In a post-pandemic environment, more people are still working from home than ever before. In this episode, Dorsey Partners Kent Schmidt, Nisha Verma, and Heather Dillion discuss the types of claims we are seeing and issues companies are facing in the brave new world of remote employment.
This podcast is not legal advice and does not establish an attorney-client relationship or create any duty of Dorsey & Whitney LLP or those appearing in this podcast to anyone. Although we try to assure that the content of this podcast is accurate, comprehensive, and reflects current legal developments, we do not warrant or guarantee those things. The opinions expressed in this podcast are the opinions of those appearing in the podcast only and not those of Dorsey & Whitney. This podcast is considered attorney advertising under the applicable rules of certain states.
In a post-pandemic environment, more people are still working from home than ever before. In this episode, Dorsey Partners Kent Schmidt, Nisha Verma, and Heather Dillion discuss the types of claims we are seeing and issues companies are facing in the brave new world of remote employment.
This podcast is not legal advice and does not establish an attorney-client relationship or create any duty of Dorsey & Whitney LLP or those appearing in this podcast to anyone. Although we try to assure that the content of this podcast is accurate, comprehensive, and reflects current legal developments, we do not warrant or guarantee those things. The opinions expressed in this podcast are the opinions of those appearing in the podcast only and not those of Dorsey & Whitney. This podcast is considered attorney advertising under the applicable rules of certain states.
Voiceover
Welcome to another episode of the SharkCast on litigation risks management, where we explore why businesses are so frequently sued, and how to mitigate and navigate the dangers lurking in these risky waters. Join us now as we welcome our host Kent Schmidt, Litigation Partner at the law firm of Dorsey & Whitney.
Schmidt
Thanks for joining another episode of the Litigation Risk Podcast. Today, I’m pleased to be joined by two of my partners here in Southern California where we are recording this podcast. Nisha Verma and Heather Dillion are both partners in the Labor Employment Group, and so I’m very honored to have you join in one of the early episodes of this podcast. Welcome to Shark Cast.
Dillion
Thank you, I’m so happy to be here. We have so much to go over today.
Verma
Thanks for having us.
Schmidt
Well, employment litigation is a daunting and somewhat overwhelming topic for a lot of clients. And since 2020, with work from home, litigation risks have become even more complicated and nuanced. We’re now three years plus past the beginning of the pandemic, and I think it’s fair to say that work from home is part of the new reality for almost every employer, at least for a subset of their employees. And so let’s jump into what you’re hearing and what you’re seeing out there in the litigation risk you need to the work from home context.
Dillion
And it’s interesting, I think you said remote work is here to stay, and it is. And a lot of employers were very hesitant about it pre-pandemic. The pandemic forced us into our work from home experiment. You know, non-essential workers had to work from home for the most part and essential workers, even a lot of us lawyers, were essential workers, and many of us still worked from home, whether it was to keep down, you know, spread risk or anything else, and it has been quite interesting and I think people have adapted much better than we maybe thought we could previously. So that has been neat to see. I has been neat to see that, you know, some people could handle different things at home. But as you mentioned there’s a ton of considerations and legal pitfalls that employers can walk into with it as well.
It’s very timely because when I was kind of going over the news last night on development, Amazon is bringing its employees back, requiring its employees to be back in Seattle three days a week. And maybe other areas as well but it’s not just, it really shows you what a seismic shift that is, because the news stories weren’t just about the workers walking into the office, but how this is changing the look of Seattle, the metro areas as well with, you know, bakeries and dry cleaners being ready to have customers finally. But it just goes to show you, that just happened. That means in the last three years all those people were home and it was a completely different reality.
Schmidt
Well, I think that’s a good segue to a question I wanted to ask because before we talk about specific litigation risk, I think it’s helpful to address the larger context of the decisions that companies need to make on whether they’re going to even allow this. That’s an identity and cultural question. And what are you seeing in that space?
Dillion
I mean, I think you hit the nail on the head. It’s an identity and cultural question. It’s not a COVID question. It’s been a long time since we’ve heard employer or employees even report that the reason that they don’t want to come in is because they’re concerned about getting COVID after multiple rounds and accessibility to vaccination, after multiple people getting COVID several times, including all of us. You know, workers are pretty transparent that it doesn’t, they’re not really worried about getting COVID or the flu or a cold or, you know, anything necessarily disease related. So I think there was a period where the COVID was part of it, and I think that’s long gone. And so now it’s really just a communication between workers and their bosses about what they want out of life and what they want out of their work experience. And it seems like pre-COVID it was a little bit easier for employers to hear that, managers to hear that and say like, that’s nice, that sounds nice that you want to be able to start prepping dinner, you know, during your second break of the day. But I don’t care.
