Many young people or those cheering for employee/consumer rights do not seem to understand that this does more net harm than good. For small businesses and startups, this can amount to millions of dollars of additional expenses. Like any economically rational entity, your employer is going to respond by reducing headcount, not hiring in CA anymore, cutting costs in your annual raises, or some combination of the above. This law does not work in your favor.
Fully remote work has always benefited the employer more than the employee, at least financially. Before the pandemic closed my employer's local office space (we were all told just to work from home), part of the employer's budget for each employee included infrastructure costs (office space, furniture, internet access, maybe food, beverages, etc). My salary did not change when I became fully remote, so the company realized significant savings by telling one hundred to just work from home.
Now, if a company has always been fully remote, then, yes, this sort of thing is ultimately going to hurt the employee because the company needs to recuperate those unplanned costs.
Personally, as a fully remote employee, I don't how to feel about this. Sure, I'd love my employer to offset some of my utility costs, but I also don't want them to assume that means they can control their use (which is their right in the context of an office space).
Not just time, but cost also. As my wife also works from home we've been able to scale back to a single car for 2 years now. Since owning, insuring, fueling, repairing, and maintaining a car typically runs $6k-$10k/year (depending on your tastes and mileage) I've gotten a substantial financial benefit from being remote.
Unless it was already a short-term lease agreement, which is not super common in CRE, chances are your company was still footing the bill for their lease on that office space. Most office space is leased on 5-10 year terms.
different contracts. ISPs may or may not be tied to the building. Our bandwidth in our offices was generally on 2-year contracts. We were locked into the building for 10-years, but if we wanted to turn off the power and water and phones we could have.
> I'd love my employer to offset some of my utility costs.
Yes but I would rather be paid more than waste my time and divulge a lot about my life to my employer. While these might be beneficial in the short term to those already employed this might hurt remote work employers and employees.
A computer uses 150kWh/year @ $0.42/kWh that is $75/year. Certainly internet is possible at $60/month so $720/year. Say you have a generous $500/5 years for equipment plan and you are still below $1,000/year/employee.
Yes there are other expenses but you should already be providing a PC etc.
How are you getting to millions at a small company? Certainly a shop with 3,000 people is out a few million but... You have 3,000 people you are doing fine.
Heck with 20 people $1m is what $50k/person? You wouldn't spend that leasing everyone a Mercedes at $605/month.
> A computer uses 150kWh/year @ $0.42/kWh that is $75/year. Certainly internet is possible at $60/month so $720/year. Say you have a generous $500/5 years for equipment plan and you are still below $1,000/year/employee.
So California is adding a bunch of administrative expenses for something that will net out to a few thousand dollars max per employee. Workers that have to go the office easily spend more than this on just commuting costs.
How would this be a huge admin expense? Any company with remote employees already likely have some expensing process, would be probably as much as adding another expense category at best.
What's the admin expense? Won't it just be another line item in the paycheck? It's only an issue if the employer makes requests that exceed the that budget and get called out.
If it's just a fixed amount refunded to all employees, agreed there's no huge admin expense. If employees have different amounts (depending on their circumstances) that they get refunded, there is a lot of complexity required to set rules around what is acceptable, track receipts for these expenses, and have someone review and approve these.
For example, we used expensify at a previous company, and ignoring the human admin cost, there was a $20 / expense report fee the company had to pay.
This is where a little creative problem solving could come into play. You know, having all those "administrators" actually do their jobs.
One simple way to set this up that minimizes administrative overhead is to estimate a base amount for each remote employee, and automatically reimburse that amount. If the employee's actual expenses exceed the base amount, then and only then do manual processes and $20 expense reports need to be involved.
When I said "for each remote employee," it would probably work best to have the base amount set up individually for each remote worker, based on relevant factors such as cost of electricity and such, when they start working remotely. If the base amount proves to be consistently too low, after a period of say, 6 months, then the employee could file some sort of amendment and have the amount reviewed. If the increased reimbursement based on the amendment request is determined to be reasonable, then just retroactively reimburse the difference to the employee and continue forward with the new base amount. It should also probably be re-reviewed yearly.
That should get it done for every remote employee in the company, with a maximum of around 2 manual interventions per year, rather than an expense report every 2 weeks or anything ridiculous like that.
Simple when someone gets hired they list their internet expenses.
Also isnt this basic admin just the cost of doing business?
I should probably not tell you that in europe its common to be reimbursed for traveling expenses when going to the office. Calculated per commute at 0.19 euro per kilometer. So its unique per employee. No company has gone bankrupt due to administrative weight yet.
> No company has gone bankrupt due to administrative weight yet.
Administrative weight has absolutely been a factor in companies collapsing. That's an absurd statement.
And as a specific example, the company I work at just does a blanket credit for work from home expenses to every employee to avoid the administrative overhead. Yes it's not a huge admin overhead, but it's one more thing a company has to read and understand the rules on (in each state), enact policies / processes for, and have an employee process reimbursements for.
