Also, the court noted that even though some employees have plans which do not result in any additional cost for work use, the employer is still required to reimburse: The threshold question in this case is this: Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job? Seeing is believing. No, it is not required but it is highly recommended. 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. Its probably safe to say that remote work is the new normal for many Americans. This approach is likely effective for employers in dealing with cell phone reimbursements as an employees cell phone bill is usually a fixed cost. Representation in business, real estate, construction, home care, trust and probate litigation and general civil litigation. The Firm is known for its global perspective, deep understanding of the local language and culture of business, uncompromising commitment to excellence, and world-class fluency in its client service. It's best to check your state's laws regarding what's considered a necessary business expense. With so many employees working remotely, employers also began to wonder if they should reimburse their employees. Illinois law imposes time restrictions by requiring employees to submit expense reimbursement requests within 30 calendar days of incurring the expense and include sufficient documentation to verify the expense. -LGK'rJ;nvmhH^ H`vg9 v2XfK:oLX`|u*0 $m7\Po,X-Xal-PV:(5#e)P~w)t9Zpm[L}N~N+3rg'L14WIB V00'B%&e|4(b?%iCX`:mIBf%}ap/YOpK+5cU&y=^gPDG '!JBE9yDZ3d_ Dr`[)# ]0IYw!lM75t|IEU53J&KsEs!1lv=T>1K^-.- &xI%#ct?>b/P 'M z21,uq jU +8)#?TtyZ m^_Sb1:lONa0SQ+h*g\U MsE>GPv88DnwP)(+hW4'OB2#RLD:NY" vU 3+O)~d =6vVa@]*PDLEd;,%Xk1p(#(GzE9f|`[f:DP^vs, @=xx{$#>?vD&2yW^_(hmhw/ The employer advances or pays an amount to an employee regardless of whether they expect the employee to have business expenses. See our vetted tech & services alliances. 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. 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. 2021), Charged Speech in the Workplace: Knowing When to Step In (Jan. 2021), Diversity, Equity & Inclusion | Best Practices for Managing & Collecting Employee Diversity Data (Oct. 2020), How Employment Counsel Add Value to a Companys Inclusion & Diversity Programs (Sept. 2020), Navigating Political Speech in the Workplace (Aug. 2020), 2023: Discussion on The New Legal Restructuring Landscape in Europe Series (Jan. Feb. 2023), Annual Illinois Employer Update (Jan. 2023), Annual California Employer Update (Dec. 2022), Navigating the World: An Update on Key Global Employment Laws and Trends for US Multinational Employers series (June 2022), California Seeks to Ban Most Criminal Background Checks, Employer WARN-ING: Potential Changes to New Yorks and Californias WARN Acts Barreling Down the Turnpike, Global Employment Law Fastpass for US Multinationals (Webinar Series), Reading the Tea Leaves: What the NLRB GCs New Guidance on Separation Agreements Means for Employers. Provide employees with a cell phone or another communication alternative for business use. Well help reduce costs & mitigate risks. To embed, copy and paste the code into your website or blog: Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: [HOT] Read Latest COVID-19 Guidance, All Aspects [SCHEDULE] Upcoming COVID-19 Webinars & Online Programs, [GUIDANCE] COVID-19 and Force Majeure Considerations, [GUIDANCE] COVID-19 and Employer Liability Issues. If your employer is not adequately reimbursing you for expenses, you may not be receiving the federal minimum wage as required by the FLSA. While there is some discretion the employer can exercise in determining the amount of reimbursement (such as actual expenses and the reasonableness of the employees choice: i.e., was the employee required to use their own phone), the following language by the court shows the standard is still reasonable reimbursement (which means if the issue went to court a judge or jury would determine reasonableness, which means an employer should be careful in this area). Attorney Advertising|Disclaimer | Terms | Website Development by Employers must pay any benefits or wage supplements, including reimbursement for business-related expenses, that have been promised to an employee. Our customers are our heroes. Due to the pandemic, employees in the US are working from home in unprecedented numbers. Explore our product tour to see how. As an example, under Section 2802 of California's Labor Code, employers are required to reimburse their employees for "all necessary expenditures or losses incurred by the employee as a direct consequence of the discharge of his or her duties," or to comply with the directives of the employer. Remote work has become the new normal for many Americans with over 27 million people working from home. "We hold that when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. Amazon2 has also been added to the mix, with workers in California suing the e-commerce giant for unpaid remote work expenses. It works like this: you set up a monthly benefit allowance for your employees. 