outlook 2016 (office 365) using incorrect time zone for emails

TimeZone is set in Exchange configuration. It is queried using Get-MailboxRegionalConfiguration, and configured using Set-MailboxRegionalConfiguration.

A user guide to modifying localization settings in Office 365 is here: Change your display language and time zone in Office 365

This is typically setup during FirstRun if a user first logs into OWA.