Frankly, as an employee this just feels unnecessary. I'm already comparing the cost of commuting, work clothes, etc when deciding where to work. The "work from home expenses" end up being less than the "work from an office" expenses, so I'm not sure why California finds it necessary for employers to reimburse one but not the other. It's adding extra complexity for fairly limited benefit (something California seems to be great at).
Average Cali salary is 73k. Assume an employee stays for 2 years (I just made this number up, I have no idea what the average retention for a remote worker is, but it’s probably more). It would barely represent 1% of total renumeration for the employee. “Significant” is not a word I’d use to describe a 1-2% cost to an employer.
Gross is silly you need to talk net. Living wage in California is like 37k before taxes 43k if you include taxes on that and assuming a tax rate of around 25% of the rest that means you have excess take home of $22,500 a year.
$2,000 a year would be around 10% extra income not related to staying alive.
I wouldn't call 10% a minor deal.
Also your point about 1-2% cost shows why this is a good bill. Cover the things you need to, pay a few points of payroll and get a significant benefit for your employees.
https://www.eia.gov/electricity/monthly/epm_table_grapher.ph... “Average Price of Electricity to Ultimate Customers by End-Use Sector,
by State, August 2023 and 2022 (Cents per Kilowatthour)” — according to this, both $0.42/kWh and $0.06/kWh would be outliers, relative to any state-wide residential averages.
We're in Alameda, who run their own utility and buys their power from PG&E and our rates are $0.15/kwh. I don't know how PG&E still exists as an entity, they were deserving of the pitchforks a long while ago.
The cost of the power itself is not the driving cost of electricity, it's the distribution and grid maintenance costs. PG&E can sell power delivered easily and in bulk to Alameda in the heart of the bay area quite cheaply. Delivering the same kWh to all of the smaller communities in the rural north third of the PG&E coverage area is where much of the costs are.
Hello fellow Alamedan! AMP is great — very grateful for a little abstraction between us an PG&E, despite it being all the same at the end of the day...
I moved out of CA but it was already 0.40 a couple years ago. My friends told me it’s close to 0.60 now. I’m more curious where you are, I’m in a low(er) cost of living and I still pay 0.17.
We're around there (hand-waving here about exchange rate) in Scotland. What's fucked up is that most of the UK's power is generated in the north and yet electricity rates are based on how far you are from London.
Here in South Africa the rate is about 0.15 (USD, depending on exchange rate), but they keep turning off the electricity because the state-owned utility cannot make enough of it. Load shedding they euphemistically call it instead of the blackouts it really is. Of course they also complain about loss of revenue because we use and thus pay for less kWh if they keep turning it off.
Somewhere with real time pricing. The cheapest normal pricing is down around 12-13 cents per kWh. Granted due to the enormous nuclear base load in Chicago, I routinely pay 1-2 cents per kWh. I paid zero cents at 4am.
> your employer is going to respond by reducing headcount
If they have enough slack to reduce headcount they're going to do it anyway. Companies strive to hire enough people to get the job done and no more. They may not always get it right, but minor changes to expenses aren't going to affect headcount unless the company was already overstaffed and looking for an excuse to cut employees.
This is the same mistaken thinking you see from people who oppose minimum wage increases. The McDonalds down the street isn't going to cut staff because the wages went up, they need those staff to serve customers. In face the opposite can occur. The increase in money at the bottom is a huge stimulus to demand which increases traffic and requires even more staff.
> If they have enough slack to reduce headcount they're going to do it anyway.
This is so incorrect that it's hard to take seriously.
When revenues go down (for any reason), companies cut costs. Most employees are a cost. Why have 2 people when 1 will just have to work harder? A company rather cut and see what happens, when push comes to shove. Many company initiatives are also re-evaluated with a bottom-line mentality when revenues are down. That project that's 4 weeks overdue for a milestone? Time to cut it and everyone involved. When revenue is up, the opposite effect. "slack" is relative to market conditions. Job security along with it.
Small companies are often lean, but it's never surprising how much leaner they will run when money gets tight. Big companies can always pare down assets and associated headcount. These are just the things I see every time revenue is down, but far from an exhaustive list.
1 having to work harder works when 1 will actually work harder...
The problem is that is a failing paradigm these days and it's not uncommon to walk to up locations that say "closed, no staff".
If the 'no immigration' voices get there way expect to see a rapidly declining population here in the US and these businesses that are used to abusing labor start to freak out.
"Closed, no staff" is quickly followed by "Retail space for rent". If you see that sign you can rest assured that the business is poorly managed.
Beyond the low pay it is quite likely that the manager is an asshole and the reason he can't find workers is because for what he's offering there are loads of opportunities for jobs at better managed stores in the area. This is a person who was spoiled when the job market was tight and now can't adjust to a new reality where people have options and if you suck they won't choose you. If the business isn't profitable without effectively slave labor then it was poorly structured.
I don't think it's puzzling, at all but is instead smart rhetoric that exploits the protestant work ethic. You get to pay people less, and those people get to pat themselves on the back for their superior work ethic. It strikes me as a similar trade to how we pay teachers and NASA scientists less money because they get increased social standing.
When revenues go up (for any reason), companies cut costs. Why have 2 people when 1 will have to work harder?