Verma
Or work in your pajamas.
Dillion
That all sounds nice, but I’ve kind of done listening to that because you do what I say and, you know, I’m the boss. And I think the fact that employees have been able to demonstrate that they can productively get work done. Revenues for several companies during the kind of 21/2022 had gone up. Productivity based on some measures had gone up. It’s a little bit harder for employers to just kind of cut off the conversation.
Schmidt
Yeah, before it was a question of whether this could theoretically work.
Verma
Right.
Schmidt
And then over a period of many months, many employers found out, yes, it could work. And then the decision of whether to bring the employees back isn’t quite as theoretical. Because we know it worked, at least for some.
Verma
But it’s interesting ‘cause we know it worked as in, for some objective measures, productivity, but there has been a big cultural shift.
Dillion
So I think Nisha, to your point is, it’s figuring out what works for your company ‘cause a lot of workers are hesitant about coming back, but you know many of them, there’s a whole at least, what, three years of professionals who have never been in the office full time. So they don’t understand some of the benefits and, you know, I love a hybrid system. We’ll talk about that later, but there are some true tangible benefits to being among your colleagues and not via screen, but via face to face. And so I think it is really an important cultural and personal decision for each employer.
Schmidt
Well, it’s a decision that the employer has to make and the employee. And sometimes it, they don’t align. Right?
Dillion
Right.
Verma
Right.
Dillion
And we’ve seen that. We’ve seen people saying we’re back fully in the office and a mass exodus of employees.
Schmidt
And then you see employers that say I’m going to capitalize on this, and this is a draw because I’m going to be maximum flexible on this.
Dillion
Right. And then I would just say that managers that are expecting consistent in-office presence have to deliver something for those people coming into the office. You know, I don’t think it’s necessarily the case that if you require two or three days in the office, you are gonna have a retention problem. I think if you’re organizing work around allowing those one or two days that the person is at home to be days where they should be communicating with people less because they’re aligning their calendar to do more deep work at home. And then you know what, maybe knocking off a little early because they got a ton done in those four hours. But then you’re also organizing the days where people are in the office to actually benefit from interaction with their managers. I’ve spoken on this topic a couple of times and I always say, I would not be where I am today, and maybe that’s not saying much, but I would not be where I am today if I had my first three or four years at home. There’s no, there’s no way. So much of what I learned as a lawyer and how I learned to be a professional with just staying in a room longer than I probably should have, lingering, you know.
Schmidt
Yep.
Dillion
And that doesn’t happen where your only interactions with the people that you’re supposed to be learning from as a professional are orchestrated and not organic. So I would say to the managers that, you know, want to see that their, want to see their employees following a two-day rule or a three-day rule to ensure that they’re there on the same days as managers, and that they’re creating, they’re kind of taking the good aspects of the old days, in terms of everyone being in the office. Maybe leaving some of the bad, like walking around at 5:30 to see whose still there. Roll call, evening roll call.
Schmidt
So let’s turn to litigation risk and legal pitfalls that…
Dillion
Could I add one thing on…
Schmidt
Sure.
Dillion
…the cultural issue, that’s just very important to me?
Schmidt
Absolutely.
Dillion
Is that I think that any employer that has allowed employees to work from home or was required to, needs to be very, very conscious of its employees who have job duties that just don’t happen to be able to be performed from home, and to the extent the employer is providing flexible opportunities for their staff that can work from home to, for example, be able to prep dinner during their second break. Well, you need to think about, is there a way to translate that flexibility to the rest of your workforce? Because there is post-COVID a lot of resentment, you know, among different types of employees and different workforces, which we see in, first of all, we see in, in unionization labor movements. We have a strike in LA today.
Verma
Yeah and we had one last month.
Dillion
And also with, you know, with litigation and internal complaints. And so if you’re really looking at, you know, if you’re looking at creating flexibility for one aspect of your workforce, you cannot just ignore another aspect of your workforce. That is going to create distrust and division and potentially people being seen or feel as if they’re of a different or second class. So I think it’s really important for employers to consider, okay, if we’ve gone to like three-day-a-week for those people whose job is primarily done on a computer, and we can’t necessarily do that for the rest of our staff, then what are other ways to be conscious and cautious of the fact that life happens to those people too.
Schmidt
Right.
Dillion
Their kids get sick, they get COVID. They have days where they can’t make it into work because something happened to their car. So is there something you can do with the point system with an attendance policy? Is there something you can do with providing time off? Is there something that you can do to kind of translate the flexibility that one segment of the workforce has to another? I, you know, I truly think that’s the right thing to do and I think employers that aren’t thinking about that are going to have cultural problems.
