SWM Lessons

Working From Home in 2026: Challenges Financial Institutions Face with Productivity, Reasonable Accommodations, and Reimbursement

By Laraya M. Parnell

October 6, 2026

Six years after the pandemic reshaped the workplace, employers and employees remain in an uneasy standoff over remote work. For several years, employees confronted with return-to-office mandates could often leave for roles that offered more flexibility. By 2026, that leverage has shifted: more employers are enforcing return-to-office plans, and more positions are being posted or converted as fully in-office roles.

Financial institutions are part of that shift. Many that embraced remote and hybrid arrangements during and after the pandemic are now reassessing those models in light of member-service consistency, mentorship and training for newer employees, cross-departmental collaboration, and the in-branch culture many view as central to their identity.

Executives increasingly frame in-office attendance not as a retreat from flexibility, but as a response to concrete operational concerns: slower onboarding, weaker informal knowledge-sharing, and harder-to-measure declines in member responsiveness during extended periods of remote work.

Productivity, accommodation, and reimbursement issues often overlap. A hybrid arrangement that works for one position may be impractical for another. Additionally, some circumstances may require individualized review as a possible accommodation. Either way, once work occurs away from the office, reimbursement obligations may follow. For most financial institutions, the first step is practical rather than legal: determine which arrangements actually support the work.

Making Hybrid and Remote Work Productive

Employers should begin by identifying what makes hybrid work succeed or fail for each position. A policy grounded in measurable operational needs is easier to manage, explain, and defend. Financial institutions that have made hybrid work sustainable tend to follow several practices:

• tying in-office time to activities that genuinely benefit from being in person, such as new-hire onboarding, cross-team planning, member-facing work, and coaching conversations;
• allowing deep-focus work to occur where it is performed most effectively; and
• making expectations explicit and measurable.

Clear expectations give managers better tools to evaluate remote and in-office staff than visibility-based standards alone.

Remote Work as a Disability Accommodation: The RTO Wrinkle Employers Do Not Expect

When remote work is requested as a disability accommodation rather than as a matter of preference, employers need a process that distinguishes business preferences from legally required individualized review.

Under California’s Fair Employment and Housing Act and the federal ADA, employers must provide reasonable accommodations to qualified employees with disabilities and engage in a timely, good-faith interactive process unless doing so would create an undue hardship.

Remote work may qualify as an accommodation under both frameworks. The pandemic sharpened this issue: after many jobs were performed remotely for extended periods, employees increasingly argue that if a role could be done from home then, it can continue to be done from home now.

Courts so far have declined to adopt that position as a categorical rule. The analysis remains fact specific:

• whether in-person presence is truly an essential function of the role,
• whether the employee has a record of performing effectively while remote,
• whether employees in comparable roles already work remotely, and
• whether allowing remote work would impose a real operational burden rather than mere inconvenience.

Employers are generally on stronger footing when they can identify concrete, job-specific reasons presence matters, such as in-person supervision of tellers or cash handling, real-time collaboration that does not translate well to video, or member-facing duties that require being on-site. They face greater risk when a denial appears to be a blanket return-to-office rule applied without regard to the employee’s actual duties or documented remote-work history.

For financial institutions expanding return to office plans, this cuts against the instinct toward uniformity. A one-size-fits-all mandate may be easier to communicate and enforce, but it is also more likely to prompt an accommodation claim and more difficult to defend once challenged. “We require everyone back” does not, by itself, prove that in-person presence is necessary for a particular employee’s role.

Granting the accommodation, however, only resolves who works where; there is still the question of who pays for it.

Reimbursement: The Expense Issue That Follows Remote Work Home

Once remote work is approved—whether as part of a hybrid policy, an individualized accommodation, or a temporary arrangement—the next question is who pays for the tools needed to do the work. That issue is especially important in California, where reimbursement obligations can arise even when the expense is small, shared with personal use, or incurred at home.

The Baseline Rule

California Labor Code Section 2802 requires employers to reimburse employees “for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of [their] duties.”

The rule applies to remote work as much as on-site work, and employees who successfully sue to enforce it can recover interest and attorney’s fees—and, because Section 2802 claims are frequently brought as PAGA (Private Attorneys General Act) actions on behalf of a whole workforce rather than one employee, the exposure tends to scale fast once a pattern exists. About two dozen states have expense-reimbursement statutes, but California is one of the few where courts have expressly applied that duty to remote work.

