Click to view our complete suite of labor and employment video chats, Founded in 1949, Baker McKenzie advises many of the worlds most dynamic and successful business organizations through more than 4,100 locally qualified lawyers and 6,000 professional staff in 77 offices in 45 countries. So, what to do? There is no federal law requiring employers to have a policy related to remote work reimbursement; but some states require it. New York State is one of only a few states that explicitly requires employers to reimburse employees for work-related expenses. However, because of the new normal of working from home, employers must vigilantly analyze the types of expenses their employees are incurring for business-related purposes and provide reimbursement accordingly. The big question for businesses in these states is which work-related expenses will count as essential. Whether an expense will be deemed necessary for the performance of an employees' job depends primarily on the type of work the employee performs. Some states require employers to reimburse employees only for necessary expenditures. Employers must reimburse California employees for all necessary expenses, including those incurred at the employer's direction. Drive engagement and increase retention with talent development and continuous learning. In the Cochran case mentioned above, the court of appeals held that employers must reimburse a reasonable percentage of their employees cell phone bills. For this, employees will be required to submit a reimbursement form. Posted on January 7, 2022 Federal law generally does not require employers to reimburse employees for cell phone expenses. In some cases, local jurisdictions such as cities and counties may impose their own rules regarding expense reimbursement. The laws around what's considered necessary are relatively open to interpretation, but state laws generally define necessary as any expense required for the employee to complete their job. In most cases, the costs wouldn't be considered necessary if an employee chooses to work remotely. Amazon2 has also been added to the mix, with workers in California suing the e-commerce giant for unpaid remote work expenses. Employees can claim unreimbursed expenses as deductible according to Pennsylvania Personal Income Tax law. In sum, employers must reimburse California employees (without distinction) for cell phone use when employees are required to use their personal cell phones for business purposes. However, ten states (and Washington D.C.) currently have laws requiring employers to reimburse employees for certain remote work expenses: California, Washington D.C., Illinois, Iowa, Massachusetts, Minnesota, Montana, Hampshire, New York, North Dakota, Pennsylvania, and South Dakota. Consequently, many workforces were thrust into remote work models without adequate time and resources to develop thoughtful remote work plans and fully contemplate the impact of the shift on their businesses. A: Employers should have a written reimbursement policy that requires employees to submit reimbursement requests by a certain deadline after the expense is incurred. But, if your entire organization is remote full- or part-time, those costs would be necessary for your employees to do their jobs. Automate routine tasks, mitigate compliance risks, and drive efficiencies across your organization. You might also want to consider offering a remote work reimbursement to all your employees, whether legally required or not. Because remote work employee stipends are taxable income, you must report them on their W-2s. 91A.5 (1) (b) ). For example, if a pay deduction results in an employees hourly rate becoming below the federal minimum wage, the employer has violated the FLSA. 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. See a licensed agent for detailed information on your state. The trickiest areas are cell phones and internet given that employees are now working from home because they cannot go into the office, as opposed to perhaps at their convenience. xwM1]XQ\D@T>i/i;h>%a%011m}D@9KrS'd04 dr@qi$oM0wwx&]je;Su`~O|>_z|D~QG Collaborative Compliance: Tax and Employment Old Issues, New Lens, USERRA: Insulate Your Business from Violation Liability, FFCRA Credits Extended, but Leave is Not Mandated, Sitting with the C-Suite: Remote Work - Increasing Communication on Collaboration Platforms, Common Ground: Embracing Remote Work for Better or for Worse. App. 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. Currently, 11 states, the District of Columbia, and Seattle, Washington, have laws about reimbursing employees for necessary work-related expenses. Control costs and mitigate risk with accurate timekeeping. Necessary expenses include internet access and phone bills for remote workers. However, there's still quite a bit of a gray area in other states. 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. Human resource teams need to gain efficiencies in their workday. Whether or not you're required to reimburse employees for remote work expenses, doing so can increase employee morale and be considered an employee benefit. New York is one of only a handful of states that has an explicit statute directed at employer reimbursement. 