No, it is not required but it is highly recommended. In order to qualify for an accountable plan, the employer's reimbursement or allowance arrangement must follow all three of these rules: Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. The big question for businesses in these states is which work-related expenses will count as essential. Paycors leadership brings together some of the best minds in the business. To find out if you have a claim, send an online inquiry or call our law office at 917-639-5350 or toll free 1- 877-390-8732. The policy should clarify the time period in which employees may submit reimbursement requests, identify an appropriate individual to whom employees submit reimbursement requests, and outline which expenses are eligible. So, what to do? You can also choose to only offer the benefit to employees in certain states or classes. ), Per the Cochran court, The purpose of this statute is to prevent employers from passing their operating expenses on to their employees. (Id. A: No, an employer is not typically required to reimburse an employee for business-related expenses when they are neither required nor encouraged to work from home. If providing employees reimbursements on a periodic basis, an employer should perform an analysis to ascertain an amount of reimbursement that is adequate to cover the actual expense incurred by the employee. When the COVID-19 pandemic forced some businesses in the United States to move to remote work, many organizations didnt have a remote work policy or procedures in place. Employers should also be aware of any potential reimbursement obligations under the FLSA or the obligations for employees working remotely as a reasonable accommodation under the ADA. Once you understand your obligations, set clear guidelines for your employees. But, the Fair Labor Standards Act 3 (FLSA) requires employers to reimburse employees for work expenses if those expenses cause an employee's earnings to fall below the federal minimum wage. App. Our customers are our heroes. Illinois Wage Payment and Collection Act, Section 9.5: Reimbursement of employee expenses6. at p. New York State Department of Labor David A. Paterson, Governor M. Patricia Smith, Commissioner Phone: (518) 457-4380 Fax: (518) 485-1819 W. Averell Harriman State Office Campus, Bldg. While working from home raises a myriad of issues (e.g., data privacy and security, health and safety, employee engagement, and more), this post focuses on expense reimbursements related to telecommuting. Again, the key is that employees are reimbursed a reasonable percentage of their phone bill. Due to the pandemic, employees in the US are working from home in unprecedented numbers. Until more guidance is provided from the courts or a government agency, the employer should carefully monitor its practice and make sure it has a policy of reasonable reimbursement and fully address any employees grumbling about fair reimbursement. 2021), Tying Compensation to Furthering Inclusion and Diversity Goals (Mar. Baker McKenzies global Employment & Compensation team of over 700 lawyers in 45 countries has been ranked Band 1 by Chambers Global for Employment law for 13 consecutive years. Baker Donelson var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); | Attorney Advertising, Copyright var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); JD Supra, LLC. Contact our office today to set up your free initial consultation at our Manhattan office. Only authorized expenses by the employer must be reimbursed. 1144.). who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones, alleging labor code violations and unfair business practices, and seeking declaratory relief and statutory penalties. The Cochran case provides guidance on how to calculate a reasonable reimbursement for the mandatory use of personal devices such as cell phones: employers must compensate their employees for a "reasonable percentage" of the employee's cell phone bill under Section 2802. We do not necessarily advocate those approaches. App. Reimbursements must be paid out within 30 days. The employee fails to return excess reimbursements or allowances in a reasonable amount of time. For more information: www.bakermckenzie.com, Reimbursement Refresher: Cell Phone and Internet Expenses Related to Telecommuting in the US, International Considerations for Executive Severance Plans, Proposed Expansion of NYC's Pay Transparency Law Includes Bonuses, Equity Awards and Other "Non-Wage Compensation", Practical Considerations When Addressing New DOJ Compensation Incentives and Clawbacks Program, Protecting Against Unintended Discrimination During Layoffs (Apr. The Reimbursement Amount Is A Reasonable Percentage Of The Employees Phone Bill. Reimbursements are considered nonaccountable if: The IRS Publication 