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California’s Labor Code Section 2802 normally requires employers to reimburse employees for “reasonable” and “necessary” expenses incurred while performing their job duties. Sometimes, this requirement is explicit; other times, the law can be interpreted to require the reimbursement of business expenses. 2. Related issues are covered elsewhere, including: When employees work remotely, an employer may wish to use a Telecommuting Policy to establish expectations around the reimbursement of certain business-related expenses such as phone calls, shipping costs, etc. Under some state labor codes, that could require employers to take on additional reimbursement of work expenses. The following chart summarizes state and local requirements regarding general indemnification for employees' business expenses. Reimbursement for the cost of transportation shall not be certified to the Comptroller for payment by state agencies in excess of the reimbursement allowed in § 2.2-2823 except in an emergency or, when in the interest of the Commonwealth, a greater expense is justified, the facts in each such instance to be stated in the expense … ‘Reasonable’ expenses. Some states (like California, Illinois, and Montana) have more robust reimbursement laws in that employers are required to reimburse employees for all “necessary expenditures or losses” or “business expenses” incurred … New York is one of only a handful of states that has an explicit statute directed at employer reimbursement. Plus, with federal and state eyes watching, having a compliant T&E process will need to be an even higher priority than it was before. The materials and information included in the XpertHR service are provided for reference purposes only. Finally! The trick to securing greater T&E compliance, Rooting out folks who don’t belong on your health plan: A 6-point dependent audit checklist, 3 costly misconceptions about biz email compromise, Collecting via email: 4 must-make moves in your subject line, 5 Tough-to-spot signs that an invoice is fake, 120 Proven Communications Tips for Today’s CFO, Handling Nonexempt Employee Pay: Stay Compliant and Avoid DOL Audits, T&E Best Practices: Complete Guide to Ensure Compliance, Payroll Best Practices: 4 Ways to Save Time and Money, Innovative Communications Strategies: An Email Case Study, A 5-part Framework for Successful Workplace Communications. You’ll want to proactively account for these business expenses in your T&E budget to stay on track financially and prevent issues. If an employer fails to … The handbook addresses most common travel situations but is not intended to be a substitute for knowledge of the existing travel laws and regulations. Generally, your department knows what typical business expenses states will expect to be reimbursed, like transportation, lodging, meals and entertainment. Meanwhile, some states like Illinois expressly permit employers to adopt written policies designed to reasonably control employees’ job-related expenses … There is no federal requirement to reimburse employees for business-related expenses. Illinois , for example, requires employers to reimburse employees for all “necessary … New York State’s Labor Law provides that … Employee Travel Expense Reimbursement > C. Travel Mileage Rates. that are reasonably incurred in accordance with job responsibilities. But it’ll be important to watch as courts decide how to interpret these laws and make cas… As mentioned, these new laws may require your department to tweak its current T&E policies and practices to align with state-specific rules. New York 6. 275:57 Reimbursement of Employee Expenses. Exempt, excluded, and represented state employees may be eligible for the reimbursement of authorized out-of-pocket expenses that are reasonably, actually, and necessarily incurred as a result of conducting state business. Other jurisdictions that already have expense reimbursement laws on the books include: 1. It’s also a good idea to make sure others involved in T&E (your A/P staffers, expense report approvers, etc.) California’s law has been interpreted to require reimbursement of a “reasonable percentage” of an employee’s monthly bill for Internet or mobile device data plan, even if the employee does not incur any additional cost for using the Internet or mobile device … Essentially, these are laws requiring companies to reimburse employees for “necessary expenditures” incurred on the job. *Note: Illinois says the employee can offer a signed 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 … Be aware, however, that some states have their own laws surrounding expense reimbursement. The law is intended to prevent employers from passing on their operating expenses … legislation and in court, it’s important for Finance to stay vigilant and The California Labor Code – and, consequently, Section 2802 – only … In fact, federal law generally allows employers to require employees to pay for many business expenses unless doing so would reduce their earnings below the minimum wage and any overtime they may be owed. California