June 17, 2024


Think Differently

What expenses should my employer pay if I work from home?

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While federal law does not require employers to pay for work-related expenses incurred by you while working from home, many state laws do. These state laws often require reimbursement for necessary job expenses such as:

  • internet access,
  • cell phone use, and
  • office supplies and equipment, like printers and ink.

Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work.

Is my employer required to cover my expenses if I work from home?

The federal Fair Labor Standards Act (FLSA) generally does not require that you be reimbursed for expenses incurred while working from home. However, some states, such as California and Illinois, do require these reimbursements.

The only time that the FLSA impacts work-from-home reimbursements is if the cost would lower your earnings beneath the applicable minimum wage. Because this only protects you if your income is fairly close to the minimum wage, the FLSA is rarely implicated in reimbursements for work-related expenses.

Several states, though, have statutes that detail when an employer has to reimburse you for business expenses – including those related to working remotely or telecommuting. These states are:

  • California,[1]
  • District of Columbia,[2]
  • Illinois,[3]
  • Iowa,[4]
  • Massachusetts,[5]
  • Minnesota,[6]
  • Montana,[7]
  • New Hampshire,[8]
  • New York,[9] and
  • Pennsylvania [10]

State laws vary

The requirements in these states are not all the same, however. In Minnesota, for example, you only have to be compensated for certain business expenses at the end of your employment. In New York, on the other hand, employers who fail to reimburse you for reimbursable expenses can be charged with a misdemeanor crime (if you are a non-exempt employee).

Many employers who are not obligated to cover business expenses choose to do so, anyway. If they do, the terms of reimbursement will likely be included in your employment contract or employee handbook. Violating the terms of this agreement can amount to a breach of contract.

What remote work expenses are covered?

Many of these states require employers to reimburse you for any business-related expenses you have incurred while remote-working.

The extent of these expenses will depend on your job duties. However, they frequently include the following expenses:

  • phone use for business activities,
  • home internet use,
  • postage,
  • online subscriptions, like a paid plan for Zoom,
  • a printer and printing supplies, like ink cartridges and paper,
  • office supplies, possibly including an ergonomic desk and chair, and
  • a work computer.

Reimbursement policies

The employer’s reimbursement policies for work-related expenses can also determine which expenses are covered.

When an employer pays for home office equipment, though, it is often still the company’s property. If you leave your job, you may have to return what you bought to your employer.

What is the law in California?

In California, you are entitled to reimbursement for all of your reasonable financial losses that come from doing your job.[11]

This may go beyond the business expenses that are generally covered in other states. It can also include, for example:

  • home utilities, like heat and air conditioning,
  • the cost of a business cell phone so you do not have to use your personal cell phone,
  • travel expenses, and
  • attorneys’ fees you incurred in recovering reimbursement for other expenses.

Businesses can:

  1. reimburse you after you paid the work-related expense, or
  2. create a stipend for the anticipated costs of remote working.

When two states are involved

California labor laws for work reimbursements may apply if you work for a California-based company while living out-of-state. It can depend on such factors as:

  • the amount of work performed in California,
  • the company’s control over your work, and
  • your specific employment agreement.

If you live and work in California, California’s work reimbursement laws generally apply if you work for an out-of-state company. This is because the work is being performed in California, and the state has an interest in protecting its workers. However, there are limitations:

  • If the out-of-state company has no significant presence or business in California, California laws may not apply.
  • If your employment agreement includes a choice of law provision stating that the laws of another state govern your employment relationship, this may affect the applicability of California laws.[12]

Given the complexity of these issues, it is advisable to consult with an experienced employment law attorney to assess your specific situation and determine whether the California Labor Code applies to you.

Disputes and lawsuits

Because the employer only has to cover these expenses when they are work-related, it can lead to disputes over what percentage of these costs are for business use and what portion is for personal use.

If the employer fails to pay these reimbursements, you can file a wage and hour lawsuit. You are protected from retaliation if you file a claim.

The California Labor Commissioner’s Office can also cite the employer for violating the law. Any fines or penalties recovered from the citation will be paid to you.[13]

Dad holding baby while working at home from desk

California remote employees are entitled to reimbursement for all of their reasonable financial job-related losses.

Are these reimbursements tax deductible?

The Internal Revenue Service (IRS) lets you claim a tax deduction of your business expense reimbursements if:

  • the expense was an ordinary and necessary one for your job,
  • the expense is substantiated or proved by you, usually with receipts, within a reasonable amount of time, and
  • you returned any excess reimbursement to your employer within a reasonable period of time.[14]

If any of these conditions are not met, then the reimbursement is considered income and has to be reported as taxable.

What about home office expenses?

If you have had to set up your own workspace at home, you are not able to claim the home office deduction. You can claim the deduction only if you are self-employed or an independent contractor.

This is a recent change in tax law. The Tax Cut and Jobs Act eliminated this deduction for W-2 employees from 2018 through 2025.

What are digital nomads?

You are a digital nomad if you leverage digital technologies to perform your work duties – and lifestyle at large – in a nomadic manner. You can work remotely from foreign countries, coffee shops, public libraries, co-working spaces, or recreational vehicles.

The digital nomad lifestyle is becoming more prevalent through cheap and widely available high-speed internet, smartphones and lightweight laptops, and cloud-based collaboration tools. This allows you to travel and work anywhere in the world, untethered from a physical office or single location.

Traditionally, digital nomads tend to be freelancers, contractors, or remote employees in fields like design, programming, marketing, tutoring, consulting, or content creation. However, many companies now offer remote work to all white-collar employees in an effort to attract and keep talent.

Typical motivations for being a digital nomad include:

  • A desire for greater freedom, independence and flexibility,
  • Wanderlust and a passion for travel and cultural experiences,
  • Dissatisfaction with traditional 9-to-5 office life, and
  • Seeking a lower cost of living while earning income from employers/clients in higher-wage countries.

Additional reading

For more in-depth information, refer to these scholarly articles:

Legal References:

[1] California Labor Code Section 2802 LAB.

[2] D.C. Municipal Regulation Title 7, Section 910.1.

[3] 820 Illinois Compiled Statute 115/9.5.

[4] Iowa Code 91A.3(6).

[5] Massachusetts General Law Chapter 149, § 148A and Fraelick v. PerkettPR, Inc., 83 Mass. App. Ct. 698 (2013).

[6] Minnesota Statute 177.24(4)-(5).

[7] Montana Code 39-2-701.

[8] New Hampshire Revised Statutes 275:57.

[9] New York Labor Law 198-C.

[10] 43 Pa. Stat. Ann 260.3.

[11] California Labor Code 2802 LAB (“An employer shall 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”).

[12] See also Implications of “Work from Anywhere” – When Remote Workers Cross State Lines, ADP.

[13] California Labor Code 2802(d) LAB.

[14] See IRS Publication 5137 (Rev. 2-2020).

About the Author

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Neil Shouse

A former Los Angeles prosecutor, attorney Neil Shouse graduated with honors from UC Berkeley and Harvard Law School (and completed additional graduate studies at MIT). He has been featured on CNN, Good Morning America, Dr Phil, The Today Show and Court TV. Mr Shouse has been recognized by the National Trial Lawyers as one of the Top 100 Criminal and Top 100 Civil Attorneys.