15 and Publication 535 have more details about the tax implications of business expenses and reimbursements. If you have employees working remotely in different states, you can outline the differences in how you'll reimburse their work from home expenses in your expense policy. Put this policy in writing and expressly state that employees may submit expense reimbursement requests each month to the extent that the flat rate does not cover the total expenses for the usage that month. Stay up to date with the latest HR trends. (GINA). Rules against interference with the exercise of rights under the ADA. Interestingly, this law has been interpreted to require employers to reimburse employees for a reasonable percentage of their monthly internet or mobile telephone bill for work-related uses, even in instances where the employee has an unlimited wireless data plan or where their internet bill does not increase based on usage. 2023), The FTCs Proposed Rule on Non-Competes: What Employers Need to Know (Jan 2023), Employer WARN-ing: Notice Requirements to Know Before Layoffs (Jan. 2023), Employers: All Eyes on Salary and Pay Range Disclosure in US Job Postings (Dec. 2022), Cost-Cutting Considerations in the Workforce Without Layoffs (Nov. 2022), AI in Recruitment and Hiring: Checking Your Blind Spots (Oct. 2022), Labor Unions and the Workforce: Whats Trending and How to Get Out in Front (Aug. 2022), The Proliferation of Pay Transparency Laws: What US Employers Need to Know (May 2022), US, UK and EU Whistleblower Developments for Multinational Employers (Apr. Our attorneys are familiar with the applicable federal, state, and local laws surrounding employee reimbursements and will help you explore your legal options for pursuing reimbursement from your employer. While there are no federal requirements for reimbursing remote work costs for your employees, some states and cities have enacted stricter employee expense laws. If remote work is mandated, however, a variety of different costs may need to be reimbursed. consumable supplies required in the course of that employment., for all that he necessarily expends or loses in direct consequence of the discharge of his duties as such or of his obedience to the directions of the employer., An employee who incurs expenses in connection with his or her employment and at the request of the employer, except those expenses normally borne by the employee as a precondition of employment, which are not paid for by wages, cash advance, or other means from the employer, shall be reimbursed for the payment of the expenses within 30 days of the presentation by the employee of proof of payment.. Topics explained in the new guidance include: The scope of employee activity protected by the law. Employers must reimburse employees for all necessary expenses or losses. Cochran v. Schwan's Home Serv., Inc., 228 Cal. See whats new today. Otherwise, the employer would receive a windfall because it would be passing its operating expenses on to the employee. It does not matter whether the phone bill is paid for by a third person, or at all. Automate routine tasks, mitigate compliance risks, and drive efficiencies across your organization. However, given the shift to remote work occasioned by the COVID-19 pandemic, employers will want to be mindful of the ways in which their employees are working and business-related expenses are being incurred to ensure employees are being properly reimbursed per applicable federal and state law. % Similarly, employers are prohibited from requiring employees to reimburse the organization for using their employer-provided equipment if it reduces their earnings below minimum wage or overtime compensation. See a licensed agent for detailed information on your state. Theres never been a better time to join. Damages, of course, raise issues that are more complicated. (Id. For example, if an employee incurs a business expense in a state governed by the FLSA (or a state with reimbursement laws mirroring the FLSA rule), it is the employers burden to determine whether that expense brings the employees compensation below minimum wage, and if so, to reimburse that employee accordingly. 2023 Lipsky Lowe LLP | Phone: 212-392-4772 The employer advances or pays an amount to an employee regardless of whether they expect the employee to have business expenses. We help you stay updated on the latest payroll and tax regulations. Seattle: Employers must pay employees all compensation owed to them, including any business expenses. 