and five other states have enacted expense-reimbursement statutes. Reimbursement of Employee Expenses. Other jurisdictions that already have expense reimbursement laws on the books include: Generally, your department knows what typical business expenses states will expect to be reimbursed, like transportation, lodging, meals and entertainment. View our privacy policy, privacy policy (California), cookie policy and supported browsers. "As such, a separate policy for California employees could be drafted that explains that, based on state law, the company will reimburse certain expenses" as stated in the policy. Those states include: Illinois, California, Massachusetts, Montana, Pennsylvania, New York, Iowa, and the District of Columbia. Expense reimbursement policy considerations: Set a clear written policy stating what will be reimbursed, under what conditions, and when, and have employees sign it; be as specific as possible. XpertHR is part of the LexisNexis® Risk Solutions Group portfolio of brands. But if you work in Illinois, state law now says employees can provide “a signed statement” if they lose a receipt. Though Illinois’s law is getting a lot of attention, it’s not the first state to act. If the amount paid as “reimbursement” is disproportionately large, the excess amount will be included in the regular rate. State labor codes and employee reimbursement As we have reported over the past several years, California's labor code in Section 2802 requires employers to reimburse all "necessary expenditures and losses" incurred as a part of an employee's job responsibilities… Can I file a lawsuit to get unpaid travel expenses reimbursed in California? (2) A reimbursement … Such expenses can include office supplies, cell phone and Wi-Fi service, printer and printing supplies and other equipment. However, some state and local laws may require employers to bear the cost of business expenses. SECTION OVERVIEW AND POLICIES New York State reimburses … With CFO Daily News arriving in your inbox, you will never miss critical stories on accounting, benefits, payroll & employment law strategies. For example, California companies required to pay for employees’ cell phone bills now need to allot for this massive expenditure. Use of the service is subject to our terms and conditions. Other states, including Illinois, Iowa, Montana, New Hampshire and South Dakota, have enacted laws which may require reimbursement of employee expenses, although case law in these states is not as … As a result, employers reasonably took the position that expense reimbursements were not “wages” and thus were not covered by the IWPCA. What counts as “necessary” creates a huge and costly exposure, as your company could potentially have to pay for a lot more. Your company required or approved the employee to make the expense. Washington, DC. Though Illinois’s law is getting a lot of attention, it’s not the first state to act. California 2. In addition, state law … A request by a State approving agency for reimbursement under the law will be subject to the requirements of 41 CFR 8-7.5101-8 as to “Equal Opportunity”. The federal Fair Labor Standards Act requires that employees earn at least the minimum wage net of any necessary business expenses they incur to do their jobs. Please press Ctrl/Command + D to add a bookmark manually. Enter your username and password below to log in. movement? Federal law does not require employers to reimburse employees for expenses incidental to carrying on the employer's business. As states continue to address expense reimbursement in Employers should be aware that federal and state laws have different rules regarding reimbursement for expenses incurred by employees with remote work arrangements. Reimbursement Obligations. XIII.4.C Travel Mileage Rates. statement regarding the expense instead of a receipt if supporting Chart cells for which there are no requirements regarding business expense indemnification are marked N/A. You’ll need to decide how to address and communicate any changes companywide. Iowa 3. 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. Given the sudden and rapid expansion of the remote employee workforce, and the patchwork of expense reimbursement requirements under state and federal law, employers should … Current State Laws & Reimbursement Policies Search by Filter However, some states have their own laws surrounding expense reimbursement. This is a chart summarizing general reimbursement … For example: Companies usually mandate receipts. In 2019, Illinois imposed expense reimbursement on employers, mandating they must reimburse for all “necessary expenditures.” The law’s modeled after California’s law … Expense retorts: … Prior to the amendment, expense reimbursements were not addressed in the IWPCA and its regulations. CFO Daily News, part of the SuccessFuel Network, provides the latest Finance and employment law news for Finance professionals in the trenches of small-to-medium-sized businesses. Illinois … But it’ll be important to watch as courts decide how to interpret these laws and make case-by-case judgment