Key Case Law on Reimbursement

A pivotal case regarding reimbursements is Cochran v. Schwan’s Home Service 228 Cal. App. 4th 1137, 1144 (2014), which held that when work requires an employee to use a personal cell phone, the employer owes a reasonable share of that bill—even if the employee had an unlimited plan and paid nothing extra because of work use.

Naturally, employees have argued this extends to home internet and electricity/utilities, and courts have generally expected employers to reimburse a fair percentage of shared costs. Because no California court or agency has adopted a bright-line percentage, employers still face uncertainty in determining how to calculate a reasonable reimbursement amount.

Is Reimbursement Necessary When an Employee Voluntarily Works from Home?

A recurring question is whether an employer must reimburse expenses when an employee voluntarily works from home. The answer depends on the facts. Courts and practitioners have not taken a uniform approach, and the litigation landscape remains unsettled.

Some courts have declined to hold employers responsible for reimbursement where an office is available to the employee at any time and furnished with all necessary equipment to perform the job. In Novak v. Boeing Co., 2011 WL 9160940, at *3 (C.D. Cal. July 20, 2011), the employer offered its employees the option of voluntarily participating in a virtual worker program. One participant sued under Section 2802 for home office expenses.

The federal district court held that the expenses associated with working out of a home office, including phone and internet expenses, were not “necessary” expenses as a matter of law where working from home was optional and the employer made physical workspaces with computers, phones, and other necessary equipment available at its offices to employees so that they did not have to work remotely.

Similarly, in a Central District of California case, the federal district court dismissed the plaintiff’s claim for home internet reimbursement where the evidence showed the plaintiff had been provided with a company-owned mobile hot spot. The court rejected the plaintiff’s claim that the superior speed and convenience of the plaintiff’s home internet plan created an obligation to reimburse under Section 2802.

Other courts, however, have read Section 2802 broadly and tied reimbursement to expenses incurred “in direct consequence of the discharge of duties” or in “obedience to the directions of the employer.” In Thai v. International Business Machines Corp. (2023) 93 Cal.App.5th 364, the First Appellate District rejected IBM’s argument that it should not have to reimburse work-from-home expenses because the real cause of those expenses was Governor Newsom’s pandemic stay-at-home order, not IBM itself.

The court held that reimbursement “does not turn on whether the employer’s order was the proximate cause of the expenses; it turns on whether the expenses were actually due to performance of the employee’s duties.”

This distinction when tied to reasonable accommodations is important. Employers should not assume they can avoid Section 2802 by labeling the arrangement voluntary or by treating it as legally required through the interactive process. If the employee incurs the expense to perform the job from home, reimbursement may be required regardless of why the employee is working remotely.

The same caution applies outside the accommodation setting. Whether remote work is truly voluntary is highly fact specific. For example, if the employer lacks enough office space for all employees on a given workday, it may be difficult to argue that working remotely was entirely optional.

Taken together, these rulings point to a practical takeaway—that voluntariness may narrow the reimbursement obligation, but it does not necessarily eliminate it.

California employers should focus less on where the employee chose to work and more on whether the expense was necessary to perform the job. Costs tied directly to required work—such as business calls on a personal phone, employer-mandated software, required equipment, or other tools needed to perform assigned duties—remain strong candidates for reimbursement even when remote work is optional.

A written policy, role-specific analysis, and consistent reimbursement process are the best defenses against a small expense becoming broader Section 2802 or PAGA exposure.

Key Takeaways

For financial institutions, remote and hybrid work decisions should be treated as integrated workforce-policy decisions, not isolated flexibility requests. Productivity, accommodation obligations, and reimbursement exposure often turn on the same evidence: what the role requires, where the work can be performed effectively, and what tools the employee needs to do the job.

Institutions should:

• document which roles genuinely require in-branch or in-office work,
• make hybrid-work expectations measurable, and
• apply return-to-office rules consistently while reviewing disability accommodations individually.

A written reimbursement policy should identify covered expenses, explain how shared costs are calculated, and provide a clear claims process.

California employers should be cautious about treating voluntary remote work as a complete defense to reimbursement claims. An available office does not necessarily eliminate the obligation to reimburse necessary work expenses. A practical, role-specific policy supported by clear documentation and consistent implementation remains the strongest approach.

If your institution has questions about remote work policies, accommodations, or reimbursement, contact SW&M’s Labor and Employment team to discuss your specific circumstances.

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