Working from home: who pays for the internet, the phone and the desk

The instinct is that there must be a baseline — some federal rule saying an employer who sends you home pays for the room you now work in. There is not, and the federal contribution to this question is not a reimbursement rule at all.

What federal law actually contributes

The Fair Labor Standards Act has no reimbursement provision. What it has is a rule about how wages must arrive: under 29 CFR 531.35 wages must reach the employee "finally and unconditionally or 'free and clear'", so a cost the employee bears for the employer's benefit is treated as a deduction from pay. The companion regulation, 29 CFR 531.3(d)(2), puts "tools of the trade and other materials and services incidental to carrying on the employer's business" on the employer's side of the line: their cost cannot be counted as part of wages. The final-paycheck rules guide works through that mechanic in full.

Notice how narrow that is. It bites only when the unreimbursed cost drags the pay period under the minimum wage or eats into overtime — realistic for an hourly worker told to buy a headset and a router, almost never for a salaried employee paying for broadband. For most remote workers, no federal law is engaged at all.

Having a statute is not one category

A roster of states is a bad thing to memorise: it changes, and the shape matters more than the count. Two employers can both be "in a reimbursement state" and owe completely different things.

The Illinois definition is the most useful sentence in any of them, because it states the test the others leave implicit: necessary expenditures are those "required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer". Primary benefit, not shared benefit.

The flat-rate phone bill still has to be shared

This holding is worth knowing even if you never work in California, because it shows what these statutes are protecting against. Cochran sued on behalf of customer service managers required to use their personal mobile phones for work. The employer's defence was arithmetic: on an unlimited plan, work calls cost the employee nothing extra, so there was no expenditure to indemnify.

The court held that an employee required to make work calls on a personal phone "is incurring an expense for purposes of section 2802", and that "it does not matter whether the phone bill is paid for by a third person, or at all" — otherwise the employer "would receive a windfall because it would be passing its operating expenses on to the employee". Someone else absorbing the cost does not make it stop being the employer's.

The 2023 decision in Thai v. International Business Machines Corp. extends the logic to the thing that actually sent everyone home. IBM argued that the March 2020 stay-at-home order, not IBM, caused the work-from-home expenses. The Court of Appeal reversed: reading the statute to cover only expenses "directly caused by the employer" inserts a tort-like causation inquiry the words do not contain, and "section 2802(a) allocates the risk of unexpected expenses to the employer". Whoever decided you would work from home, the expenses of doing the work are still the employer's.

"Necessary" is not the setup you would prefer

A second monitor the employer requires for the job is a business expense. A standing desk you would rather have is, on the face of these statutes, a preference: its primary benefit is yours and no employer authorised it. That is not a comment on whether the desk is a good idea, only on where the statutory test lands. A desk needed as a workplace adjustment is a different question under a different body of law, and an expense claim is the wrong route to it.

Illinois writes the boundaries out: no liability unless the employer authorised or required the expenditure, and losses from the employee's own negligence, from normal wear, or from theft the employer's negligence did not cause fall outside it. Where the expense is genuinely mixed — a broadband line carrying both a job and a household — the question is apportionment between business and personal use, not whether shared use means nothing is owed.

Does a monthly stipend discharge the duty?

It can. The California Supreme Court held in Gattuso v. Harte-Hanks Shoppers, Inc. (2007) that an employer may satisfy its statutory reimbursement obligation by paying employees enhanced compensation rather than itemised reimbursement. What a stipend cannot do is change the amount owed: the statute requires indemnity for the necessary expenditure, so a stipend that falls short leaves the shortfall outstanding, and a figure set at the start of a remote arrangement and never revisited drifts out of date quietly.

There is a tax edge to this that changes what a stipend is worth. Under 26 CFR § 1.62-2 an arrangement is an accountable plan only if it has a business connection, requires substantiation of each expense, and requires the return of any excess. Anything else is a non-accountable plan, and amounts paid under one "are included in the employee's gross income, must be reported as wages or other compensation on the employee's Form W-2, and are subject to withholding". A flat allowance with no receipts is taxed as pay, so the headline number is not what reaches the employee.

The handbook does not beat the statute

A line in the staff handbook saying the company does not reimburse home-office costs settles the question in most states, because in most states there is nothing to override. In California it settles nothing: Labor Code § 2804 makes any agreement by an employee to waive the benefits of that article "null and void". Nor does a signature help — an employee handbook acknowledgment records that you received the document, not that you gave up a statutory right.

Illinois is the instructive middle case, because there the policy genuinely does work — within limits. It can impose documentation requirements, set claim deadlines and cap amounts through specifications or guidelines, and an employee who ignores it loses the claim. What it may not do is provide for no reimbursement or de minimis reimbursement. The policy shapes the duty; it cannot delete it. Worth holding in mind alongside what a handbook can and cannot bind you to.

None of this reaches genuine contractors. No reimbursement statute applies to someone who is not an employee, so the independent contractor agreement is the entire answer, and a contractor who did not negotiate expenses has agreed to absorb them. It is one of the quieter consequences of how the classification is decided.

Asking for it, in the order that costs least

Where a claim has already been refused and a statute plainly applies, a short demand letter naming the sum, the months and the section relied on moves further than another email to payroll.

The question that actually decides it

Not whether the arrangement is fair, and not what the handbook says. Two things: does the state where the work is physically performed have a reimbursement statute, and does the expense inure to the primary benefit of the employer. Everything else — the unlimited plan, the government order that started the remote working, the signed policy — has been argued and has mostly lost.

The failure mode is the same on both sides, and it is not malice. A national employer writes one expense policy at head office and discovers that a rule lawful for most of the payroll is unenforceable for the part of it sitting in California or Illinois. Employees make the mirror-image mistake: they assume the policy is the law, and never ask.