Omnizant - View site in new window, Age Discrimination in Employment Act (ADEA), Worker Adjustment and Retraining Notification (WARN), Understanding New Yorks Statutes of Limitations, New York Employers Paying Biweekly Hit with Wage Class Actions, Overtime Pay Mandate for Six-Figure Earners to Spur Litigation, Signs that Someone Is Sexually Harassing a Co-Worker, Why Telling Your Co-worker Isnt the Best Choice to Report Sexual Harassment, Signs that Someone Is the Victim of Sexual Harassment, Common Wage & Hour Complaints In The Personal Service Industry, Payment Disputes in the Restaurant Industry, Lipsky Lowe Named Best Employment Lawyers in New York City, A Look at the EEOCs Fiscal Year 2022 Performance Report, NLRB Ruling Restricts Severance Agreements, Replacement of broken equipment or dishes, Expenses related to business transaction errors, Costs associated with settling disputes with customers, An employer deducts expenses from the employees wage and the expense was for the benefit of the employer, The employer fails to reimburse his or her employee for those expenses. Find quality candidates, communicate via text, and get powerful analytics. 1 0 obj Leverage AI to automate sourcing and increase candidate diversity. 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. at p. App. 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. Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. Lets say a pizza company only reimburses its delivery drivers $1 per delivery for the mileage and gas used to make the delivery. Yes. 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. Remote work has become the new normal for many Americans with over 27 million people working from home. Employers must reimburse California employees for all necessary expenses, including those incurred at the employer's direction. See how our solutions help you reduce risk, save time, and simplify compliance management. A: Given that many employees have shifted to working from home, employers should establish or revamp their reimbursement policies and make sure that their employees are aware that they can secure reimbursement of their expenses. Notably, California and Illinois courts have explicitly stated that remote work expenses fall under their states' employee expense reimbursement laws. 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.) Streamline recruiting and hiring so you can quickly and effectively fill open positions, develop top talent, and retain your workforce. )\D5\ This guidance is to For example, California companies required to pay for employees' cell phone bills now need to allot for this massive expenditure. 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. Our popular webinars cover the latest HR and compliance trends. Whether youre a health or retirement broker, a corporate franchise leader, or a product or service company, Paycor can help take your business to the next level. 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. For example, employees may now (and for the foreseeable future) be incurring expenses related to printer paper, pencils, pens, cell phone expenses, home internet bills, etc. 4 0 obj An action plan to help you achieve HR excellence based on Paycors proprietary data and research. Were growing and want to hear from you. Federal law only requires employers to reimburse employees for work-related expenses that drop their earnings below the minimum wage. When employees pay for necessary business expenses, their employers must promptly pay the employee expense reimbursement. We do not necessarily advocate those approaches. 1011 Camino Del Rio S, Suite 531 @^_ {d1EQ2P%5{x n(,N5|_ \SfppMTn[6|4EF?F('DZnH6N},q'}l64a ux-c fp+"i+Q`p9xy#.BA%AZ94, See a licensed agent for detailed information on your state. 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. Test drive Paycor Payroll, Onboarding, HR, and Time for 14 days. California Labor Code 2802 LAB . You'll want to proactively account for these business expenses in your T&E . When employees work from home, they use their own electricity, internet and (often) office supplies. App. Intuitive software to help pay employees accurately and on time. 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. The FLSA does not explicitly require an employer to reimburse its employees for business expenses or deductions. According to a 2022 Reuters article17, several clients of Ackermann & Tilajef have settled cases with their employers over unreimbursed remote work expenses. 2. The reality is, its open to interpretation. Specifically, you should identify what is considered a necessary expense to be reimbursed and what is not. The Division of Labor Standards protects all workers, including those that are undocumented or paid off the books, and ensures employers are following Labor Laws. Return unsubstantiated amounts: Any excess reimbursements or allowances must be returned within a reasonable time (120 days). 