The Invisible Costs of “Work From Anywhere”
Remember when working from home seemed like a money-saving dream? No commute, no dry cleaning bills, and lunch from your own kitchen. Fast forward to 2025, and California employers have learned a painful lesson: remote work isn’t free for anyone.
Here’s the truth many companies still don’t want to face: Your internet isn’t free just because your view is nice.
California’s Labor Code Section 2802 doesn’t care about your company’s pandemic-era budget cuts or your “we’re all in this together” team spirit. It cares about one thing: ensuring employees don’t bear business expenses that should rightfully fall to employers.
And ignoring this reality isn’t just unfair, it’s potentially catastrophic for your bottom line.
What California Law Actually Requires
Let’s cut through the confusion. Section 2802 states that employers must reimburse employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”
In plain English? If your employees need it to do their jobs remotely, you’re paying for it.
This includes:
- Internet service (a reasonable percentage based on work usage)
- Cell phone expenses (when used for work purposes)
- Computer equipment and peripherals
- Office supplies
- Ergonomic furniture (yes, really)
- Software subscriptions (Zoom isn’t free, and neither is the bandwidth it consumes)
- Utility costs (a gray area, but heating/cooling during work hours has been upheld in some cases)
The courts continue to side with employees on these matters. In Cochran v. Schwan’s Home Service, the court ruled that employers must pay a reasonable percentage of personal cell phone bills even when employees have unlimited plans and incur no additional charges.
The $50 Chair That Cost $25,000
One Golden State HR client learned this lesson the hard way. They balked at an employee’s request for a $350 ergonomic chair, suggesting they use a budget chair off Amazon or “be creative.” Six months later, they were looking at a workers’ compensation claim for severe back issues, complete with medical bills, partial disability payments, and accommodations that totaled well over $25,000.
As I told them afterward: “That couch cushion wasn’t a lumbar support plan.”
Here’s why this keeps happening: companies see remote work expenses as optional perks rather than legal obligations. But California’s stance is clear—if you’re requiring Zoom, you’re paying for Zoom—whether it’s in-office coffee or home internet.
The Four Most Expensive Compliance Mistakes
1. “We handle it case-by-case”
The most dangerous phrase in remote work compliance isn’t “no”, it’s “maybe.” When your expense policy lives in managers’ heads rather than documented procedures, you’re building a discrimination claim with each inconsistent decision.
Remember: If your plan is “we handle it case-by-case,” your plan is a lawsuit.
Inconsistent application of reimbursement policies hits underrepresented groups hardest, as they’re often less likely to push back against arbitrary denials. This turns your informal system into potential evidence of disparate treatment.
2. Ignoring ergonomics outside the office
OSHA doesn’t stop at your office door. California employers have a duty to provide safe working environments, including for remote workers.
This means:
- Providing proper ergonomic equipment
- Conducting remote workstation assessments
- Addressing hazardous home office conditions
That employee working from a barstool with their laptop on a counter? They’re a workers’ comp claim waiting to happen. And when they file, saying “we didn’t know” won’t save you from paying.
3. Making reimbursement more painful than the expense
Have you ever spent 45 minutes filling out forms, scanning receipts, and following up on a $7.49 expense? Your employees have, and they’re quietly absorbing costs to avoid your Byzantine reimbursement process.
No one wants to expense $7.49. But thousands of these small, unreimbursed expenses create both legal exposure for your company and resentment among your workforce.
The real fraud isn’t employees claiming too much—it’s policies so cumbersome they discourage legitimate claims.
4. Forgetting about the tax implications
When employees absorb business costs, they’re effectively taking a pay cut. One that’s particularly painful since those expenses aren’t even tax-deductible for employees anymore (thanks to the Tax Cuts and Jobs Act of 2017).
Meanwhile, properly structured reimbursements through accountable plans are tax-free to employees and tax-deductible for employers. Ignoring this is leaving money on the table for everyone involved.
Solutions That Actually Work
Fixed stipends with smart documentation
Consider a monthly technology stipend that covers reasonable internet, phone, and incidental tech costs. While a blanket stipend alone doesn’t technically satisfy California’s “actual expense” standard, pairing it with a simplified process for claiming expenses that exceed the stipend creates both compliance and convenience.
The key is documentation: have employees acknowledge that the stipend is intended to cover specific categories of expenses, and maintain an easy process for extraordinary claims.
Create a standard WFH kit
For new remote employees, provide a standard package of equipment rather than waiting for requests:
- Laptop and monitor
- Ergonomic chair and desk (or stipend specifically for these items)
- Keyboard, mouse, headset
- Initial supply kit
This proactive approach prevents injuries, increases productivity, and demonstrates compliance with California requirements.
Develop clear, accessible policies
Your remote work expense policy should be:
- Written and easily accessible (not buried in an intranet nobody visits)
- Clearly communicated during onboarding and periodically thereafter
- Applied consistently across departments and levels
- Regularly reviewed and updated as laws evolve
Your policy isn’t a policy if it’s in someone’s inbox. Make it visible, make it understandable, and make it fair.
Audit your managers’ decisions
When managers have discretion over approving expenses, review those decisions quarterly for patterns of disparate treatment. Are women’s requests denied more frequently? Are certain departments being treated differently? This data not only helps prevent discrimination claims but improves your expense management overall.
The ROI of Getting This Right
Proper remote work expense management isn’t just about legal compliance, it’s about employee retention, productivity, and morale.
Consider the real costs:
- Legal exposure: PAGA penalties start at $100 per employee per pay period for initial violations
- Lost productivity: Employees with improper setups take more breaks and work fewer effective hours
- Higher turnover: Feeling nickel-and-dimed is a leading reason employees look elsewhere
- Workers’ comp increases: Home injuries without proper equipment drive up your experience modifier
Against these costs, proper reimbursement looks like a bargain.
Moving Forward
The remote work landscape in California continues to evolve, with courts regularly refining what expenses qualify and how they should be calculated. What doesn’t change is the fundamental principle: business expenses belong to the business.
As we often tell clients at Golden State HR: in California employment law, cheap is expensive when you’re in court.
If you’re concerned about your current remote work policies or need help developing compliant procedures that protect both your business and your employees, contact our team for a policy review. We specialize in turning California’s complex employment laws into practical, business-friendly solutions.
Remember the most expensive chair isn’t the ergonomic one you buy. It’s the kitchen stool that lands you in a deposition.
For more information on California compliance issues, check out our freebies.