IBM Ordered to Pay Back Remote Working Expenses, but Staff Only Get 25%

IBM has been ordered to pay staff back remote working expenses from the pandemic, but the state is keeping most of the dough.

A case involving several thousand IBM employees has come to a head this week, when the First District Court of Appeal in San Francisco ruled that the company must reimburse its remote staff for their working from home (WFH) expenses.

While hybrid and home working models have boomed since the pandemic, the number of companies offering remote work has dwindled in 2023, with many scaling back their WFH offering.

IBM initially stated it wasn’t going to compensate employees as it was just following the state’s stay-at-home orders. This ruling, however, means the tech company is liable for 15 months of penalties in the form of back payments to remote working staff.

Californian Court Rejects IBM’s Appeal

When California Gov. Gavin Newsom issued a stay-at-home order in March 2020, most companies (like IBM) pivoted to a remote working model.

As workforces became familiar with this new way of working, the change sparked a period of adjustment. This notably included the need to purchase equipment that allowed everyone to do their jobs just as before, so things like headsets for video calls and office chairs instead of just slumping on living room sofas with a laptop.

IBM were amongst many employers who refused to compensate workers for these expenses, arguing that they were just following the state’s orders and shouldn’t have to pay. Since then, the company has also rolled back its remote working policy, with IBM issuing a return to office mandate back in September.

However, the state appeals court said the issue wasn’t over why there was an order to work from home, but whether the employees’ additional expenses were the result of IBM’s orders. The court then ruled that California law protects workers from “bearing the costs of business expenses that are incurred by workers doing their jobs in service of an employer.”

In a 3-0 ruling Justice Mark Simons wrote that despite following Newsom’s order to shut the office, the work was “performed for the benefit of IBM”. This ruling became final on Wednesday, when the state’s high court rejected IBM’s appeal.

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IBM Footing the Bill – but State Keeping 75% of It

Despite the workers joining forces to sue the company for violation of labor laws, this may feel more like a moral victory than anything else. The employee compensation won’t be dollar for dollar, but instead they’ll receive 25% of the financial penalties, with the rest going to the state.

Lawyers working for the IBM employees have estimated that around 3,000 of them could receive as much as $100 every two weeks – broken into $25 for an employee and $75 for the state. This is likely to last the length of time spent working from home, which is 15 months.

Other Employer Suits Still Pending

Simons went on to state that the “work-from-home expenses were inherent to IBM’s business” and “allocates the risk of unexpected expenses to the employer.”

While IBM are still yet to comment on the ruling, it’s known that other suits of a similar nature are pending. However, according to Jason Harrow, a lawyer for the IBM employees, it’s clear that in California “big companies can’t force employees to pay for work expenses and then fail to reimburse them”.

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Written by:
Ellis Di Cataldo (MA) has over 9 years experience writing about, and for, some of the world’s biggest tech companies. She's been the lead writer across digital campaigns, always-on content and worldwide product launches, for global brands including Sony, Electrolux, Byrd, The Open University and Barclaycard. Her particular areas of interest are business trends, startup stories and product news.
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