A state appeals panel has ruled California law requires employers to pay for their workers’ job expenses if they work from home, even if the workers are required to work from home by order of the governor.
On July 11, a three-justice panel of the California First District Appellate Court ruled in favor of plaintiff Paul Thai and others, saying IBM violated California state law when it refused to reimburse some of its employees, including Thai, for the equipment they purchased to work from home after Gov. Gavin Newsom ordered all “non-essential” workers to work from home following the outbreak of the Covid pandemic in March 2020.
Thai sued IBM in December 2020, when he added the company to a separate action under the same law against a staffing agency. The staffing company was later dropped from the action, leaving only Thai’s case against IBM.
The lawsuit centered on claims under California’s labor code, which requires employers to reimburse employees “for all necessary expenditures … incurred by the employee in direct consequence of the discharge of his or her duties.”
The class action lawsuit seeks to require IBM to pay penalties under the law, known as Section 2802, for not reimbursing Thai and potentially several thousand other IBM workers in California for the cost of the equipment they purchased when they were ordered to work from home in 2020.
In San Francisco County Superior Court, Judge Anne-Christine Massullo dismissed the lawsuit.
Judge Massullo sided with IBM, ruling that Newsom’s stay-at-home order served as an “intervening event” that negated IBM’s liability for the expenses. Essentially, Massullo declared that, since Newsom ordered IBM and other companies to make their employees work from home, then IBM should be excused from abiding by Section 2802 in this instance.
In the ruling, Massullo said the law should only be read to apply to employers if the company itself directs the employees to work from home without intervention from an outside agency, like the governor.
On appeal, however, the justices said they believed Massullo misread the law.
The justices said nothing in the law should require judges to determine why the workers had been directed to work from home, only that they had done so. If an employee must work from home, they said, then under Section 2802, a California employer is obligated to cover the costs they pay for any equipment or supplies needed.
“Under the statutory language, the obligation does not turn on whether the employer’s order was the proximate cause of the expenses; it turns on whether the expenses were actually due to performance of the employee’s duties,” the justices wrote.
“It may be true that the Governor’s March 2020 order was the ‘but-for’ cause of certain work-from-home expenses, but nothing in the statutory language can be read to exempt such expenses from the reimbursement obligation.”
The decision was authored by Justice Mark B. Simons. Justices Teri L. Jackson and Gordon B. Burns concurred in the ruling.
Thai and the potential class of other IBM employees are represented by attorneys Craig J. Ackermann and Avi Kreitenberg, of Ackermann & Tilajef, of Beverly Hills; and Jason Harrow, Charles Gerstein and Emily Gerrick, of Gerstein Harrow, of Los Angeles.
IBM has been represented by attorneys Kelsey A. Israel-Trummel, Renee Pauline T. Perez, Matthew W. Lampe and Wendy C. Butler, of the firm of Jones Day, of San Francisco.