Schmidt
That’s a great point. The tension that exists between those that are allowed to work from home and those that aren’t for whatever reason, job description, seniority, that exists. And that’s not a good thing in any employment context. Well, let’s turn to the litigation risk and legal pitfalls that come from the work from home phenomenon that we’re experiencing. Your jobs entail advising on run of the mill, soup to nuts, litigation risk attendant to employee situations. What are the unique issues that you’re seeing from the work from home context?
Verma
How many hours is this again? There are a handful, truly a handful of different issues that come up, and I think we can categorize them in two main issues. One is, is your employee fully remote or is it hybrid, or are they hybrid? Because that changes things. If you’re fully remote, different laws are gonna trigger to if your hybrid, and we’ll talk about that a little bit. And then the next, the biggest one is, what state is your employee in? The laws of New Jersey are very different than California’s, so if you have a New Jersey company and you have an employee who works fully in California, you need to be following California laws. And spoiler alert, California laws are very difficult to follow. So that’s, that’s what the two main issues, are they fully remote and what state they’re in. And one of the big wage and hour issues is just tracking their hours, if we’re talking about specifically non-exempt employees. So make sure they’re clocking in and out. Make sure they’re taking their breaks, monitor it. And you don’t, in California, you don’t have to, by the law, police the meal and rest periods, but with this you kind of want to a little bit. Monitor and if you’ve seen employees not taking breaks, figure out what’s happening. Is it because they’re forgetting to log it? Is it because they feel like they have to work 24/7? You know, you see that sometimes with working from home is you didn’t really, you don’t have that separation anymore.
Schmidt
Right.
Dillion
Mm-hmm.
Verma
So really try to follow their time records and see what’s going on. Make sure they’re not working off the clock, have strict policies, do not work off the clock. And police them as I’ve mentioned so that you can see if there are issues and you can fix those issues as necessary.
Schmidt
So if an employer knows that they receive employee emails at 6:30 in the morning and at 8:30 at night and all the way in between. But the employee, wanting to be a hero, wanting to maybe earn some cred is only reporting 7 hours, that’s a problem.
Verma
It’s a huge problem, and it really puts up a big risk in litigation, and also you want your employees compensated, right? If they’re working, you want them compensated. You also want them to enjoy their home life and to sleep. So you do definitely need to look at that and see if, make sure you’re clocked in and out. And be careful with texting employees, you know, even as that might be non-exempt employees, you’re texting and saying, hey, you can deal with this tomorrow. But here’s an issue, don’t, I mean don’t do that.
Schmidt
So the boss sends a text at 9:00 at night because they know the employee has their laptop at home and they just need one small thing and they send a text and now we’ve got a question is whether that time’s being compensated for.
Dillion
Well, that text better say, please clock in before you do this or write down your time tomorrow or text me back and let me know how long this took and I’ll put it in.
Schmidt
Not some sort of implied idea that they’re gonna just do this one thing off the clock.
Dillion
Exactly.
Verma
No, and you don’t want, just to Heather’s point, which I think was so excellent, you don’t want employees thinking that you’re like your frontline managers are getting something out of employees not being paid for all their time or employees not being paid, either not getting meal periods or not getting paid for meal periods. They’re not, we work with tons of companies. It’s not like there’s a bonus for frontline managers because, you know, employees are doing more than they’re paid for. So if there’s anything about your culture that’s, you know, that’s causing anyone to think that’s the case, then, that’s what you need to address.
Dillion
Well and it’s and culturally, obviously you want that. And especially in California, managers understand the risk of wage and hour law. These are millions of dollars in settlement or, you know, in trial for class actions for wage and hour laws. There’s different derivative claims, it just piles and piles and piles on. So yes, there’s cultural, but also legally managers understand, for the most part, understand that they don’t want these issues and they want you to want you to be compensated for your time worked. So making sure you have some sophisticated program, even unsophisticated, just make sure your employees are logging their time.
Verma
Well, here’s an unsophisticated option that some employers, you know, could do. Is just for anybody that works from home, figure out, and they’re non-exempt, figure out what time their lunch should be and block it off on their calendar. And you know, so there’s nothing else that they can do during that time. And I know it’s a little bit hard, but to the extent there’s any way to make sure they’re off e-mail during that time and make sure they’re away from their computer. At least for maybe a spot check every few weeks.
Dillion
To be clear, you’re not saying auto-deduct the lunch?