Your argument is completely wrong, yet you start by berating the other poster. Companies will always cut costs and try to whip their employees as much as they can, regardless of if they're making a profit or a loss. That is business.
> This is the same mistaken thinking you see from people who oppose minimum wage increases. The McDonalds down the street isn't going to cut staff because the wages went up, they need those staff to serve customers.
Shenanigans. You've never worked in retail. Even if you come back claiming otherwise, I'm still going to accuse you of lying about it because you could only be more out of touch with reality if you claimed to be the ghost of Sam Walton himself.
"Necessary" staff does gets cut and the remaining employees are expected to pick up the slack. The alternative course is shaving hours off of the schedule for all employees. Sometimes they go both routes.
One way or another, the retailer will not bear that cost of increased wages. It gets suffered first by employees through reduced hours, then by customers in a degraded service experience.
You offer economic theory. I'm telling you from bitter experience what actually happens.
I've worked retail. Employers try shenanigans like that, but it backfires because the lines get long and people start looking at alternatives. Business suffers, and then either they hire the people back or they go out of business.
There is always the threat of laying off staff instead of paying more, but only a relatively minor portion of management is enough of a maniac to actually go through with it. I worked at a McDonalds during a minimum wage hike (you can tell this was a long time ago), and while everybody said it would result in cut staff few went through with the threat. Sure you could find examples here and there, but at the end of the day they were already operating with the minimum amount of staff they could get away with. There was no slack in the system.
McDonalds corporate even realized this and started talking up fully automated restaurants. I think they even built a pilot store somewhere. They dust it off anytime people start talking about minimum wage hikes, even though it makes no sense economically even if we were to double the minimum wage overnight.
Worked 16 years for an owner-operator in Southern Cal. Every time min wage was increased, the number of hour permitted was limited so that total payroll remained the same. So sure we might not have had layoffs, but we definitely had less people working. This behavior was consistent with all the franchisees in So Cal.
> McDonalds corporate even realized this and started talking up fully automated restaurants.
IMO, this is going to happen at some point anyways. It's only a matter of time.
In the short term, it's going to cost a LOT of money to develop, deploy, and work the bugs out. But in the long term, it means there's literally hundreds of thousands of workers they could replace. They will eventually see an RoI.
>One way or another, the retailer will not bear that cost of increased wages.
They will try to avoid it before the increase, and they will try harder after. That doesn't mean they can have a 100% unmanned mcdonalds if minimum wage somehow shot up to $30. And given that McDonald's main revenue isn't even on food, it's not even a good idea for that specific company to shut down locations over increased wages.*
That's clearly why they are investing more into those automated tellers. automation is the only way to reduce headcount but not affect throughput.
*Other chains might, though. I do wonder in this scenario if this would lead to small business rising up as large business find it untenable to hire entry level labor. I don't imagine so (they will pass the costs to the customer), but it's an interesting thought experiment.
One of many reasons to have a personal LLC/S-Corp in my opinion.
Another comment in the thread really nailed this well. If employers didn't pay for commute costs separately, why does this become a line item?
The employer does pay for gas and commute costs, as well as cost of living expenses...in a paycheck.
I place a high value on my home office setup so I have things exactly as I want them. I also live in a low cost of living area thanks to my ability to work remote.
A law like this is essentially there just to further incentivize the return to office policies that we've all been reading about. Now there will be an additional cost associated with going remote.
A fundamental business dynamic is that transparently passing on expenses is a low margin behavior, while comping more things for "free" and charging for produced value leads to higher margins. Personally I'd rather workers have higher margins (ie higher pay) while personally choosing how to spend some of that income to fulfill the job requirements, than receiving lower pay while being able to nickle and dime employers for bureaucratically-approved expenses.
Of course it's not like the government really wants to encourage more small businesses that replace W-2 workers at large businesses, given how lopsided the tax code is against W-2 income.
One weird thing I learned about one of the Scandinavian countries is that part of the reporting taxes is reporting of labor for DIY home improvement.
The reasoning for this was that the economy could not be adequately measured if DIY work is not recorded.
This really demonstrated to me the American mindset of freedom. I have no idea about California. I think another motivation is that they are trying make sense of what will undoubtedly be a complex tax-reimbursement situation.
I have been a sole-proprietor since the 1990s. I think they are working towards normalizing that sole-proprietor lifestyle with longterm employment.
No, there is no such thing in "Scandinavian" countries about reporting labor when doing DIY home improvements. You can deduct the material, or bought labor, when selling the house. But no your own labor, unless you run a company and hire yourself. That might work, but then you have to spend taxes in your company for that income.
Clarification: This is in Sweden, a Scandinavian country.
Edit #2: If you have a specific country in mind, please mention that instead. Makes it easier to refute.
Sorry, it was I believe a comment on HN that told a story of having to track their own labor on a home improvements.
This tracking needed to be reported so that economic growth could be better measured.
I couldn't remember the specific country so I referred to it as a country in a region. I also couldn't remember the reporting process and assumed taxes.
I was reminded of the comment when I read the California story. I thought many of the comments were too cynical and narrowly focused. I wanted to broaden the conversation by pointing out that there are many reasons to collect data have new definitions of labor.