calls. Recently, Illinois modified its Wage Payment and Collection Act to include expense reimbursement rules. – I. Montana 5. Which states are at the forefront of this legislative documentation doesn’t exist, is missing or is lost. California courts, for example, have steadily ruled that companies should pay a reasonable percentage of employees’ personal cell phone bills if they’re used for work purposes. An employee claiming he or she was not properly reimbursed would have to characterize it as a breach-of-contract claim. The request will be accompanied by the proposed plan of operation and the specific duties and responsibilities of all personnel for which reimbursement of salaries and travel expense … As of Jan. 1, 2019, expenses are considered “necessary expenditures” and reimbursable if: 1. Who is submitting the receipt? benefits and wage supplements (the latter including reimbursement of expenses, see Labor Law §198-c(2)) . Same thing for expenses … You’ll get to explore thousands of resources that will help you be confident in your HR decisions, increase your productivity and deliver on your business strategies. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. That position is n… Expense reimbursement is getting more and more complicated for your finance department, due largely to a newer legislative trend. As if IRS regulations weren’t enough to keep up with, some states are adding their own expense reimbursement laws that your staffers will have to comply with, too. Federal law requires reimbursement only when required expenses push a worker’s earnings below minimum wage. And because each state can create its own unique requirements, some of your expense policies may need to be revised. Employer reimbursement policies may require workers to submit expense reports within a certain time frame, but the California Expense Reimbursement Law states that workers be paid for legitimate business expenses no matter when the employee submitted them and whether or not management has already approved the expenses. Lost your password? The rest is up to states and individual employers. New York State Employee Expense Reimbursement Law. Your browser does not allow automatic adding of bookmarks. However, several states (including California, the District of Columbia, … Copyright © 2020 LexisNexis Risk Solutions Group, Permitted and Prohibited Pay Deductions by State and Municipality, The definition of wages, including whether reimbursement for expenses is considered a wage and/or a benefit (, Employment laws such as the Americans with Disabilities Act (ADA), which may require employers to reimburse employees for certain expenses if they are a reasonable accommodation (. Massachusetts 4. The employee submitted the expense for reimbursement with proper supporting documentation* (i.e., a receipt) within 30 calendar days of when it was incurred. (c) Payments excluding expenses. Pennsylvania, and 7. Rather than simply regurgitating the day’s headlines, CFO Daily News delivers actionable insights, helping Finance execs understand what Finance trends mean to their business. Do I have to pay for a work uniform or buy my store’s clothes in California? This field is for validation purposes and should be left unchanged. Therefore, all commissions paid to the employees here, whether wage commissions or expense commissions, must be considered “wages” as that term is used in Article 6 of the Labor Law. They are not intended either as a substitute for professional advice or judgment or to provide legal or other advice with respect to particular circumstances. If your work requires you … In instances where the state has made policies permanent, CCHP has incorporated those policies into this interactive map tool. In accordance with current state policy, employees may be eligible to receive reimbursement for expenses … proactive. Discover the power of XpertHR employment law guidance and best practice at your fingertips with a free trial. (1) It should be noted that only the actual or reasonably approximate amount of the expense is excludable from the regular rate. Other states, such as Illinois, Montana, New Hampshire, North Dakota, and South Dakota, have reimbursement laws similar to California, and the law in some states is a bit vague. Courts in the Golden State have also said companies should pay for similar items like Internet expenses, data plans and other computing expenses. Such a claim would not include the potential recovery of liquidated damages and attorney’s fees, as are available under the IWPCA. If they live in California, … You will receive a link to create a new password via email. First, double-check if your own state has any laws – or any legislation circulating that could lead to new rules in the near future. Sign up for a free CFO Daily News membership and get our newsletter! However, unlike the Illinois law, California law does not enable employers to maintain parameters of expense … reimbursement of employees for allowable travel expenses incurred during travel on official state business. 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