Verma
Oh no, I’m saying your Outlook calendar. I’m saying make sure there’s like, you know, make sure the Outlook calendar says lunch at the right time.
Dillion
Right.
Verma
And then make sure they took it because I mean, if you’re if, again, we share calendars in my department. Like we can see each other’s calendars, the details of each other’s calendars and if you have a workplace like that where a manager can see that somebody is taking calls or doing sales calls or something for the first six hours, then you know that they’re taking their lunch too late.
Dillion
Mm-hmm.
Schmidt
Let’s turn to another risk which I know exists and that is just relating to the accessibility of all this data and information that used to be within four walls and is now in everyone’s homes on their laptops and is out there.
Dillion
Yeah, and so I think this is something that’s easy for employers to overlook, particularly because the risk doesn’t seem imminent at the time. And then also because you’re onboarding people, you want to get, you want them to work, right? You don’t want to spend three days with them explain, making sure that they’re not going to do anything with this data. And so that being said, there are, well, I think a threshold thing to address is that in the event there is a dispute over your data, in the event employee does do something that you don’t like with it, you’re not going to have any recourse if you haven’t taken measures to protect that data, right. But it’s not a trade secret if the employer hasn’t created structures, or the owner of the information hasn’t created structures, to keep it from being seen from other people, right? So that means that if somebody’s taking their work home and the employer is not, you know, tracking that and all of a sudden there is a use of that information outside of what’s allowed under the law, there could be a weakness in terms of, in terms of pursuing that.
Schmidt
What are some practical steps to protect those trade secrets?
Dillion
So I know that, I know there are ways to keep something from being printed, to keep certain links or certain documents from being printed, so that’s a good one. Encryption, if anything’s being sent over, anything other than an authorized e-mail. VPN firewalls, I would say, I mean not everybody needs access to everything. And then I think for particularly for healthcare employers, just really robust training on HIPAA. Because one thing that I, you know, think about as well is that you know, protected health information isn’t just anybody that works at the company can see it because they work at the company. It’s only people that need that information in furtherance of the care, right? So how many firewalls can you put in so the data is just not accessible to everyone as an example.
Schmidt
Do you think it’s a good idea to revisit the employee policies on confidential information and to have a subset of those policies specific to work from home?
Dillion
I do and I think that nobody reads those policies. So I think that…
Verma
What?
Dillion
I think that, yeah, I think it’s got to be practical. Like it’s got to be really practical. I think it’s got to be, you know, a training, a training with some slides on practical expectation and then a refresher. I mean, having them sign a policy, nobody signed, nobody starts our first day of work intending, most, almost nobody, starts their day work intending to be loose and free with their employers information, right? It’s just, these are habits people fall into, so it’s really more about the psychology of, how, you know, how do you create that expectation throughout the work life of someone right? And the way people hear you and prioritize it.
Schmidt
Right.
Dillion
But I agree with what you said, Kent, that people may need to revisit those policies because to your point earlier, you can’t say it was secret information if you haven’t done anything to protect it. And one way to protect it is these beautiful written policies that we do. But to make sure they account for remote work.
Schmidt
Well and from a litigation standpoint, you’re right, they’re ignored. They’re shoved into a drawer often. But the time that they do come out is when an employee’s been terminated and there’s worry and a great deal of concern that they’re going to walk out the door with that. So what steps do you go about to terminate an employee who is 100% remote, maybe even in a different state.
Dillion
Yeah.
Schmidt
And they’ve got all the data and information and you’re not sure that they’re going to be a good person.
Dillion
I think, we see this a lot, and I think you really got to get that laptop back before you fire them wherever possible. And if that means going to Oklahoma, it means going to Oklahoma. I mean, you still, they’re still your employee. They’re still required to do these basic things that you ask in terms of hand over that, you know, laptop, and before the termination happens would be the best time to get that, I think.
Schmidt
How do you do that? Do you have someone knock on the door and say please hand me your laptop and then they’re terminated immediately?
Dillion
Maye please meet me at this law office at, where I have a safe at, where there’s security, something like that, but no, it’s, we have to talk it through with clients ‘cause it is tricky and I’m not saying it’s easy. But it is something that employers that are having remote work, so to the extent there’s a benefit for employers of having remote workers, fully remote workers, ‘cause you can hire people in other states well there’s cons too. This is one of the cons.
Schmidt
Right.
Dillion
So that’s, so then we need to be aware and own that and figure out how to get around that con, right?
Schmidt
Right. You just mentioned a moment ago other jurisdictions. What happens when an employer has now an employee who’s not just down the street, but across state lines, or even in another country?