I consider HN as a place to throw out thoughts and see the reaction. I don't state anything I don't believe to be true. I'm happy to correct my worldview as needed through dialog.
I certainly do not claim that the notion is true, most likely any false hood is through my poor understanding and expression.
I certainly mean no disrespect to any social effort to create an equitable base line for human existence. I have great admiration for the region of Scandinavia and the Baltic Region as well.
I'm currently from the New England region of the United States.
I wasn't trying to make a statement regarding superiority of one type of social organization over another.
The point I thought was critical is that labor data is used by governments for central planning.
> A law like this is essentially there just to further incentivize the return to office policies that we've all been reading about. Now there will be an additional cost associated with going remote.
Not an additional cost, just fewer savings for companies. I'm guessing that even having to reimburse employees for internet/power they're still saving a ton of money on those things (my last office was lit up everywhere 24/7), plus not needing to rent the office space, keep food and coffee available for employees, keep bathrooms stocked up, etc.
I agree, honestly I feel a much better solution to this problem would be to extend the same tax advantages that you allude to when talking about a personal company to W2 employees.
Provision a home office? All of those expenses should be tax deductible.
BYOD? You should be able to expense a portion of the costs.
Pay for internet and power? You should be able to deduct a percentage of costs.
Have a work related meal? Tax deductible.
Drive your car to work? You should be able to deduct your mileage or depreciate your vehicle.
Pay for public transit passes to get to work? Tax deductible.
> If that means fewer/smaller startups, small businesses? Ultimately, so be it.
This is really what it comes down to. If your business can't afford to employ people then people don't need to work for less, your business needs to cease operations.
This bizarre entitlement entrepreneurs seem to experience baffles me. I don't care if the cost of labor makes your business inoperable. Tough shit. The last year or so I've had to make a lot of adjustments to my life to account for everything getting more expensive, it happens. If your business is on such a razor's edge that you can't deal with new expenses then it sounds like your business is poorly operated.
I don't even understand how this isn't the norm. When I was hired on to my current job, they were prepared to send me home from my onboarding with everything I could need, including monitors and an expensable amount to equip an office. I didn't need really any of it because I was already setup for remote, but like, why wouldn't you be ready to do this? Asking workers to use their personal devices to do their jobs is some top tier horseshit, not only from ethics but from security perspectives too.
Thank you. Businesses don't have some inherent, natural, god-given right to exist. We, the people, through the state, graciously allow them to exist and regulate them so that they operate in accordance with some public good. And even then, they have to earn their existence by being a financially viable business. It's a big hurdle, deliberately so.
This idea that, ohhhhh we can't regulate business because it will make them sad and even make some of them go out of business! The horror! They are not entitled to exist in the first place.
First of all almost all of them don’t make it. They aren’t entitled for anything, they fight for any success. And the odd is heavily stacked against them. Check with your local restaurants.
Second of all small businesses provide the majority of the jobs. Your income directly or indirectly rely on the success of small businesses. Your town is kept safe and clean thanks in no small part to the tax money they pay.
You’d want them to success, not berate them with “the horror”. They have to operate within laws and regulations of course. But there are good and bad regulations. Keep the good ones. Take the bad away.
You might want to retake your constitutional law courses. The Commerce Clause (Article I, Section 8) grants the government power to regulate business. It does not grant citizens the right to do business. The right to do business and participate in commerce and trade is a natural right. You do not allow businesses to exist. You are nobody.
Then being more specific: you do not have a right to a profitable/successful business. Nobody is required to inconvenience themselves for the benefit of your business and pocket.
> Yup. And often those same people will say to others "you need to live within your means".
And it's ONLY when the given expense is labor. That is the only time this small business apologia goes on a rampage decrying whatever it is. Materials? Rent? Consumables? Safety stuff? Nothing. Crickets.
Laborers are asking for something to offset their costs to work for you? The shit hits the fan and we get a round of think-pieces about entitled workers.
> This is really what it comes down to. If your business can't afford to employ people then people don't need to work for less, your business needs to cease operations.
No, you’re not supposed to say that. You’re supposed to immediately concede when someone brings up the holy institution of the Small Businesses. :/
Honestly my life would get notably better if a few different VC-burning silicon valley companies would hop in a deep fryer, so this really isn't the threat you think it is.
> If that means fewer/smaller startups, small businesses? Ultimately, so be it.
People rush to claim that XYZ will hurt businesses, glossing over the fact that the alternative hurts employees.
It’d sure be better for small businesses if pay was optional and employment could be forced but that doesn’t sound like a very nice world. The government could also make no taxes, give out free money, and give every company free office space.
Just because it’d be good for small businesses doesn’t mean it’s actually good for society - which is the real metric to measure.
> glossing over the fact that the alternative hurts employees.
...And, potentially, the planet.
In my mind it's reasonable to expect employers to cover costs of things like equipment. But, I do wonder how much CA is considering it's own interests here. It seems like this could be abused to do things like bring people back to downtown areas impacted by COVID or lightly discourage hiring employees who don't live in state (and therefore pay sales tax.) That case could also end poorly for society (and the planet.)