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. In the Cochran case mentioned above, the court of appeals held that employers must reimburse a reasonable percentage of their employees cell phone bills. Lets create value across your portfolio. Rules against interference with the exercise of rights under the ADA. Understanding the state and local rules surrounding remote employee reimbursement can help your business avoid lawsuits by employees. Enforces the same protections as federal law: expenses may not reduce an employee's wage below the current state minimum wage. 4. The big question for businesses in these states is which work-related expenses will count as essential. Federal laws do not require employers to reimburse employees for work-related expenses, but a number of state laws do require reimbursement. Employers cannot waive the right to receive a national minimum wage, either directly or indirectly. Hire skilled nurses and manage PBJ reporting. Employers can specify what theyll pay for each type of expense. Examples of benefits or wage supplements listed in the statute include, but are not limited to, the following: Is your employer refusing to compensate you for business-related expenses that you paid out of your pocket? 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. Federal law doesn't require employers to reimburse their employees for work expenses. 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. 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. Leave payroll and taxes to the experts so you can focus on your business. Our team of experienced sales professionals are a phone call away. 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. For example, California Labor Code Section 2802(a) requires an employer to indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer. Failing to reimburse employees can lead to class or collective actions and quickly become incredibly burdensome for employers. Expense reimbursement lawsuits were already commonplace before the pandemic, and with no end in sight to the pandemic and employees working from home, employers can expect additional lawsuits to be filed. Stat. 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. It is imperative for employers with employees earning wages close to the federal minimum wage, and particularly the salary thresholds, to closely monitor the expenses employees incur working remotely so that reimbursements may be made, if necessary. More states are likely to consider adopting remote work and employee reimbursement laws in the future. "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. This blog article was originally published on March 23, 2022. What portion ofthese business-related expenses are, or should be, reimbursable? You should note that if you do use a personal phone for business use, you may be able to record a trade or business expense for your personal tax reporting purposes. 4th 1137 (2014). 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.. 2023 Paycor, Inc | Refer Paycor | Privacy Policy | 1-800-501-9462 | With so many employees working remotely, employers also began to wonder if they should reimburse their employees. You can use the table below to quickly reference state and local laws about remote work employee reimbursement. 778.217 Reimbursement for expenses. <>>> Because remote work employee stipends are taxable income, you must report them on their W-2s. Attract top talent, develop employees, and make better decisions with actionable data. Employers that operate in several different jurisdictions are encouraged to familiarize themselves with the expense reimbursement requirements of all of those jurisdictions, if any. Gather and convert employee feedback into real insights. *Represents approximately 30,000 corporate clients covering 40,000 businesses employing people. 1144.). Due to the pandemic, employees in the US are working from home in unprecedented numbers. You might also want to consider offering a remote work reimbursement to all your employees, whether legally required or not. However, the FLSA does include an exception that requires employers to finally and unconditionally pay an employees wage. 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. Employers must reimburse employees for all necessary expenses or losses. 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. 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. 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. The date reimbursement is due is typically the date that the employee submitted the expense for reimbursement. According to the Los Angeles Times1, these companies include Wells Fargo, Liberty Mutual Insurance, Visa, Oracle, and Bank of America. If remote work is mandated, however, a variety of different costs may need to be reimbursed. There is no federal law requiring employers to have a policy related to remote work reimbursement; but some states require it. 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. (d) In addition to recovery of penalties under this section in a court action or proceedings pursuant to Section 98, the commissioner may issue a citation against an employer or other person acting on behalf of the employer who violates reimbursement obligations for an amount determined to be due to an employee under this section. Human resource teams need to gain efficiencies in their workday. We help you stay updated on the latest payroll and tax regulations. Offering a remote work stipend is a great way to meet state reimbursement requirements while providing your employees with a quality benefit. Once you understand your obligations, set clear guidelines for your employees. Some say the safest approach is to pay the entire cost of an employees phone. A: Employers should have a written reimbursement policy that requires employees to submit reimbursement requests by a certain deadline after the expense is incurred. To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed. Law Firms: Be Strategic In Your COVID-19 Guidance [GUIDANCE] On COVID-19 and Business Continuity Plans. 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