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 . Maximize training and development with personalized content. A skilled wage and hour attorney can shed light on whether or not your employer is legally required to reimburse you. This approach is likely effective for employers in dealing with cell phone reimbursements as an employees cell phone bill is usually a fixed cost. Reduce labor spend, manage overtime, and maximize productivity across your workforce. Overview. Because of the differences in cell phone plans and work-related scenarios, the calculation of reimbursement must be left to the trial court and parties in each particular case. (Id. Employers must reimburse employees for business expenses related to necessary duties or at the employer's direction. Read these case studies to see why. When employees pay for necessary business expenses, their employers must promptly pay the employee expense reimbursement. An employer will want to maintain records as to reimbursements made to employees and the rationale behind those reimbursement amounts. San Diego, CA, 92108 The Cincinnati Bengals and Paycor announce stadium naming rights partnership, further strengthening their shared vision and commitment to the Cincinnati community. Law Department, governs the limited personal use of the City of New York's ("City") office and technology resources by City employees. Manage all employee tasks and documents in one place. It was last updated on February 9, 2023. Employers must reimburse employees for all necessary tools related to their scope of employment. Federal law doesn't require employers to reimburse their employees for work expenses. Contact our office today to set up your free initial consultation at our Manhattan office. California and Illinois have the most robust and expansive business expense reimbursement laws. 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. Rules against interference with the exercise of rights under the ADA. 1144.). Weve been helping our New York City clients fight for their right to adequate compensation for over thirty years. 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.. Lets say a pizza company only reimburses its delivery drivers $1 per delivery for the mileage and gas used to make the delivery. (GINA). Finally, employers operating in these above-referenced jurisdictions should coordinate with a Labor & Employment attorney to review your existing expense reimbursement policy or create and implement such a policy. A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. Health insurance regulations differ in each state. 4th 1137 (2014). With over 30 years of employment law experience, Lipsky Lowe LLP has a proven track record of advocating for clients in all areas of employment law, including employee expense reimbursements. 2021), Reconceptualizing the Importance of Place (Mar. That's why many forward-thinking companies are now adopting bring-your-own-device . (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. Damages, of course, raise issues that are more complicated. (Id. 1144.). )\D5\ Cochran v. Schwan's Home Serv., Inc., 228 Cal. This can be tricky, however, as the employer must be sure to document/identify the amount of compensation attributable to the expense actually incurred. An action plan to help you achieve HR excellence based on Paycors proprietary data and research. According to a 2022 Reuters article17, several clients of Ackermann & Tilajef have settled cases with their employers over unreimbursed remote work expenses. That means that employers in D.C. are also generally not required to reimburse employees for the cost of tools and supplies necessary to perform their job where an employee's remote work arrangement is entirely voluntary, meaning they are neither required nor encouraged to continue to work remotely. Paycors leadership brings together some of the best minds in the business. However, the court did not provide guidance as to what is meant by reasonable percentage. Does it mean 20 percent? Through The Employer Report blog, our lawyers provide legal updates and practical insights to help clients understand, prepare for and respond to the latest domestic and cross-border Labor and Employment issues affecting US and multinational employers. Hire skilled nurses and manage PBJ reporting. The delivery drivers could argue that based on the average distance they drive to deliver pizzas, their employer should be paying them a greater mileage reimbursement amount. 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. 2023 Paycor, Inc | Refer Paycor | Privacy Policy | 1-800-501-9462 | Typically, you'll make reimbursement payments to your employees on their next paycheck. 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. In other words, it is no concern to the employer that the employee may pass on the expense to a family member or friend, or to a carrier that has to then write off a loss. 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. When developing and implementing a policy, employees need to be treated equally in that they all need to be reimbursed for work related phone use. Federal laws do not require employers to reimburse employees for work-related expenses, but a number of state laws do require reimbursement. 10 states and Washington D.C. have laws that require certain remote work expenses to be reimbursed. Section 2802; 820 Ill. Comp. 2 0 obj 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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