Dillion
So it does open up as we discussed earlier, a bunch of different issues and it’s important that you, some, we see some employers, candidly I’ve seen one that said we cannot have employees in California, we’re not, we’re not doing it because of this was a particular how they were classifying their employees and it’s really hard to classify employees as contract employees in California. There’s a whole test you have to follow. So they specifically, ‘cause when I saw their policy I said, these aren’t contract employees out of California’s laws. And they said, fine, no California employees. And if that’s something you can do, this company was able to do that. But if you really want certain policies in place you need to ensure that the states that your employees are in will enforce those policies. And we can talk about those in a little bit, but there’s, so there’s all those different issues. There’s the wage and hour laws that we talked about earlier, taking their meal and rest breaks, different laws, different states require different things, so it’s just really crucial that you determine what the laws are of the relevant states that your employees are in.
Schmidt
Okay. Is it accurate that you cannot avoid that multi-jurisdictional issue through a choice of law provision and having the employees say I’m going to be in Arizona, and I agree that California law is going to control, even though I’m gonna be living in Arizona.
Dillion
It depends on the state. So California is not a fan of choice of law provisions. In fact, we have enacted a Labor Code section that specifically says that an employer cannot try to contract around California law by putting another state’s law in place. Granted, there’s some exceptions to that, specifically where the employee has a attorney on their side to help enter into the agreement for the choice of law provision. So some states it’s fine, some states that’s a great way to do it. But it’s just not a one, it’s not a one-size-fits-all situation.
Verma
Yeah, for those of us that took conflict of laws in law school, who, who thought that was their favorite class? No, no, it all sounds fine when you’re entering into the agreement, but, you know, when there ends up being a dispute between those two parties, it’s a lot of work. I think we, as our litigators, we can all attest to that.
Schmidt
What about restrictive covenant? That’s another area where there’s significant change from one jurisdiction to another. Are those sometimes triggered because now the employee is in a state that takes a different view of restrictive covenants?
Dillion
They sure are. If you want a non-compete, if a non-compete is very important to you with your employees, you’re going to have to be careful in California. California hates non-competes. Some states think fine, as long as it’s reasonable, you know, reasonable time frame, reasonable jurisdictional limits, that they will enforce it. California really does not like enforcing it. It’s a very, very limited situations in which they’ll do so now, and in fact, there’s a bill right now that’s likely gonna get passed that’s trying to restrict these even more, restrict even, there’s a provision of it saying that they would recommend an attorney for disbarment for pushing a non-compete forward. So I’m hopeful that that part won’t pass.
Schmidt
That’s remarkable.
Dillion
But it’s, it’s Labor Code section 925, and they are really looking to just hone this in a little more. I mentioned earlier that the use of attorneys can sometimes help with the choice of law. By help I mean enforce a choice of law provision. They’re trying to amend that so that the attorney cannot be paid by the employer, which our previous recommendation to clients would be just pay for them to have their own attorneys and they can negotiate the terms. But if you have an attorney, so now they’re saying that an attorney, not only cannot be paid for by the employer, but cannot even be recommended by the employer.
Schmidt
Wow.
Dillion
So they’re really in California really looking to get rid of any opportunities to keep restrictive covenants in places.
Verma
And just, and just briefly, that’s a national trend. FTC rule pending that we, it’s a longer conversation as to where that’s gonna go, but the FTC rule would eliminate non-compete in all states. And then I just, when she was talking I was thinking about the remote work aspect of this and how it comes up with me when I do non-competes. And it is, I have to say when you have employees who are either working from home in their own town or working in another state, or working between their summer home and their primary workplace and you have these non-compete law, like this case law that’s 25 years old with respect to non-competes in the states where it is possible, where you have a reasonable scope, geographic proximity and duration, and you’re sitting here reading this case from 1988, and then you’re sitting here reading this provision that’s based on a state from, based on that case and it says, oh, as long as, you can’t go work for another employer within 30 minutes, or sorry, 30 miles or 50 miles or 150 miles of this employer, this current employer’s primary location. Well, how does that help? I mean, at that point you’re talking about two empty buildings and whether or not they’re 150 miles apart. Because nobody, at the time nobody’s going in them any ways, right? The, you know, the exact thing that we’re talking about could be any which way. It’s very hard to, frankly it’s very hard to argue that that’s, you know, that’s enforceable, even though it does meet the 1988 case law.
Schmidt
Interesting. So there’s a, the factual premise of some of the non-compete is now a thing of the past.
Verma
That’s what I think, yeah.
