Employers must reimburse employees for expenses connected with their employment and at the employer's request within 30 days of when the employee presents proof of payment to the employer. See whats new today. 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. Learn a lot in a little bit of time with our HR explainers. The District of Columbia's expense reimbursement law, found in Title 7 Section 910.1 of the D.C. Municipal Regulations, requires employers to pay the cost of purchasing and maintaining any tools that the employer requires to perform the employer's business. Toll-Free Hotline: 877-669-2572. 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. stream 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. In some cases, local jurisdictions such as cities and counties may impose their own rules regarding expense reimbursement. Get real-time analytics to HR & Payroll data. We collect no fees unless we are successful in obtaining compensation on your behalf. 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? D.C. Municipal Register Title 7 Section 9105. In Mid-March, much of the nations workforce began working from home due to the COVID-19 pandemic. (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. 1 0 obj Some say the safest approach is to pay the entire cost of an employees phone. Lab. 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. Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal. 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. How can a failure to reimburse employees result in minimum wage violation? Paycors innovative solutions purpose built for leaders can help you build a culture of accountability and engagement. <> Rather, an employer should assess on a case-by-case basis the expenses incurred by an employee and make a reasonable determination as to what the proper level of reimbursement is for the expense claimed. An employer will want to maintain records as to reimbursements made to employees and the rationale behind those reimbursement amounts. 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) General rule. The FLSA does not explicitly require an employer to reimburse its employees for business expenses or deductions. Our employment law attorneys offer free initial consultations about expense reimbursement. 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. 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. 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. 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. Moreover, the employee has a relatively easy burden to successfully make a liability claim against his/her employer on this issue. *Represents approximately 30,000 corporate clients covering 40,000 businesses employing people. 778.217 Reimbursement for expenses. Paycors always in the news for innovation, hiring and more. Where the practice is widespread (or just alleged to be) the claims can be brought on a class-wide basis. Illinois Wage Payment and Collection Act, Section 9.5: Reimbursement of employee expenses6. 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. Our team of experienced sales professionals are a phone call away. Stay up to date with the latest HR trends. Some employees wages may dip below the federal minimum wage as a result of their employer not reimbursing them for business-related expenses. Determining if you will need to pay taxes on expense reimbursements depends on whether you use an accountable or nonaccountable plan. 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. Get The 2022 New Mexico Employment Law Handbook (Printable PDF) today! <>>> This entry does not give specific legal advice about your specific legal problem. 1144.). 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. 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. ), hotspot device or internet service usage if the following conditions are met: The agency has an established written policy detailing how the charges will be reimbursed. A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. %PDF-1.5 Employers have several options for reimbursing remote work expenses. Lets create value across your portfolio. 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.. 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. 12, Room 509, Albany, NY 12240 www.labor.state.ny.us bcejjs@labor.state.ny.us June 20, 2008 . The trial court denied Cochran's motion to certify the class and Cochran appealed. 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. 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. It was last updated on February 9, 2023. Under California law, an employer that does not reimburse employees risks a lawsuit where the damages will include not just the unreimbursed expenses but the attorneys fees incurred by the employee seeking reimbursement. However, the court did not provide guidance as to what is meant by reasonable percentage. Does it mean 20 percent? 2 0 obj (GINA). 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.. 91A.5 (1) (b) ). 4. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LABionNum=2802. Even if your state does not mandate reimbursement to employees, experts recommend offering some type of reimbursement policy because it helps build loyalty and morale among your employees. Reduce tedious admin and maximize the power of your benefits program. But, if your entire organization is remote full- or part-time, those costs would be necessary for your employees to do their jobs. Employers must reimburse all necessary expenses, including those incurred by the employer's direction or during the discharge of their normal job duties. Even fewer states require reimbursement for remote work expenses. We do not necessarily advocate those approaches. Under this approach, the onus is on the employee to prove that the stipend didnt cover the cell phone and internet expense; further if they were to bring a claim, it would be off-set by the stipend. Reimbursement is required even if the employee does not actually incur extra expenses as a result of his or her use. Employers must reimburse California employees for all necessary expenses, including those incurred at the employer's direction. No, it is not required but it is highly recommended. Reimbursement for business-related expenses. 4th 1137, 1140. The Reimbursement Amount Is A Reasonable Percentage Of The Employees Phone Bill, Employers Must Reimburse Employees For Work Related Cell Phone Use. "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. Since so few states have enacted laws requiring reimbursement for remote work expenses, the general rule under the FLSA will apply in most cases. DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Federal law doesn't require employers to reimburse their employees for work expenses. RF%|h3H c"40JOwF}\5Y UGUn}:xIdRu :I8U xys B Jir:TxwO1;ZL&)[G&+E,NU; Some, particularly in tech, may be working from home through the end of the year, or even permanently! 