778.217 Reimbursement for expenses. (a) General rule. Employers must reimburse their employees within 30 days of the reimbursement becoming due. Not only does our interpretation prevent employers from passing on operating expenses, it also prevents them from digging into the private lives of their employees to unearth how they handle their finances vis--vis family, friends and creditors. If an employee who makes $8.00 an hour incurs $6 per day in unreimbursed employer expenses, the FLSAs kickback provision will lower his or her hourly wage to below minimum wage. Drive engagement with talent development and career management. Ann. You might also want to consider offering a remote work reimbursement to all your employees, whether legally required or not. Expense reimbursement lawsuits were already commonplace before the pandemic, and with no end in sight to the pandemic and employees working from home, employers can expect additional lawsuits to be filed. Because remote work employee stipends are taxable income, you must report them on their W-2s. Employers that operate in several different jurisdictions are encouraged to familiarize themselves with the expense reimbursement requirements of all of those jurisdictions, if any. 420 Lexington Avenue, Suite 1830, Employers must reimburse employees for uniforms, purchased or rented equipment, or consumable supplies upon their termination of employment. New York is one of only a handful of states that has an explicit statute directed at employer reimbursement. That answer depends on where your workforce is located. Get expert advice and helpful best practices so you can stay ahead of the latest HR trends. Distribute the policy to employees, and remember to inform new employees when they are hired. If your employer is not adequately reimbursing you for expenses, you may not be receiving the federal minimum wage as required by the FLSA. The Reimbursement Amount Is A Reasonable Percentage Of The Employees Phone Bill, Employers Must Reimburse Employees For Work Related Cell Phone Use. (b) All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry interest at the same rate as judgments in civil actions. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. 2023), How to Navigate Ballooning Pay Disclosure Laws Across the US (Mar. Other states (like Alaska and Arkansas) require reimbursement only if equipment purchased by employees for work-related purposes cannot be used during normal social activities of the employee or if the purchase/expense would bring the employees compensation below minimum wage. (8 Alaska Admin Code Section 15.165; Code of Arkansas Rules and Regs., 010-14-107(B).). 480 E. Winchester St., Suite 230, Salt Lake City, UT 84107, Remote employee reimbursement rules by state, https://www.latimes.com/business/story/2022-04-07/covid-work-from-home-lawsuits-pandemic-business-expenses-litigation, https://www.linkedin.com/news/story/amazon-sued-over-remote-work-costs-5351604/, https://www.dol.gov/agencies/whd/flsa/pandemic#14. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> It was last updated on February 9, 2023. Last Updated: March 29, 2023 | Read Time: 15 min. Albany, NY 12210 . Employers must reimburse all necessary expenses, including those incurred by the employer's direction. Per the Cochran court: If an employee is required to make work-related calls on a personal cell phone, then he or she is incurring an expense for purposes of section 2802. Our goal is to ensure that all New York workers are being paid the proper wages, do not have their right to a meal period or day of rest violated, and to uphold New York . The reimbursement would have otherwise been paid as wages. Gather and convert employee feedback into real insights. Unreimbursed employee expenses may be tax-deductible. 5. https://casetext.com/regulation/district-of-columbia-administrative-code/title-7-employment-benefits/chapter-7-9-wage-hour-rules/rule-7-910-tools, 6. https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2402&ChapterID=68, 7. https://www.legis.iowa.gov/docs/code/91A.3.pdf, 8. https://malegislature.gov/laws/generallaws/parti/titlexxi/chapter149/section148, 9. https://www.revisor.mn.gov/statutes/cite/177.24, 10. https://leg.mt.gov/bills/1995/mca/39/2/39-2-701.htm, 11. https://casetext.com/statute/new-hampshire-revised-statutes/title-23-labor/chapter-275-protective-legislation/reimbursement-of-employee-expenses/section-27557-reimbursement-of-employee-expenses, 12. https://newyork.public.law/laws/n.y._labor_law_section_198-c, 13. https://casetext.com/statute/north-dakota-century-code/title-34-labor-and-employment/chapter-34-02-obligations-of-employer-and-employee/section-34-02-01-employer-must-indemnify-employee-for-losses-and-expenses-exception, 14. https://sdlegislature.gov/Statutes/Codified_Laws/2077532, 15. https://lni.wa.gov/workers-rights/wages/getting-paid/, 16. http://www.seattle.gov/laborstandards/ordinances/wage-theft, 17. https://www.reuters.com/legal/government/amazon-sued-over-employees-remote-work-costs-during-covid-19-pandemic-2022-03-25/. 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