On February 1, 2023, the federal court for the Eastern District of California approved a settlement of a Private Attorney General Act (PAGA) action filed in Foon v. Centene Mgmt. Co.
According to the court’s order, the plaintiffs alleged that they were “not reimbursed for the costs of using their own personal telephones, computers, office space, and utilities while working remotely for the defendants.” The plaintiffs claimed expenses for their home offices of about $235 per month, ranging up to $300 per month for employees living in areas with a higher cost of living, such as Los Angeles, Orange County, San Diego, and San Francisco.
California Labor Code 2802 requires employers to “indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Due to the increased remote workforce over the past few years, employers’ obligations under Labor Code 2802 have resulted in compensating California employees for their work-from-home expenses, as the Foon case demonstrates.
The $750,000 settlement will provide average payments of approximately $6,000 to exempt employees and about $9,374 to non-exempt employees, who also alleged wage underpayment and non-compliant meal and rest breaks, in addition to PAGA penalties that will be distributed to the Labor and Workforce Development Agency (LWDA).
Although the settlement was negotiated and the court did not rule on the issue of business expenses, the claim and substantial settlement should serve as a reminder to employers of the importance of having a reimbursement program that addresses all associated and incidental costs for remote workers operating a home office in California. If your organization has any questions about reimbursing its California employees for business expenses, please contact our California Legal Services team at CAinfo@employerscouncil.org.