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What Public Employers Should Know About Liability for Employee Work-From-Home Expenses

A recent California Court of Appeal case (Krug v. Board of Trustees of the California State University) has implications for public agencies regarding employee reimbursement for work-from-home expenses.

Even though Labor Code Section 2802 does not explicitly or implicitly mention that it applies to government agencies, public employers should know they could still be responsible for an employer’s necessary expenditures to work from home.

This article breaks down the key takeaways and offers guidance.

Key Takeaways:

  • Labor Code Section 2802: This section requires employers to reimburse employees for reasonable and necessary work-related expenses.
  • CSU Case: In August, a California Court of Appeal ruled that California State University (CSU) did not have to reimburse a professor for home-office equipment and supplies acquired during the pandemic. The court cited CSU’s sovereign power granted by the California Education Code, allowing it discretion over purchases and reimbursements.
  • Sovereign Powers Doctrine: Public agencies are generally exempt from Labor Code requirements unless specifically included. The Sovereign Powers Doctrine shields public entities unless their inclusion would infringe on their sovereign powers, often granted by other laws.
  • Three-Part Test: The court applied a three-part test to determine whether the Sovereign Powers Doctrine applied:
    (1) Does the Labor Code provision explicitly mention governmental agencies?
    (2) Is there legislative intent to exempt them?
    (3) Would applying the Labor Code provision infringe on sovereign powers?
  • Krug’s Case: In Krug’s case, Labor Code Section 2802 did not expressly mention governmental agencies, and the legislative intent was silent. However, CSU’s sovereign power over expenses, granted by the Education Code, led to the denial of reimbursement.
  • Potential Liability: This case implies that public agencies might be liable for employee work-from-home expenses if their governing legislation doesn’t explicitly grant discretion for such reimbursements.

Guidance for Public Agencies:

  • Review Governing Legislation: Public agencies should carefully review the legislation that grants them sovereignty. If it does not explicitly address employee work-from-home expenses, they may be at risk for potential liability.
  • Consult Legal Experts: It is advisable for public agencies to consult with experienced attorneys to assess their liability under this new court holding and ensure compliance with labor laws.

In summary, the recent court case has highlighted the potential liability for public agencies in reimbursing employees for work-from-home expenses.

Public agencies should assess their governing legislation and seek legal counsel to navigate this complex issue and determine their obligations under Labor Code Section 2802.