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. View our product demos to get a deeper dive into the technology. Mitigate risk with proactive payroll and tax alerts. But, if your entire organization is remote full- or part-time, those costs would be necessary for your employees to do their jobs. Pay employees from any location and never worry about tax compliance. Notably, California and Illinois courts have explicitly stated that remote work expenses fall under their states' employee expense reimbursement laws. An action plan to help you achieve HR excellence based on Paycors proprietary data and research. However, what is not well understood (or developed in the law) is how much must be reimbursed. Topics explained in the new guidance include: The scope of employee activity protected by the law. 91A.3 (6) ). Learn more about our product bundles, cost per employee, plans and pricing. https://casetext.com/regulation/district-of-columbia-administrative-code/title-7-employment-benefits/chapter-7-9-wage-hour-rules/rule-7-910-tools, https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2402&ChapterID=68, https://www.legis.iowa.gov/docs/code/91A.3.pdf, https://malegislature.gov/laws/generallaws/parti/titlexxi/chapter149/section148, https://www.revisor.mn.gov/statutes/cite/177.24, https://leg.mt.gov/bills/1995/mca/39/2/39-2-701.htm, 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, https://newyork.public.law/laws/n.y._labor_law_section_198-c, 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, https://sdlegislature.gov/Statutes/Codified_Laws/2077532, https://lni.wa.gov/workers-rights/wages/getting-paid/, http://www.seattle.gov/laborstandards/ordinances/wage-theft, https://www.reuters.com/legal/government/amazon-sued-over-employees-remote-work-costs-during-covid-19-pandemic-2022-03-25/. Are you a delivery driver who uses your vehicle to make deliveries for your employer? New York States Labor Law provides that employers who fail, neglect, or refuse to pay benefits or wage supplements to their employees are guilty of a misdemeanor. 420 Lexington Avenue, Suite 1830, Otherwise, the employer would receive a windfall because it would be passing its operating expenses on to the employee. 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. A: Alaska, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and Washington, DC all have enacted statutes which bear on expense reimbursement. An agency may adopt agency-specific standards and . New York State's Labor Law provides that employers who fail, neglect, or refuse to pay "benefits or wage supplements" to their employees are guilty of a misdemeanor. A nonaccountable plan treats any reimbursement or other allowance arrangement as supplemental wages and subject to taxes. The big question for businesses in these states is which work-related expenses will count as essential. Supplement Payments (Labor Law 198-c) At least ten states Illinois, California, Massachusetts, Montana, Pennsylvania, New York, New Hampshire, North Dakota, South Dakota, Iowa and the District of Columbia have enacted laws requiring employers to reimburse employees for certain remote work expenses. You might also want to consider offering a remote work reimbursement to all your employees, whether legally required or not. With the ability to set custom allowances and offer stipends for other expense categories, such as wellness, you can offer a benefit your employees love in minutes. Authorship Credit:Carter Norfleet and Shareef Farag. Alphabet stock slid as much as 4% on Monday, erasing about $55 billion in market value after a report from The New York Times suggested that competition is heating up in the mobile search market . These are not typical expenses that employers would reimburse. Soon, employees wondered who should be responsible for the expenses theyd accumulated for remote work. HR solutions purpose-built to help leaders create great places to work. 98% of respondents in Buffers 2023 Remote Work Survey of 3000 would like to work remotely for the rest of their careers (Buffer). 2023 Paycor, Inc | Refer Paycor | Privacy Policy | 1-800-501-9462 | Employers can specify what theyll pay for each type of expense. It follows that if employers allow their employees to opt to use their personal cell phone, instead of a company-issued cell phone, that they should be reimbursed a reasonable percentage of their phone bill for work-related calls or other data usage for using texts or the internet for work purposes. Only authorized expenses by the employer must be reimbursed. Paycor is not a legal, tax, benefit, accounting or investment advisor. We think a more palatable and reasonable approach is for the employer to pay a flat monthly stipend (e.g., $10 - $100 or some estimated percentage like 10-50%: the reimbursement number is a business decision based on history of usage). Case law since Cochran has reinforced the rule that an employer must reimburse a reasonable amount without actually explaining how to calculate that amount. <> Distribute the policy to employees, and remember to inform new employees when they are hired. Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills." (Cochran v. Schwan's . You can give all employees the same allowance or give certain employee classes (such as full-time) or employees in certain states a larger allowance. DQ 3mc,(]BVy m v&*\f`e@Gm9P&PI +!pY{:,5K WT8 2021), Tying Compensation to Furthering Inclusion and Diversity Goals (Mar. Claim hiring tax credits and optimize shift coverage. Some say the safest approach is to pay the entire cost of an employees phone. Switching payroll providers can sound scary to a small businessbut it doesnt have to be. Generally, under the federal Fair Labor Standards Act (FLSA), employers are not required to reimburse employees for work-related expenses incurred working remotely. Stay up to date with the latest HR trends. For this, employees will be required to submit a reimbursement form. Necessary expenses include internet access and phone bills for remote workers. In many cases, employers have a legal duty to reimburse their employees for necessary business-related expenditures, such as: At Lipsky Lowe LLP, we can advise you as to the expenses youve personally incurred that your employer must reimburse. Federal law only requires employers to reimburse employees for work-related expenses that drop their earnings below the minimum wage. It is irrelevant whether the employee changed plans to accommodate work-related cell phone usage. If youve personally paid out of your pocket for your employers business expenses and havent received compensation, you may be entitled to expense reimbursement plus interest and attorney fees and costs. As the pandemic continues, many employers are attempting to adapt to their workforce's new normal, which may include a continuation of their current remote model or the implementation of a hybrid work model. Ann. 2022), Guidelines for Accommodating Sincerely Held Religious Beliefs and Disabilities for Employers Mandating Vaccinations (Sept. 2021), Religious Beliefs in the Workplace Following the Supreme Courts Bostock Decision (Sept. 2021), The COVID-19 Employment Litigation Landscape Is It All Uphill From Here? Lab. Even if your organization is in a state where remote work reimbursements aren't required, it's still a good idea to have an expense reimbursement policy in place so that employees know the policy ahead of time. Consumer Wireless Telephone Recycling. 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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. Massachusetts General Laws Part I, Title XXI, Chapter 149, Section 1488. Reimburse for the actual voice and/or data fees incurred for business purposes, which requires employees to submit expense reports itemizing the costs of calls made for work purposes and the costs of data used for work supported with cell phone bills or other evidence of the costs (this is a time intensive process for employees); Reimburse for a percentage of voice and/or data fees that accurately reflects the amount of mandatory business usage, and if a percentage or flat monthly amount is used, then allow employees to seek reimbursement for any additional costs incurred over the percentage or flat amount if the actual costs of business use exceed those amounts (this can be hard to determine given the number of different plans available); or. Employers must reimburse employees for business expenses related to necessary duties or at the employer's direction. Seattle: Employers must pay employees all compensation owed to them, including any business expenses. This shift raises the all-important question of who foots the bill for these expenses going forward. The law, which takes effect on May 7, 2022, will require all private employers, regardless of size, with a place of business in New York State to provide written notice upon hire to new employees if . San Diego, CA, 92108 Test drive Paycor Payroll, Onboarding, HR, and Time for 14 days. First, lets discuss why employers need to know remote work reimbursement laws. Disclaimer: The information provided on this website is general in nature and does not apply to any specific U.S. state except where noted. 1144.). Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee's cell phone bill. HR solutions purpose-built to help CFOs mitigate risk and control costs. Stat. There arent any federal guidelines on remote work-specific expenses. Retain and coach your workforce with career planning. Remedies available for retaliation. More? 115,9.5; Mont. However, there are some costs that employers know employees will incur on a monthly basis and so it may make sense to provide a reimbursement on a more periodic basis. We collect no fees unless we are successful in obtaining compensation on your behalf. Legal analysis to be used to determine if evidence supports a claim of retaliation. Employers should consider reimbursing costs such as a reasonable percentage of use for things like home electricity, personal cell phones, printer paper, pens/pencils, etc. at p. 2. <> Generally, reasonable reimbursable expenses will likely include: The employee who prefers the convenience of a standing desk, a wireless computer mouse, or an ergonomic chair will likely foot the bill for these expenses, as such items are generally not deemed reasonable or necessary, absent an employer's legal requirement to provide them. Android, iPhone, etc. 