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. Supplement Payments (Labor Law 198-c) You'll simply approve these amounts up to their eligible allowance. The common practice that is evolving is to provide a flat monthly stipend and inform employees in writing that employees may submit expense reimbursement requests to the extent that the stipend does not otherwise cover their business internet and cell phone usage. Some states have laws that require employers to reimburse employees for the costs of necessary job expenses. Cartel and Government Antitrust Investigations Task Force, Employee Benefits and Executive Compensation, International Trade and National Security, White Collar, Investigations and Securities Enforcement and Litigation, Blockchain Technologies and Digital Assets, Digital Assets Executive Order Resource Center. According to state law, necessary expenditures include all reasonable costs. And, those who dont would like to. <> Many even purchased new home office setups, including desks and chairs. Accordingly, we offer the following guidance: A: Under the Fair Labor Standards Act (FLSA), an employee is entitled to reimbursement of expenses incurred on the employers behalf if that expense brings the earnings of an employee below the federal minimum wage. 2. Claim hiring tax credits and optimize shift coverage. Paycor has the right defenses in place to protect your data. Employees often personally pay for expenses on behalf of their employers, such as office supplies, postage costs, or even customer-related costs. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. 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 . The reimbursement would have otherwise been paid as wages. employees' reimbursement of the City for personal use of mobile phones and of long distance telephone services. expiration of such state disaster emergency declaration, New York State Medicaid will reimburse telephonic assessment, monitoring, and evaluation and management services provided to members in cases where face- to-face visits may not be recommended and it is appropriate for the member to be evaluated and managed by telephone. Examples of reimbursement arrangements that may be in excess of the expenses reasonably related to the needs of the employer's business and should be examined more closely include: (1) reimbursement for international or satellite cell phone coverage to a service technician whose business clients and otherbusiness contacts are all in the local . Offering a stipend can be an attractive benefit to prospective employees, especially when they are weighing their options and comparing benefits packages. 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 . Ensure you have a strong onboarding process. Learn more about our product bundles, cost per employee, plans and pricing. Massachusetts General Laws Part I, Title XXI, Chapter 149, Section 1488. )\D5\ For many companies, managing expenses used to require generating paper reports, keeping receipts, and undergoing a time-intensive approval procedure. See how our solutions help you reduce risk, save time, and simplify compliance management. This can be a valuable employee perk to help attract and retain employees in the tight labor market. Gather and convert employee feedback into real insights. As the COVID-19 pandemic hit, several states and localities implemented shelter-in-place orders to slow the spread of the coronavirus. Whenever an agreement between a bona fide labor organization and an employer or an association of employers requires that employees shall be paid an agreed wage or rate of wages for their services, it shall be unlawful for any person, either for that person or any other person, to request, demand or receive, either before or after such . Overview. More 0 found this answer helpful | 0 lawyers agree Helpful Unhelpful California's stringent wage and hour laws have led to unique legal risks for employers as they manage remote workers during the COVID-19 pandemicwhich makes it essential for employers to. See our vetted tech & services alliances. Automate routine tasks, mitigate compliance risks, and drive efficiencies across your organization. Stock Exchanges Publish Clawback Proposals As required by Rule 10D-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the New York Stock Exchange (the "NYSE") and Nasdaq have issued their . What portion ofthese business-related expenses are, or should be, reimbursable? Equipment such as copiers, printers, and fax machines, if necessary. In this case, it is also recommended that you develop general guidelines around reimbursement to avoid confusion or unequal application. 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. Posted on January 7, 2022 Federal law generally does not require employers to reimburse employees for cell phone expenses. Build a Morning News Brief: Easy, No Clutter, Free! Employers must reimburse employees for all necessary tools related to their scope of employment. 4th 1137 (2014). 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. % Attract top talent, develop employees, and make better decisions with actionable data. Get insights into your workforce to make critical business decisions. Representation in business, real estate, construction, home care, trust and probate litigation and general civil litigation. This blog article was originally published on March 23, 2022. 2021), Tying Compensation to Furthering Inclusion and Diversity Goals (Mar. For example, in New York, employers must. This article will break down expense reimbursement laws by state and what counts as a necessary cost. Table Of Contents Hours Worked Leave Laws Wage and Hour Wage Payment Employer Obligations Updated Laws States Employment and Labor Laws New York Resources Minimum Wage: $14.20/$15.00 Overtime: $21.30/$22.50 New York Labor Department Civil Rights New York Legislature General Email: info@utilityproject.org The answer is that reimbursement is always required. 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. Authorship Credit:Carter Norfleet and Shareef Farag. 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. California and Illinois have the most robust and expansive business expense reimbursement laws. Notably, employers are only required to reimburse "necessary" expenses in California, so businesses that do not require or encourage employees to work remotely are not required to reimburse these expenses, as employees have the option to work in the office, absent the FLSA and ADA restrictions noted above. Whether an expense will be deemed necessary for the performance of an employees' job depends primarily on the type of work the employee performs. This guidance is to 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. 