It sounds like these aren’t actually new laws, and aren’t California specific, so it’s probably not the intent. This seems too conspiratorial on the part of the state.
According to the article, it’s mostly driven from lawsuits from employees. The basis is that if the employer uses the employee’s internet, it has to pay for part of the bill, because otherwise it’s an unfair “windfall”.
It rather seems like basic protections to prevent employers from offloading expenses onto employees.
> healthcare startups that want you to BYO device. For working on PHI.
When I did a gig for Statnett in Norway (the state owned company that owns and manages the high voltage power system) a couple of years ago; they provided a Windows laptop for me even though I was a contractor not an employee. There is no way that they would allow a device out of their control to connect to their network and services! The risks are far too high.
I could use my own more powerful laptop but only as a Citrix client.
> If that means fewer/smaller startups, small businesses? Ultimately, so be it.
Think this through. What happens? What happens, when it's harder and harder to build and scale small businesses? You only have big players owning everything. I am struggling with that every week here in the EU and I'm very glad I don't produce anything, as it would be even harder. So this is a fine line, where we should be cautious of both extremes. There's a word for big enterprises calling for regulation to prevent competition and hinder small companies.
No one has ever tried to ban you from saying no to any of the arrangements you described, but you will advocate to ban me from saying yes? Why don't you mind your own business?
That would be true except the types of companies hiring a lot of remote workers already have a lot of remote workers in California.
California has the luxury of being able to do whatever it wants and companies not really having much of a choice to say - we'll just skip the California market.
It's a bigger market than Germany & Japan.
This would go over less well if a state like Mississippi tried it.
This simply isn't true except when you're talking about the largest companies. The vast majority of American businesses don't have a place of business in all 50 states, or retail outlets, etc. etc. -- the majority of American businesses are small, operate in one or a handful of states, and as a result do in fact skip California.
Sames goes I expect for "businesses hiring remote workers," only a Californian would have the arrogance to believe that all those businesses are somehow addicted to hiring in California.
So what this kind of stuff does is crush small businesses in California, and leave only the large ones standing. By the way small businesses drive most of the growth in the US and owning one used to be a way to have control over your own destiny while making a good living, but hey I guess all that stuff's out of fashion in this brave new world where only five companies matter and they have a revolving door set up between their boards and the government.
California does not care if some 2 person company in Ohio will be slightly less likely to hire a 3rd person remotely from California - the number of remote jobs going to California from these types of companies is close to 0.
Even if you assume 100% of them go away - I'd wager voters in California would prefer to have current conditions improved than an ever so slight increase in opportunities in the future.
Yes - small businesses employ the majority of workers. Do small businesses from outside of California with no current presence in California making new hires into California in a given year make up even 0.1% of total jobs? No.
On the flip side - close to 20% of Californians work remote full-time. And some estimates are as high as 40% for workers that work from home at least once a week.
Higher cost jurisdictions experience a hollowing out of their economies over time.
Last mile, geographically constrained jobs like transport and retail remain, but higher skill jobs that are mobile leave, either because it was more cost effective for the employer or because the employer couldn't compete and failed.
Australia experienced this and its economy now is little more than primary resource extraction, all shipped overseas for processing and value adding. Some basic service industry jobs, like retail, but none of them go anywhere because the companies don't have any real presence here except a shopfront.
California has been extreme cost since the early 2000s and it's been on a non-stop boom (almost 50% higher GDP growth than the US average - keep in mind that's with CA's outsized weight lifting up the rest of the nation - https://united-states.reaproject.org/analysis/comparative-tr...)
Yes, the middle class is being hollowed out - but is it really significantly more so than anywhere else in the US?
> Higher cost jurisdictions experience a hollowing out of their economies over time.
That doesn't seem to be true of Norway. But Norway retains control of much of its primary resources. Australia could do the same; it's a political problem not a directly economic one.
> Sames goes I expect for "businesses hiring remote workers," only a Californian would have the arrogance to believe that all those businesses are somehow addicted to hiring in California.
It's not arrogance when history bears it out time and time again.
> So what this kind of stuff does is crush small businesses in California, and leave only the large ones standing.
You are claiming that small businesses will stop existing in California if employers have to pay necessary costs? The same ones they'd have to pay in an office setting, less rent? Doubt.
> Like any economically rational entity, your employer is going to respond by…
A weak argument that can be made about any general improvement to worker pay snd conditions. Its clear that societies that encourage workers rights have the strongest economies.
GDP is a poor measure of a country’s prosperity or standard of living.
Based on GDP numbers Italy is barely ahead of Mississippi, even though spending 10 minutes in both will make it readily apparent that one is miles ahead in terms of prosperity than the other.
> GDP is a poor measure of a country’s prosperity or standard of living.
So much this. Even if you do "GDP per capita", it's a piss-poor measure.
I think the greater measure of a country's prosperity is wealth equality. There will always be outliers, but how are the people in the 20-80 percentile doing?