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. If any of these conditions are not met, the reimbursements are treated as supplemental wages, subject to applicable taxes and will also need to be reported on theemployees W-2 form. More states are likely to consider adopting remote work and employee reimbursement laws in the future. PHA+Q2hlY2sgeW91ciBpbmJveCBmb3IgYW4gZW1haWwgY29uZmlybWluZyB5b3VyIHN1YnNjcmlwdGlvbi4gRW5qb3khPC9wPg==, Remote Employee Reimbursement Rules by State, Massachusetts General Law Chapter 149, 148A, Paycors integrated expense management software, 5 Benefits of AI Talent Sourcing Technology for Recruiters, Get Our Customizable Employee Review Template, Boost Efficiency and Transform Your Workplace Culture with HR Technology, 10 Tips for Small Businesses Considering a Payroll Provider Switch, Onboard like a Pro: Tips for Successful Employee Integration, all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties., the cost of purchasing and maintaining any tools required of the employee in the performance of the business of the employer., all necessary expenditures or losses incurred by the employee within the employees scope of employment and directly related to services performed for the employer., Expenses by the employee which are authorized by the employer and incurred by the employee shall either be reimbursed in advance of expenditure or be reimbursed not later than thirty days after the employees submission of an expense claim.. However, several states (including California, the District of Columbia, Illinois, Iowa, Massachusetts, Montana and New York) have specific state law requirements applicable to employee expense reimbursements. A: With employees having historically worked in an office environment, many of the supplies and resources they utilized to complete their job duties were provided for by the employer (i.e., printer paper, pens/pencils, computers, electricity, computer monitors, internet, phones, etc.) Save time, pay employees from wherever you are, and never worry about tax compliance. (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. Health insurance regulations differ in each state. The California Court of Appeal agreed there were violations and held (which means, its now the law): We hold that when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. Were growing and want to hear from you. One of the best ways to handle remote work expense reimbursements is to create a written policy for your organization that outlines what reimbursable expenses are for your employees. Employers must reimburse employees for uniforms, purchased or rented equipment, or consumable supplies upon their termination of employment. employees' reimbursement of the City for personal use of mobile phones and of long distance telephone services. Plan, manage, and execute pay increases and rewards. 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. Review, reimburse, and report on employee expenses in one location. Eliminate large down payments and end-of-year surprises. Read these case studies to see why. If you want specific legal advice about your particular legal issues, or if you want to create an attorney-client relationship, you need to retain the Law Offices of Ron A. Stormoen by a signed written retainer agreement. Where the practice is widespread (or just alleged to be) the claims can be brought on a class-wide basis. This article will break down expense reimbursement laws by state and what counts as a necessary cost. Hire skilled nurses and manage PBJ reporting. You'll simply approve these amounts up to their eligible allowance. @^_ {d1EQ2P%5{x n(,N5|_ \SfppMTn[6|4EF?F('DZnH6N},q'}l64a ux-c fp+"i+Q`p9xy#.BA%AZ94, Like the laws of California and Illinois, D.C.'s expense reimbursement regulation emphasizes that an expense must be "required" to perform the employer's business to be reimbursable. Employers must reimburse employees for all necessary expenses or losses. Employees can claim unreimbursed expenses as deductible according to Pennsylvania Personal Income Tax law. In California, when employees must use their personal cell phones for work-related calls, employers must pay some reasonable percentage of those phone bills even if employees incurred no extra expenses using their cell phone for work. So, what to do? Employers cannot waive the right to receive a national minimum wage, either directly or indirectly. There is no federal requirement to reimburse employees for business-related expenses. (c) For purposes of this section, the term necessary expenditures or losses shall include all reasonable costs, including, but not limited to, attorneys fees incurred by the employee enforcing the rights granted by this section. 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