Schmidt
Interesting. So let’s talk about another issue that’s pleasant to discuss. Taxes. Now we’ve got employees that are in another jurisdiction. What tax issues do we have to think about, Nisha?
Verma
Yeah. So as soon as you have an employee who is working in another state, I would say the easier part is thinking about setting up their payroll, and hopefully your payroll provider is ready to set them up in that state to make sure the withholdings for that state are correct, to identify any specific state taxes that are either employer or employee side, like an unemployment tax or a training tax, and ensure that that’s properly set. Now, in order for that to happen, the employee needs to tell you. And if they don’t tell you, and then they come to your, if they come to you later and when it’s time for them to file their taxes, none of this is right. I haven’t been in this state for a year-and-a-half. You know, that’s where it becomes very difficult to amend somebody’s W-2, for example, right. And so I think that just, I think this happened, you know, during the pandemic is employees made their own decisions to live in different states and just didn’t share that, and they say hey, and you know, hey, we haven’t seen this person in like 14 months. I wonder why that is? ‘Cause they’re in Oklahoma, that’s why. And so, you know, it’s really important that there’s sufficient management of where your employees are, and anybody that’s moving to another state is doing so with your express permission, and as an employer it’s perfectly acceptable to say hey, we don’t, we’re not set up to pay payroll taxes, we’re not set up to, with the worker’s compensation system of that state, and if you move there you can’t have this job anymore.
Dillion
And you’re specifically talking about employees who are fully remote. Correct?
Verma
Yeah, right.
Dillion
And that’s one thing we touched on a little bit earlier is that where you have employees that are fully remote, you need to know what state they’re in. You need know what city they’re in, in some point.
Verma
Right. And then I think there’s another piece on the business-side in terms of the employer’s tax obligations that can get missed, and frankly is not different than the non-compete issue I talked about before and that it’s based on laws that made sense before this seamless mobility that we have now, right. And that is the fact that does the presence, when the employer is paying taxes on its revenue and meeting its tax obligations, its business tax obligations, does the, an employee working full time in a state that the employer has never paid taxes and doesn’t know anything about paying taxes in, create a Nexus to the employer such that the employer’s revenue has to partially be taxed in that state? And so that, like Heather said with other things, depends on the state, and what made it easier during the pandemic was that several states had pretty much paused to their Nexus requirements that we’re not going to look at that for 2020 and 2021. But that’s really not the case anymore. The laws that, or regulations that existed pre-pandemic exists today. And so it depends on the state, it depends on your business, but if you have employees that are producing revenue for your business in another state, you really need to look at whether you have tax obligations in that state.
Schmidt
Some scary issues there. One other issue I want to make sure we address is the challenge of getting equipment and the litigation risk that arise from not reimbursing for equipment that you fully expect an employee to use and know that they’re using. Can you address those issues, Heather?
Dillion
Absolutely. We definitely saw this explode during COVID. Employers were constantly scrambling, saying what do we need to get our employees, what do we need to reimburse? It’s calmed down a little bit. Again, it varies by state, and it varies by whether the employee is fully remote or hybrid. California specifically has a Labor Code section that requires that all necessary and reasonable business expenses be reimbursed. Now, what does that mean? I see your face. It is questionable as to what exactly it means. But you have to think, is this required for their job? If the employee is hybrid, is their home internet required for them to complete their job? Probably not, because they could go into the office and use the internet in the office. The hybrid aspect is looked more as a benefit to the employee, that you can work from home if you would like, but we have your office here. Where your employees are fully remote they need that internet to, presuming they need the internet, many remote jobs that don’t need internet nowadays, but they need internet, they need a computer, they need cell phone access. Do they need a printer? Do they need, what do they need to complete their jobs? Litigation’s been kind of fun here. We’ve seen the plaintiff spar get very creative with what should be reimbursed. Recently they’ve tried to have a portion of their rent be reimbursed as an office expense.
Schmidt
Portion of the house that needs to be allocated?
Dillion
Correct, this is what they’re trying right now. I have not seen any case law recently where it was successful, but even, they’ve never rented out this room for business purposes, right? But they’re saying, well, I’m having to use it as an office space. So here’s what I should, could get if I rented it out this corner of my bedroom. And, they are creative. So I have not seen that level of expense reimbursement yet, but we have seen the internet, cell phones been a long time. Something you have to consider is how your employees clocking in and out, even if they’re coming onto the site full time. If you have that employee clocking in and out on their cell phone, but maybe they’re not allowed to use your cell phone for any other purpose, you need to reimburse them for that time clocking in and out.
Schmidt
So once you crossed that threshold, now you have an app that you want the employee to use, now we’ve got business equipment.