It's a small expense for employers, and can be a real difference in costs for the employee. I don't think you're correct. If I spend 100% more on heating everyday because I work from home so need to heat 24/7, that's nothing to an employer (100-200$/m) but could be a significant deduction from a family's budget.
Meanwhile the employer would have otherwise heated up an office space and paid all bills there.
I've been remote for a decade now and it always struck me as odd, but I didn't care enough to push for it. But as the remote concept is being used by many employers to cut on office expenses, employees with no alternative should be compensated for the extra expense they incur. It's just common sense, like paying for your mileage when you drive for business.
This seems hard to work out (I guess I should read the bill first, but), for example if someone has a stay-at-home house or some roommates, kids, etc, does the company have to work out the incremental cost of heating the house for one additional person?
Does the company get some input as to what the thermostat should be set to?
If you are a renter with included utilities, do they pay the landlord instead?
If you are living in a van, do they pay for your oil changes and parking tickets? Ok, I guess this last one is kinda silly.
This is all somewhat settled law. It's the same rules as a home office deduction but with exceptions. They pay based on the square footage of your dedicated workspace compared to your home.
If you don't have a dedicated workspace, you can't take the home office deduction and your employer technically doesn't have to reimburse you anything (so this is more beneficial to wealthy people with dedicated home offices).
But why not then demand that your employer cover your [reasonable] commuting costs, and even pay you for [reasonable] time spent commuting? That would greatly exceed your WFH costs, no doubt.
It's trivial to add demands like this. Employers have more pull in the legislatures than employees, so be careful what you wish for.
I think California already requires employers to do that.
What I find surprising is that everybody thinks employers are going to jump all over these requirements and work their hardest to make sure they are 100% in compliance instead of mostly ignoring them and making only a token effort to be in compliance. "We offered to buy chairs for the workers, what more do you want?"
We’ll start being asked for utility bills during interviews and recruiters will screen for people with heat pumps. “Candidate must have updated insulation and new windows”
There's standard rules for car travel expenses, I don't see why not do the same for offices. People don't expense their Dodge Charger's gas bill, they expense standard reasonable fixed rate. Working from home isn't free, offloading all of the cost on employees seems like a use of employee resources without compensation. I'm not dying on that hill and it doesn't bother me at all to pay for it all myself, but it really strikes me as the same thing as use of personal car for business purpose == reimbursement. It's chomp change to me, but it's probably not for many people.
Who's going to background check every candidate's house on order to save up on like, $4000 a year for a very inefficient energy setup?
The worst reality is they will estimate and then cut that expense from your offer. Still, $5000 less for the kind of work offered remote isn't a deal breaker.
And moreso than even the additional expenses, the expense of tracking these expenses for a small company is non-insigificant. There's the cost of the expense tracking software, setting up rules for what can be expensed, figuring out what this new law requires, and having someone approve those expenses.
The simple solution for fully remote companies is to just exclude CA residents.
I think in the short term, you're definitely right. It does not work in your favor if you want remote work in CA. The key issue is this, from the article:
"While the determination of whether an expense is "necessary" varies depending on the circumstances of a particular case, generally speaking, California employees who work from home are likely entitled to reimbursement"
Notice that necessary is in quotes, and the words generally, varies and likely, etc. Basically, none of this is hashed out and business owners have no idea what to pay and when. Expenses can be budgeted around but uncertainty makes this hard. And the risk of a significant surprise charge is real.
I think it's likely many businesses are just going to want to sit this out while the details are all worked out. Once the dust settles they'll do the math and make a decision.
So in the long term, it could be beneficial. In the short term, probably not.
They should do it the other way round: employer has to reimburse you for your commute and pay commute time as work time. Guess how quickly companies will put pressure on legislation to solve the housing problem.
Nah. Conventional wisdom says that "front loaded costs" of an employee are anywhere between 50-100% of an employees salary.
These costs cover a lot of things, to include health insurance, retirement (401k, Superannuation, etc.), but also cost of things like a desk, licenses for an employees computer & software, building/rental insurance for the office, and expected costs of heating and AC for said office (which can be costed and amortized out over a number of employees per year, per floor, etc.).
Most of that is built in, and the cash you save by not having to heat a giant fucking office can be turned into a $1500-on-hiring stipend for office gear and licenses. That corporations got themselves locked into terrible leases, or beholden to state and local tax incentives that drive RTO is not the worker's problem.
And that's a pittance compared to the amount of cash you can save by sending the jobs out of SV or NYC to Denver, or Nashville, or Upstate NY, and paying well, well above market but still $50k less than big city rates. If I have to eat a $1500 buck remote-worker-chair-subsidy to outsource to Shasta or Redding, and save $10k in the process, then so be it.
Only a availability heuristic, but I closed 2 consulting contracts that were a _hard_ "no we don't hire contractors" by letting them know I don't live in California.
Conversation changed as soon as they realized I was under AZ law for contracting/consulting services.
I was charging $10k per week, and one contract was a total of 6 months. The total value of that contract was $240k (before my expenses and taxes). That pool of contracting work appears to be closed to CA contractors.