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? North Dakota Century Code Section 34-02-0113. Stay tuned for more on that! 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. Generally, businesses arent required to pay expenses when workerschooseto work remotely. Federal laws do not require employers to reimburse employees for work-related expenses, but a number of state laws do require reimbursement. 2023 Lipsky Lowe LLP | Phone: 212-392-4772 1144.). Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. Eliminate the stress of ACA filing with streamlined reporting. Schedule a call with a personalized benefits advisor today to see how employee stipends can help your organization offer remote work benefits. 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 by the employee in direct consequence or discharge of his or her duties. at pp. As a result, many businesses are adopting automated expense management systems, which has resulted in an increase in the use of third-party providers. 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. 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. 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. Last Updated: March 29, 2023 | Read Time: 15 min. 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. -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/ Our popular webinars cover the latest HR and compliance trends. Ann. Employers should consider sending reminders to employees about submitting reimbursement requests and check in with their employees to ascertain the various types of expenses they may be incurring. endobj Unfortunately, in the years after Cochran was decided, employers still dont have a good answer because the courts and government agencies have not provided specific guidance. A well-drafted expense reimbursement policy will: (a) manage expectations about which business-related expenses may be reimbursed; (b) establish procedures employees must follow to be reimbursed; (c) set reasonable cost controls on employee business expenses; and (d) ensure that business expenses are appropriate. Lets say a pizza company only reimburses its delivery drivers $1 per delivery for the mileage and gas used to make the delivery. Law Firms: Be Strategic In Your COVID-19 Guidance [GUIDANCE] On COVID-19 and Business Continuity Plans. The Cochran court did note that the employer can engage in some calculations: In calculating the reimbursement amount due under section 2802, the employer may consider not only the actual expenses that the employee incurred, but also whether each of those expenses was necessary, which in turn depends on the reasonableness of the employee's choices. (Id. 2023 Paycor, Inc | Refer Paycor | Privacy Policy | 1-800-501-9462 | Employers must provide reimbursements to employees for expenses if there's an agreement, such as an employment contract, that outlines expense reimbursement. Today, more than 27.6 million people work from home as opposed to the roughly 9 million people in 2019 (American Community Survey). But work usage may vary depending on the position. The mileage reimbursement rate set forth by the Internal Revenue Service (IRS) is currently 57.5 cents per mile as of 2019. Some states require employers to reimburse employees only for necessary expenditures. Seattle: Employers must pay employees all compensation owed to them, including any business expenses. E.g., One employee whose job depends on the phone, may be reimbursed 100%; in office staff, on the other hand, with less frequent use could get a stipend of $25 (or $50 or $100) or a lower percentage than others (e.g., 10%). There is no federal requirement to reimburse employees for business-related expenses. endobj Hire and retain staff with earned wage access. Track critical documentation and control labor expenses. It does not matter whether the phone bill is paid for by a third person, or at all. ), Per the Cochran court, The purpose of this statute is to prevent employers from passing their operating expenses on to their employees. (Id. With the transition to remote work environments, travel-related expenses have been supplanted by work-from-home costs such as office supplies, equipment, and even Wi-Fi reimbursement. See a licensed agent for detailed information on your state. New York Labor Law 198-C. 43 Pa. Stat. However, there's still quite a bit of a gray area in other states. The requirements of the Americans With Disabilities Act (ADA) may also alter employer reimbursement obligations. Intuitive software to help pay employees accurately and on time. These federal requirements apply to all business expenses. 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. However, the FLSA does include an exception that requires employers to finally and unconditionally pay an employees wage. Leverage AI to automate sourcing and increase candidate diversity. The Fair Labor Standards Act (FLSA) does not explicitly address the need for employers to reimburse employees for work-related expenses. Theres never been a better time to join. 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. Ann. Federal law doesnt require employers to reimburse their employees for work expenses. The determination as to which expenses are "necessary" is certainly a fact-specific inquiry and will vary depending on the type of job the employee holds. 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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. Right defenses in place to protect your data law 198-c ) you 'll simply approve these up... Reasonable percentage of the Americans with Disabilities Act ( ADA ) may also alter employer reimbursement obligations phone.! Is meant by reasonable percentage of the nations workforce began working from home due to the pandemic. To finally and unconditionally pay an employees wage Lowe new york cell phone reimbursement law | phone: 212-392-4772.!, plans and pricing a liability claim against his/her employer on this issue office setups, including and! Morning news Brief: easy, no Clutter, free ofthese business-related expenses area other... Ada ) may also alter employer reimbursement obligations Chapter 149, Section:... For business-related expenses robust and expansive business expense reimbursement laws and drive across! Our product bundles, cost per employee, plans and pricing an attractive benefit to prospective employees, especially they... Drive efficiencies across your organization a fact specific exercise and that employers should approach each employee reimbursement as. On a class-wide basis, if necessary to be ) the claims can be a valuable employee to! 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