Dillion
If they, if they have to use it. If you also have a log in on their computer or wherever else, then there’s the argument of well, it’s not necessary.
Schmidt
Right.
Dillion
It was a, it’s a luxury for you.
Schmidt
Right.
Dillion
But if you, and I see a lot of people use T sheets or other sort of application-based companies, that is fully only from their phone, that’s the only way they need, they can clock in and out, that’s a business expense.
Schmidt
Well, the fact that plaintiff’s lawyers haven’t been successful on the rent issue is gratifying, but it’s also helpful to know their mentality.
Dillion
Yeah.
Schmidt
They are looking for any possible deviation from the requirement that you reimburse for any conceivable expense. So you need to think about that very, very carefully.
Dillion
Exactly.
Verma
Yeah, I mean, no good deed goes unpunished, right? There’s so much demand for workers to have fully remote jobs. So many people want it and, you know, an employer eventually says okay, we can do that, and then they turn around and get a bill for somebody’s closet, cubic square feet of somebody’s closet or whatever. Yeah.
Schmidt
Nisha, another focus of employers right now is DEI, diversity, equity and inclusion. How does the work from home issue impact DEI efforts?
Verma
So I’m so glad you asked because I think one thing about companies and organizations being open about their commitment to diversity, equity and inclusion is that they are kind of implicitly or somewhat acknowledging that there is such a thing called implicit bias. Because frankly, if there was no such thing as implicit bias then why would you need a program, you know, a formal program to highlight the importance of diversity, to eradicate implicit bias. Right? And so given that that we have organizations, we have, we support so many organizations where that is a stated goal, then what is critical for those organizations is to figure out well, it’s called implicit, it’s not right in your face. It’s not a comment that is going to be on the 5:00 news. It is, right? It is hard to suss out unless you’re looking. And so organizations that are committed to diversity want to look at how could implicit bias show up in their in their workforce, and how could it affect their workers? And I think how that crosses over with remote work is that there may be instances where certain individuals feel more comfortable coming into the office or have a better relationship with management, and it is also possible that those individuals are of majority or, you know, race or ethnicity. Right? And that may be a pattern that continues and those individuals that are more comfortable coming into the office because they feel more included end up being kind of like the person that I, the person being myself, that I mentioned earlier that just is kind of around when opportunities happen and a cycle kind of builds upon itself where someone feels more comfortable being in the office, they feel more included, so they’re more likely to go. Them being more likely to go means they’re just standing around when opportunities come up, they become better at their craft, they become seen as an expert on something, and it very well may be that you have people with just as much skills that are at home, not necessarily because they insist on being there, but because when they’re coming into the office, they’re not feeling the value that others might feel. Right? And so this is a really tricky area where you could have just unintentional, innocent, well-meaning program that could result in disparate impacts of the people in your workforce.
Schmidt
That’s an interesting observation. Heather?
Dillion
I was gonna say, you earlier mentioned just about the workforce that had to stay in the office. And candidly, that’s not something I’ve thought a lot about and about how they may feel like second class citizens. And there may be a disparate impact in who those individuals are. So I think that’s something worth looking at too, and making sure you’re affording people the same opportunities, you’re, you know, making sure they feel and understand that if you’re sick, stay home, even if you have a job that you can’t do at home.
Schmidt
Nisha, part of making sure that the employee is equipped with not just a computer and internet access, includes addressing unique needs and issues that arise for particular employees that might be dealing with disability challenges. How does that impact an approach to work from home?
Verma
Yeah, it’s a big question. It’s a big part of the transition from required work from home to either voluntary or some segment of the workforce working from home, and that is every employer has a obligation to provide a reasonable accommodation to any employee with a disability, and a reasonable accommodation is one that allows the employee to perform the essential functions of their position with that accommodation. Right? And so working from home to the extent the employee’s medical circumstances would be improved to the point where they could continue to do the work that they need to do at home and working, and them not having to be in an office environment for a certain amount of time makes that possible, that would be an accommodation in some circumstances. Pre-pandemic it was addressed by some courts, and commentators, and generally that need to be in the office was seen as essential to the position.
Dillion
I think it was very fact based. But I agree. It was, yes, we can’t have them work from home. We need collaboration, we need to be together, and then everyone started working from home. And we’ve spoken to a lot of employers about this, said be careful now. You’ve shown that people can work from home. So is it really an undue hardship for you to allow this employee to work from home? Probably not, unless there are some certain situations, manufacturing floor, you know, something else that maybe has to occur there. But we definitely are seeing that, I think it’s much more a reasonable accommodation than it used to be considered.