Correct me if I am wrong but the only material differences between contractor and employee status are
1. Who pay's the employer side income taxes. Contractors pay both sides.
2. Not eligible for benefits, you have to go to overpriced open market.
3. The contractor can deduct reasonable expenses they incur.
4. A contract will not necessarily be renewed whereas for an employee, the assumption is the job will be there in perpetuity.
I can't speak definitively to this, I wasn't in their seat.
By my understanding is that they were concerned about the liability of a consultant/contractor under CA law because you can retroactively be relabled as an employee at any point in the future causing the business to be liable for unpaid taxes and possibly benefits?
I could be wrong but I think contractors show up as a different kind of expense on the balance sheet vs an employee. In same instances it's more favorable to hire contractors than employees.
Arizona has a similar "right to control" test for IC vs employee that California does, so the legal differences are minimal. If you would be reclassified as an employee under CA law, you're 90% likely to be classified as an employee under AZ law as well.
> Like any economically rational entity, your employer is going to respond by reducing headcount, not hiring in CA anymore, cutting costs in your annual raises, or some combination of the above. This law does not work in your favor.
OTOH, like any "economically rational entity", even if the company could afford to pay expenses for its employees without needing to cut costs elsewhere, they wouldn't unless forced to by the law, whereas companies that actually have the optimal number of employees aren't going to just sabotage their business to try and fail to maintain unmaintainable profits. And if they could already take all of those measures you mention without harming their business, then not having already done them would make them irrational. The situation you describe isn't a rational business being harmed, it's an irrational one being subsidized by its employees.
So no new startups? That ultimately hurts wages and offsets any cost savings from employers paying for your home internet which you’d already be paying for anyways
If a very new startup of 5-10 people can't buck an extra (being very pessimistic) $40k a year in employee expenses in a state that already has high CoL and labor that regularly expects 200k salaries: No, I guess not. That can be something to negotiate at offer time, or to consider relocating the startup for.
>That ultimately hurts wages and offsets any cost savings from employers paying for your home internet
overtime, maybe. It's a win-win for those already employed and not a signifigant damper of salary for those employed in the future. But it's not like salaries will be droppinig 20-30k from this decision alone.
That would be a lot of marginal startups such as lifestyle business running on <5% profit margins, and it's hard to see how making them fold could ever be a good thing.
Plus all the previously slightly-better-than-marginal startups will now descend to being merely marginal.
I don’t think it’s completely either-or. There are companies out there that would try to negotiate favorable bulk-rate home Internet plans. This might not have been possible in the past, but 5G home Internet and Starlink make it more possible since these companies have a BATNA with traditional providers.
Remote people are/will get paid less than on-site people on average, with this in mind I don't think these (relatively small) additional costs will have a significant effect.
The only issue I see is with the extra paperwork this will bring.
Having said that, I still think this is a wrong measure which creates bad incentives (not trying to save money on the costs since they're partially covered by employer). This should just be a part of the compensation. Alternatively, a fixed rate for all remote workers (which would also solve the bureaucracy).
No chance in hell that work at home expenses are anywhere near the lease cost (or even taxes!) for office space. Not even in the same order of magnitude.
If you are using your own equipment and resources, how are you an employee and not a contractor? Businesses should compensate because the agreement is the business uses their capital and your labor to make money. But if they also use your capital in addition to your labor, then the employee needs ownership of the business because they are devoting their capital to the business.
My first thought when reading the headline is that I'm ok paying for most personal things if I get to work remote as it means I'm more likely to work remote.
Obviously the company should be supplying laptop, monitors, etc, but unless I'm going through an egregious number of pens, paper, etc, I'm completely ok supplying it myself.
Employers are going to reduce headcount to a minimum regardless. And these millions of dollars of expenses aren't 'additional'. They are already been paid for by the employees. Employees shouldn't have to subsidize the business.
Not to mention I have seen people abuse home office budgets and buy things not related to work. You are already getting paid, as a small business owner this culture of abusing companies runs rampant especially with millennials for some reason.
The only people we should expect to benefit are existing employees for ~1 year. After that it will be priced in. What an administrative and legislative waste.
lets just call it the cost of doing business, if i am working for some one THEY should be the ones bearing the costs of the equipment required for me to work for THEM. I give them my time and they pay me. All that is needed to get the work done is employers responsibility.
This is the tired old Libertarian Anthem of "All regulation that helps [workers or customers] will backfire because it incentivizes businesses to [do worse behavior]." The solution is not to throw our hands up and say we cannot possibly regulate businesses because they're so crafty and will always get around it. The solution is to write more comprehensive regulation with fewer loopholes, such that the other, worse behavior is also regulated.
The good old “the sky will come crashing down” FUD is still in full swing, I see.
Meanwhile, requirements like this have been commonplace in the EU. As well as employers having to pay mileage or the cost of public transport for their daily commute.
Similarly, laying off people is strictly limited. Instead of the US style under hiring or barely hiring enough people to cover the job at hand, which leads to animosity when people take their PTO, most companies there hire enough to account for employees not being present despite the high statutory PTO days.
Are those companies all going under? No. The only downside is that they can't reach trillion-dollar market caps, big whoop.
The companies and investors simply adjust their expectations, and the sky is still where it always has been.
