38 Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) Seyfarth Shaw LLP | www.seyfarth.com In Thai v. Int'l Bus. Machines Corp., the Court of Appeal held that employees were entitled to reimbursement for expenses that they incurred while working from home.184 Plaintiff was employed by International Business Machines Corporation (“IBM”). In March 2020, California Governor Newsom issued an Executive Order mandating that residents stay home because of the COVID-19 pandemic. As a result, plaintiff and other IBM employees began working from home. In connection with their work-from-home, plaintiff and other IBM employees incurred various expenses, including those associated with internet access, telephone headsets and service, and computers and computer accessories.185 On appeal, the parties disputed whether the Governor’s stay-at-home order precluded IBM’s liability for reimbursement of business expenses.186 The Court of Appeal concluded that it did not because Section 2802 does not require the employer to be the direct or proximate cause of the expenses incurred. Instead, the Court of Appeal reasoned that the analysis depends upon whether the expenses incurred were directly related to the employee’s duties.187 In Cochran v. Schwan’s Home Service, Inc.,188 the Court of Appeal held that an employer that required its customer service managers to use their personal cell phones for business tasks must reimburse the managers for a reasonable percentage of their cell phone bills. The trial court had denied certification of a proposed class of 1,500 managers, reasoning that a class trial was unmanageable in light of individualized issues as to whether particular class members paid their own phone bills, and whether they had service plans that provided for unlimited minutes. In either case, the defendant argued that its practice of requiring personal cell-phone use might not have caused an employee to incur any additional expense above what the employee was already paying. Cochran, however, reversed the denial of class certification, disagreeing with the trial court’s interpretation of Section 2802. Cochran held that Section 2802 always requires reimbursement when an employee relieves the employer of a business expense, regardless of whether the employee actually incurred an extra expense in doing so: Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee. Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill.189 Cochran left for another day the enormous practical difficulties involved in calculating individual damages. More recently, the Court of Appeal weighed whether employees can be charged for business losses caused by inadvertent employee errors. In Gallano v. Burlington Coat Factory of California, LLC, the Court held that such losses were operating expenses that the employer was responsible for under Section 2802, and they could not be shifted to employees.190 184 Thai v. Int'l Bus. Machines Corp., 93 Cal. App. 5th 364, 367 (2023), review denied (Oct. 11, 2023). 185 Id. at 368. 186 Id. at 371. 187 Id. at 371-372. 188 Cochran v. Schwan's Home Serv., Inc., 228 Cal. App. 4th 1137, 1144 (2014). 189 Id. 190 Gallano v. Burlington Coat Factory of California, LLC, 67 Cal. App. 5th 953, 963-64 (2021)
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