Verma
Exactly. I mean, so that was the, that was the second part of the test, right, you know, unless it’s an undue hardship. So previously employer, I think employers pre-pandemic and the years before we’re fine just saying it’s an undue hardship for you to work from home because I can’t supervise you. And I, you know, and I have to. And so in that way I have to look at you, and since I can’t look at you with an undue hardship. And that, I think that worked from a legal standpoint. And so then, you know March 17th, 2020 happened, you, everyone named the day where they packed up their computer.
Dillion
March 13.
Verma
Yeah, mine was March 17. A lot of other things happened the day, that was March 17 for me. And that day happened, and it just so turned out in the months and months and months and months that followed, it was possible to do jobs that were done in the office on March 17 from home. And now that the employers that, you know, several employers are mandating three days or four or five days back in the office, and you have an employee who has the documentation that they have a disability, who has a somewhat narrowly tailored request that they need to work from home for however many days, or maybe fully, and the employer’s looking at the essential functions of the position, obviously it’s gonna vary on a case-by-case basis, but naturally it’s going to be difficult for the employer to claim something as a hardship when it is planned out and orchestrated in the way it would be through the interactive process when it comes to disability accommodations. When we were all kind of there, when it wasn’t orchestrated or planned out, we just hurried home, and it, you know, it worked for that period of time.
Schmidt
Very good. We’ve come now to the part of our episode that we call The Deeper Dive, where we talk about things that are going on in your life, personally and professionally or over the course of your career. Nisha, I’ll start with you. What is it that you enjoy the most about being in the labor and employment area of law, and you find most challenging, but at the same time most fulfilling?
Verma
So those all may not be the same thing. So I’ll just answer them one at a time. So I think what I enjoy the most is that by helping employers on the front end with their compliance questions or with disputes before they bubble up, what we’re doing, I like to think, is helping them focus on their core mission. So all of our clients went into business to contribute something to the economy and continue to contribute something to the economy when they do their business. And to the extent that we can smooth out and streamline some of the employee relations issues they may have or some of their challenges in complying with these laws, we’re letting them focus on something that I hope has an impact on society. That’s what I like to think, and just let me think it. Right? And then so with all that work, especially the advice and the front end compliance, you know, we’ll still have employers that get down on the system, you know, they get down but employer that says they, you know, don’t, won’t be doing business in California.
And so I do, you know, I do find that challenging that to be fair, we all live in 2023, being an employment lawyer in 2023 post-pandemic, post some of the cultural issues that we’ve talked about is challenging. It can be, it can be challenging and it can be trying because there is a lot of employee, there is a lot of resentment out there among several workforces. And I know that we have, we’re working with employers that are trying to address that, but sometimes the kind of backlash happens before the proactive approach is completed and employers can get discouraged. And I, you know, I want to help them work through that, but I’m just not, I’m not going to pretend it’s easy.
Schmidt
Heather, how about you? What is the most challenging, but also fulfilling aspect of your role as a labor employment lawyer?
Dillion
Where do you spend the majority of your time? You know, it’s not at home, it’s at your job, it’s at your job with your coworkers, and so really working with employers to make sure that place is good for their employees. You have happy employees, you’re gonna run into much less issues, especially in the litigation world. Right? So I really like working with employers to try to fix their culture. I mean, yes, there’s a lot of law. The California law is horrific for employers. I completely, you know, agree, and it’s so hard to be compliant. So assisting them with those issues, of course, but also really getting in there on a cultural basis and helping these employers to have a good workplace. Happy workers are productive, they’re less likely to sue you, I mean, there’s so many different aspects, and it really is where we spend so much of our day. So it’s an always changing and really important landscape in California.
Schmidt
Returning to our main topic, which is work from home litigation risk and legal pitfalls, what is the one take away that you’d like to leave with our listeners?
Verma
Pay attention, be proactive and pay attention.
Dillion
Be flexible where you can be. If you can allow a hybrid system, I think that’s what people want nowadays.
Schmidt
Thank you both for being on the podcast. I think this is an interesting conversation that will continue to evolve over the coming months, and these are very timely and challenging topics to try to tackle. So I appreciate you being here today.
Verma
Thank you, thanks for having me.
Dilllion
Thanks for having us.
Schmidt
And thank you, listeners, for participating in this podcast and listening. I’m indebted to the extraordinary team of Dorsey for making this podcast and episode possible. For more resources on this and other litigation risk, go to litigationrisks.com where more information can be found, including the book on managing litigation risk written by yours truly. Until next time, my friends, this is yet another reminder that there are a lot of sharks swimming out there in the murky waters, so swim safely.
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