A Primer on California’s Laws Regulating Remote Work
With its booming technology industry and the proliferation of internet access, California is not a stranger to the remote workplace. In 2018, the state adopted the Telecommuter Pilot Project policy with the California Department of General Services. This allowed California’s Department of Human Resources to test the viability of telecommuting "to make employment more desirable and create a more productive work environment." In a further move toward expanding remote work options, in 2022, the California legislature began looking again at how to protect remote employees.
Employers must keep in mind that while remote work offers certain flexibility to outside employees, it also continues to fall under California’s strict employment laws. Even though remote working arrangements may seem like a "workplace away from the workplace" or an entirely separate entity within the state, remote employees are often subject to the same labor regulations as in-house workers. This includes minimum wage, overtime pay, meal and rest breaks, health and safety standards , disability accommodation, and other workplace laws imposed upon employers in the state. As with any other California-based employees, companies must comply with requirements for paid sick leave, anti-discrimination and harassment, and notice requirements. Although remote employees may not be physically located in California, there is a good chance that their employment falls under the purview of the state’s labor laws.
Thus, while remote work offers great benefits to those able to take advantage of them, employers must be aware of the wide-sweeping California laws that continue to extend beyond the office setting, as well as the proposed bills that may expand even further into the realm of remote work. Employers should keep abreast of California’s developments in this area, while simultaneously reviewing their own internal policies to ensure that their telecommuting practices not only comply with the more traditional California employment law landscape, but also take into consideration the unique landscape of their remote workplaces.
Pay and Overtime for Remote Employees
Employers are required, under California law, to pay employees at least the applicable minimum wage for all hours worked in the state. This extends to both remote and in-person, non-exempt employees. The minimum wage in California is currently $15.50 per hour for all employers. Employers are also obligated to pay overtime to non-exempt employees who work over 8 hours in one day or 40 hours in one week, unless other exemptions apply.
As with in-person employees, employers may not deduct pay for rest periods. If an employer fails to provide an employee with a 10-minute rest period which falls within rest period time (2nd through 5th hour of work), then the employer must pay the employee for an additional hour of pay at that employee’s regular rate of wages for each workday that the rest period is not provided.
In addition, if an employer requires an employee to work during their meal period, or if the employee is otherwise relieved of all duty during meal periods yet cannot use their time for their own purposes due to duties, then the employer must compensate the employee for the applicable time. The employer must pay non-exempt employees for meal breaks when they are not provided with the required second break if the missed second break causes the employee to work more than 10 hours total for that workday.
Workplace Safety and Remote Work Premises
As part of the evolving concept of the workplace, the traditional in-office set up has expanded to include more remote employees working from home, co-working sites, or "co-living" spaces. Historically, employee liability for hazardous work environments was largely limited to the employer’s physical location; however, as more employees work in long-term remote work environments, consideration of workplace safety is critical.
Whether an employee works partially or completely from home, employers in California must maintain a safe workplace for all forms of employment even when not at a worksite.
Whether an employer should conduct a safety assessment of a remote or home office is an ongoing dialogue, but what is clear is that employers must comply with the standards set forth in the California Occupational Safety and Health Act ("Cal-OSHA"). However, the Cal-OSHA website notes that it does not regulate home offices that are "used" for work "if the employer does not direct or control the employee’s work location, or the employer requires the employee to go to a specific location to perform work."
The Occupational Safety and Health Administration ("OSHA") as a federal agency, has posted guidance on their website specifically addressing what employers are required to do with respect to home offices. It is important to note that these regulations are not necessarily industry-specific, and although they address policies and procedures for all employers, they reflect general guidelines for home-based employment.
As a variety of interpretations of the new laws continue to develop nationwide, more clarity will emerge allowing employees and employers to adjust to this seemingly new norm. Training and proper policies and procedures in the workplace, including home offices, can help avoid common claims arising from alleged unsafe work conditions and ensure a happy and healthy remote working environment.
Data Privacy and Employee Rights
California law affords employees several privacy rights that employers in other jurisdictions may not be required to offer. As we’ve previously noted, telecommuting employees are not exempt from these laws, and many of these rights hinge on whether the employee is actually "on property." What does this have to do with remote workers? It’s important to remember that remote work does not occur in a vacuum; the vast majority of California employees utilize some type of company technology, and most work from a designated "work site" if only occasionally. As such, most of the same laws that can affect on-site employees also apply to telecommuters. The following examples highlight key remote worker privacy laws and considerations.
Telecommuting often involves a certain level of risk surrounding confidential company data or documents. Employers often invest significant resources in creating and implementing data security protocols to avoid or minimize risks, yet working from home may make it easier to circumvent those protocols. A common example is a worker who takes a picture of a printed document using his or her phone and sends it to a personal email account. This easily avoids most security measures (viewing the document uses the phone, and emailing it is difficult to trace), and should not be done without permission. The law can hold employers liable for an unauthorized disclosure made by the employee, so best practice dictates making it clear that all employees may be held accountable for actions that could compromise data security.
Remote Workers: Work-Related Expense Reimbursables
Employees who work from home are not exempt from California law requiring employers to cover their ordinary and necessary business expenses. This means that an employee must be reimbursed for any cost incurred in the performance of their job duties, even if that employee acts as an independent contractor for purposes of reporting income to the IRS. California courts will generally permit employers to pass on the costs associated with doing business, including the normal overhead costs of a business, onto employees, but when those activities are specifically for the benefit of the employer, California Labor Code § 2802 requires the employer to reimburse the employee.
