1011 Camino Del Rio S, Suite 531 California courts have given us some guidance on which expenses would fall into the category of "necessary expenses." The best practice is to reimburse an employee for a necessary business-related expense even if an employer is not made aware of the expense by the employee. Lets create value across your portfolio. Generally, businesses arent required to pay expenses when workerschooseto work remotely. 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. 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. 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. Federal law doesn't require employers to reimburse their employees for work expenses. Many of these organizations agreed to give remote workers a monthly stipend of up to $83. A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. 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. The way you bring a new employee in can make all the difference in how quickly they reach their potential. Understanding the state and local rules surrounding remote employee reimbursement can help your business avoid lawsuits by employees. Remedies available for retaliation. To help employers, weve put together a chart listing which states have remote employee reimbursement laws and what expenses must be reimbursed. Intuitive software to help pay employees accurately and on time. Again, the key is that employees are reimbursed a reasonable percentage of their phone bill. Reduce labor spend, manage overtime, and maximize productivity across your workforce. 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. You can edit the text in this area, and change where the contact form on the right submits to, by entering edit mode using the modes on the bottom right. 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. Employee reimbursements are at the employers discretion. Employers must reimburse their employees within 30 days of the reimbursement becoming due. 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. This includes reimbursement for internet access and phone bills when used for remote work purposes. 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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. 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. 2023 Lipsky Lowe LLP | Phone: 212-392-4772 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. Necessary expenses include internet access and phone bills for remote workers. 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. Eliminate the stress of ACA filing with streamlined reporting. Hire skilled nurses and manage PBJ reporting. You can use the table below to quickly reference state and local laws about remote work employee reimbursement. Learn a lot in a little bit of time with our HR explainers. 4 0 obj . Employees often use their personal resources to pay for expenses necessary to carry out their employment. Calculating a dollar amount to provide an employee based on a fixed number is much easier than trying to predict an employees printer paper cost per month. Attorney Advertising|Disclaimer | Terms | Website Development by It was last updated on February 9, 2023. 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. 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. Stat. Employers must reimburse employees for uniforms, purchased or rented equipment, or consumable supplies upon their termination of employment. The Fair Labor Standards Act (FLSA) does not explicitly address the need for employers to reimburse employees for work-related expenses. Reduce risk, save time, and simplify compliance management. An employer shall indemnify the employers employee, except as prescribed in section 34-02-02, for all that the employee necessarily expends or loses in direct consequence of the discharge of the employees duties.. Employers should reimburse expenses that are unavoidable and necessary for employees to fulfill their job responsibilities, according to guidance by the Massachusetts Attorney Generals office. 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. 4th 1137 (2014). Federal law states that an employer only needs to reimburse their employees for work-related expenses that drop their earnings below theminimum wage. 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. The following conditions must be met for such nontaxable treatment: (a) the employee maintains the type of cell phone coverage that is reasonably related to the needs of the employer's business; (b) the reimbursement amount is reasonably calculated not to exceed the employee's actual cell-phone expenses; and (c) the reimbursement for . Currently, 11 states, the District of Columbia, and Seattle, Washington, have laws about reimbursing employees for necessary work-related expenses. 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. Find quality candidates, communicate via text, and get powerful analytics. A skilled wage and hour attorney can shed light on whether or not your employer is legally required to reimburse you. Also, the details of the employee's cell phone plan do not factor into the liability analysis. While not required, the Massachusetts Attorney Generals Office recommends reimbursing employees for all expenses that are unavoidable and necessary. 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? New York, 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. 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. Claim hiring tax credits and optimize shift coverage. For example, California companies required to pay for employees' cell phone bills now need to allot for this massive expenditure. Where the practice is widespread (or just alleged to be) the claims can be brought on a class-wide basis. 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. 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. The reality is, its open to interpretation. Supplement Payments (Labor Law 198-c) Switching payroll providers can sound scary to a small businessbut it doesnt have to be. 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. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. We do not necessarily advocate those approaches. In the most employee-friendly state, California, employers may even be required to pay a portion of home utilities, such as air conditioning. Yes. This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. Similar to California's law, the Illinois law has also been interpreted to require reimbursement for cell phone and internet expenses when employees are required to use their cell phones or internet for work purposes in addition to equipment such as routers, laptops, and printers. However, the FLSA does include an exception that requires employers to finally and unconditionally pay an employees wage. Seattle: Employers must pay employees all compensation owed to them, including any business expenses. When employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. Seeing is believing. General Email: info@utilityproject.org <> The procedures for issuing, contesting, and enforcing judgments for citations or civil penalties issued by the commissioner shall be the same as those set forth in Section 1197.1. 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. Page Content These days, most employers can't keep pace with technology as nimbly as their workforce can. New Hampshire Revised Statutes Title 23 Section 275:5711. Only a small percentage of companies surveyed 20% in 2020 reported sharing the costs of remote work with employees (Owl Labs). 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. *Represents approximately 30,000 corporate clients covering 40,000 businesses employing people. This can be a valuable employee perk to help attract and retain employees in the tight labor market. This serves several purposes. 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. Some states have laws that require employers to reimburse employees for the costs of necessary job expenses. Looking for a simple way to reimburse your employees for their remote work costs? all that the employee necessarily expends or loses in direct consequence of the discharge of the employees duties.. Reimbursements must be paid out within 30 days. Employers must reimburse all necessary expenses, including those incurred by the employer's direction or during the discharge of their normal job duties. 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