What? They save on office space. They don’t have to rent the employees home office or bedroom. Then they lose a little on administrative overhead. It seems like a net win for the employer compared to in-office.
One can always complain that raising wages or anything else that benefits the employee directly will just make them fire you because the “small businesses” can’t afford it. But now we’re talking about some small administrative overhead in exchange for not having to provide office space, so this seems even less relevant.
Similar to how California made a law that prohibited charging for access to public restrooms. The intention was free public restrooms for everyone but the result was that most of the public restrooms closed up and it’s harder than ever to find somewhere to go.
The top comment is warning people that these type of laws that attempt to mandate certain behavior often backfire
I find it funny how California causes its own issues, makes laws to fix said issues, and then causes more issues as a result. Living in Utah which tends to be a very anti-business-mandate place, and which does not have any such law, I've never had to pay for a bathroom. In fact, places where you have to ask for a key from a clerk are quite rare as well.
Watching California gradually kill itself through administrative bloat, Orwellian laws, and degeneracy has been quite entertaining.
> Living in Utah which tends to be a very anti-business-mandate place
Very non-coincidental that Utah has one of the highest concentrations of MLM businesses in the country.
Or the "industry" of "youth treatment" that is centered in Utah. Conversion therapy, etc.
Thousands of allegations stretching decades of abuse, physical, sexual and emotional, federal inquiries.
And still the Utah Office of Licensing rubber stamps its inspections of such facilities:
> analysis by APM Reports and The Salt Lake Tribune reveals that those inspectors almost never find violations. More than 98 percent of the time, they check the box marked "compliant." Across the 670 reports, the data reveals inspectors assessed more than 53,000 items in total. But they documented only 861 deficiencies. That means inspectors determined that treatment programs were noncompliant only 1.6 percent of the time.
> The most common ding? Not having the proper employee paperwork.
You might sit back, "entertained", by California. But pretending like Utah is some utopian vision is equally laughable, or would be if it didn't come at such a high cost.
Perhaps there's a middle ground between Utah and California.
I didn't say or act like Utah is a utopia. You invented that. Only that I don't have to pay to use bathrooms. I have my own complaints with this place too. We're gradually getting overtaken by the very things I laugh at California for. Funnily enough, a large contributor to the problem is Californians fleeing the consequences of their decisions. I can hardly afford to live in my home state, but the unaware affluent wine-sipping Californians sure can. But I definitely am much happier here than most other places in the US for the time being.
I have a child, they spontaneously have to pee upon entering any store or restaurant. I have visited far too many public restrooms in this state, I have never had to pay for one.
Perhaps bathrooms had to be charged for due to a sufficiently significant portion of the population causing damage to them.
Perhaps the California law requiring free bathrooms was a way for California leaders to shirk responsibility for providing clean bathrooms to all and foist costs onto private businesses. I always assume this is the case when government requires businesses to do provide something at a price the government sets. The politicians get all the acclaim and none of the headaches of fixing (or not really fixing) the problem, win win for them.
If Utah does not have the population that causes damage to bathrooms, then its politicians would not yet have needed to come up with a law requiring free bathrooms.
They don't have as much of the demographic that causes damage to property because of the religious and cultural backbone here that (decreasingly so) binds this state. For all the complaints people throw at the Mormons, standard of living, average level of education, and crime rate, are all fantastic compared to most other places.
As the culture becomes one to not punish those for bad actions, not shaming bad lifestyle choices, and begins to artificially force an unnatural level of multiculturalism, society rips apart.
I'm not even a conservative either. But this "social progressivism at all costs" disorder that our country has developed is going to have dire, and inevitable consequences.
Dunno about SF, but the mitigating factor in. LA is that the bathroom is locked, you ask for a key, the key is only for customers. Not every place has a public bathroom but they didn't before either.
Don't know if that's illegal but I doubt anyone cares about mom and pop shops. All the large chains still have open restrooms.
It's like that all over Florida and Georgia. Most gas stations where the bathrooms are not accessed from inside the convenience store have locked bathrooms. That isn't something unique to California.
Here is a realistic scenario. Remote firm needs to hire a new employee in a Pacific time zone for a easy to find role. Employer could choose to target the job posting ad in Oregon, Washington, Nevada, etc. but not California.
I reject your claims. Prove that people billing their employers for certain home workspace costs “will amount to millions of dollars” over and above my regular employment burden.
Many young people or those cheering for minimum wage/child labor laws/workplace safety do not seem to understand that this does more net harm than good...
If government programs where judged by their results and not their intention I would have more faith in trying things via government
But in reality government programs are only ever judged by their intentions, never their results, and if anyone attempts to apply some kind of ROI metric to them the inevitable retort is "we just did not spend enough tax payer money for it to be effective" or "evil rich people lobbied for a loop hole that is just close it then we would have utopia" but of course that utopia never comes
An employer who cuts headcount and salaries to compensate for this, rather than taking it out of the profit margin, is crippling their own ability to hire. Best to work somewhere that isn’t so short sighted.
If your company can’t pay for the resources needed to do business, they can’t afford to be in business.