If, for example, it is common business practice for meeting attendees to use a power point presentation in delivering key information, the costs of that software cannot be properly passed along to an employee performing the meeting. Rather, it is the employer’s obligation to pay for it. Importantly, if these costs are not properly covered, an employee is entitled to relief under California Employment and Labor Code § 218.5, which provides for recovery of interest on unpaid wages and reasonable attorneys’ fees. As a general rule, employers are required to cover employees’ ordinary business expenses, whether employees are working from home or otherwise. This includes things like remote access software, scanners, faxing, printers, Internet access (beyond reimbursement of the basic cost to connect), and other similar costs. Employers must not directly or indirectly pass on these costs to the employee through deduction of wages , with the exception of those situations where deductions are permitted by section 224. If the costs are necessary to the employee’s job performance, and therefore incurred for the company’s benefit, the employer may not seek to pass them along to the employee. Specifically, California courts have held that § 2802 unambiguously prohibits employers from passing on the costs associated with an employee’s necessary job duties, with the caveat that this obligation is limited to situations where the business requires the travel, the business receives substantial benefit from the travel (more than simply the economic value of the work performed) or the business maintains a general policy regarding reimbursement of expenses. As a general rule, the following expenditures are normally covered in terms of an employee’s job function, unless done for the benefit of the employee exclusively: travel between customer sites, travel between job sites, parking fees, meals, transportation costs, room and board. This rule applies regardless of the location of the employee. Employers should note that the caveat of the above analysis, that such expenses must be necessary to the employee’s job function, is a high burden to meet for employees who are not working in a traditional office environment, such as those who travel for a living. Because of the high burden placed on the employer, the safest course of action is to simply consider all expenditures necessary to the employee’s job function regardless of where the employee performs their duties.
Modifying Workplace Policies for Remote Workers
Employers should take the time to update their workplace policies and handbooks to ensure they address their remote employees’ rights and protections provided by California law. These include wage and hour laws, sexual harassment training, anti-discrimination and anti-harassment policies, workplace safety policies, expense reimbursement policies, disability accommodation protocols, non-compete and confidentiality agreements, and anti-bullying policies.
Ideally, employers would have these policies in place prior to hiring any employees in California, as it is critical that a California employer has policies in place that align with California and federal law. As many employers are now learning, just because items are contained in an employment agreement does not mean the provisions are enforceable.
Think through your policies regarding the following issues:
Health & Safety
California requires companies to provide a work environment free from occupational safety and health hazards. Employers with remote employees may need to adapt their policies to comply with this requirement. For example, can you require your employee to maintain a safe workspace? If your employee works from an actual office prior to being given remote status, and there are workplace safety concerns created by the remote work, is it reasonable to require them to come back to the office until those issues are addressed? The OSHA and the California Division of Occupational Safety and Health (Cal/OSHA) outline an employer’s obligation to provide a safe workspace. They may have some guidance or requirements for remote employees, or be able to provide you some guidance on how to modify existing policies. This is also an area where legal advice may be critical.
Sexual Harassment Training
California law requires companies with 5 or more employees to provide harassment prevention training every two years. Companies with 5 or more employees are required to have sexual harassment training programs for all supervisors, including those who work remotely. Governor Newsom signed a bill January 1, 2020, requiring employers with 5 or more employees to provide one hour of sexual harassment training to all employees annually and two hours of sexual harassment training to all supervisors and managers every two years, effective January 1, 2021.
Expense Reimbursement
The California Labor Code requires employers to reimburse employees for any business-related expenses incurred while working remotely. This should have been an area addressed pre-remote work, but if not, this is an important part of your policy that needs to be addressed.
Common Litigation and Compliance Considerations
When it comes to remote employees, California businesses face a myriad of legal challenges. Because these employees do not work on-site, it is easy for disputes with these individuals to arise and for litigation to occur. From wage and hour laws to health insurance and more, employers must navigate a multitude of regulations when working with California remote employees. Using these tips and strategies, you can better understand the risks associated with remote employees in your business and avoid costly litigation and penalties.
Challenge 1: Wage and Hour Issues
Because remote employees are not present in the workplace, some employers may take advantage of this to require them to work outside of standard business hours. Employees may be compelled to have after-hours work meetings to discuss projects or send and receive work emails and text messages at all hours. This can cause wage and hour problems. For example, if an employee is not being compensated for overtime hours because they are late-night or early-morning text messages, this can lead to wage violations that can quickly escalate into much larger legal issues.
Challenge 2: Investment and Uniforms
Some California employers may require employees to invest in their uniforms and other necessary clothing or gear. If the costs of uniforms, tools, or equipment cut into the amount an employee earns in a pay period by more than $43.75 for a day worker or $88.13 per week for a salaried worker (currently established minimums), then your company must reimburse these workers for the cost of the items . If they do not, this is considered a failure to pay wages and can result in legal disputes, wage violations, and penalties.
Challenge 3: Workers’ Compensation Insurance
Most California employers are required to carry workers’ compensation insurance in case of workplace accidents that cause employees to become injured. However, many companies mistakenly believe that if their employees never leave home while working, they are not covered under this type of insurance. This is not the case. Employers of remote employees must still purchase workers’ compensation insurance. If they do not, they could face liability for an employee’s injuries.
Challenge 4: California Domestic Workers Bill of Rights
The California Domestic Workers Bill of Rights is an attempt to provide protection to employees who work in private homes. It provides several protections to housekeepers, caretakers, and babysitters. For example, employees who work over 9 hours in a day or 45 hours in a week are entitled to overtime pay, while those working at least 8 hours are entitled to meal and rest periods. However, employers may not require their domestic workers to clock out or take breaks when they are working in the individual’s own home. Otherwise, they could face penalties and lawsuits.
If you are unclear on the steps you should take to ensure compliance with these and other California laws, we recommend seeking experienced legal guidance.