Federal law doesnt require employers to reimburse their employees for work expenses. Gather and convert employee feedback into real insights. With so many employees working remotely, employers also began to wonder if they should reimburse their employees. Explore our product tour to see how. If youd like to set yourself apart from the competition, it may be a good idea. To embed, copy and paste the code into your website or blog: Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: [HOT] Read Latest COVID-19 Guidance, All Aspects [SCHEDULE] Upcoming COVID-19 Webinars & Online Programs, [GUIDANCE] COVID-19 and Force Majeure Considerations, [GUIDANCE] COVID-19 and Employer Liability Issues. 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. ), Per the Cochran court, The purpose of this statute is to prevent employers from passing their operating expenses on to their employees. (Id. Build a great place to work where employees show up, make a difference and win together. And, even if your state does not mandate reimbursement, a reimbursement policy will help manage expectations with your employees. Leave payroll and taxes to the experts so you can focus on your business. 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. Specifically, you should identify what is considered a necessary expense to be reimbursed and what is not. For this, employees will be required to submit a reimbursement form. Save time, pay employees from wherever you are, and never worry about tax compliance. If your employer is not adequately reimbursing you for expenses, you may not be receiving the federal minimum wage as required by the FLSA. There is no federal law requiring employers to have a policy related to remote work reimbursement; but some states require it. Section 2802; 820 Ill. Comp. 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. New York Labor Law 198-C. 43 Pa. Stat. Organize your team, manage schedules, and communicate info in real-time. 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. This includes reimbursement for internet access and phone bills when used for remote work purposes. According to Abacus' How to Create a Cell Phone Reimbursement Policy, they suggest "$50 for low business use and $75 for high business use." Also, here's a handy calculator to help you identify how much you should be spending on mobile stipends. Organizations learned to operate in this new environment almost overnight. 778.217 Reimbursement for expenses. The employee can also ask the Labor Commissioner to cite the employer or anyone acting on the employers behalf under Labor Code Section 2802(d). Also, the details of the employee's cell phone plan do not factor into the liability analysis. The reimbursement would have otherwise been paid as wages. 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. 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. The Reimbursement Amount Is A Reasonable Percentage Of The Employees Phone Bill, Employers Must Reimburse Employees For Work Related Cell Phone Use. 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. You can use the table below to quickly reference state and local laws about remote work employee reimbursement. 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. Attorney Advertising|Disclaimer | Terms | Website Development by App. 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. However, the court did not provide guidance as to what is meant by reasonable percentage. Does it mean 20 percent? Otherwise, the employer would receive a windfall because it would be passing its operating expenses on to the employee. Employers must reimburse employees for uniforms, purchased or rented equipment, or consumable supplies upon their termination of employment. 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. Before you decide, ask us to send you written information about our qualifications and experience. Given this, when crafting a nationwide policy, sometimes its simplest to use California as the high water mark. Representation in business, real estate, construction, home care, trust and probate litigation and general civil litigation. You can give all employees the same allowance or give certain employee classes (such as full-time) or employees in certain states a larger allowance. (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. Overview. 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. 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. 2. Our customers are our heroes. Another approach is to purchase company cell phones for employees. Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. 98% of respondents in Buffers 2023 Remote Work Survey of 3000 would like to work remotely for the rest of their careers (Buffer). In order to qualify for an accountable plan, the employer's reimbursement or allowance arrangement must follow all three of these rules: Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. It works like this: you set up a monthly benefit allowance for your employees. <> However, there's still quite a bit of a gray area in other states. Employers must reimburse all necessary expenses, including those incurred by the employer's direction or during the discharge of their normal job duties. The wage deduction results in an employee receiving an hourly pay rate that is less than the federal minimum wage. Code. Employers that operate in several different jurisdictions are encouraged to familiarize themselves with the expense reimbursement requirements of all of those jurisdictions, if any. 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. This shift raises the all-important question of who foots the bill for these expenses going forward. Albany, NY 12210 . 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. Baker Donelson var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); | Attorney Advertising, Copyright var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); JD Supra, LLC. Find quality candidates, communicate via text, and get powerful analytics. Learn more about our product bundles, cost per employee, plans and pricing. App. 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. And, those who dont would like to. 3 0 obj Transform open enrollment and simplify the complexity of benefits admin. 4. View our product demos to get a deeper dive into the technology. 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. Longer Answer with Practice Recommendations: An Employer Must Reimburse An Employee For The Employees Use Of A Personal Cell Phone For Work Related Duties. Ann. Employers have several options for reimbursing remote work expenses. 1144-1145.). 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/. It's best to check your state's laws regarding what's considered a necessary business expense. 1 0 obj Amazon2 has also been added to the mix, with workers in California suing the e-commerce giant for unpaid remote work expenses. San Diego, CA, 92108 More states are likely to consider adopting remote work and employee reimbursement laws in the future. Necessary expenses include internet access and phone bills for remote workers. endobj Plan, manage, and execute pay increases and rewards. 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. For example, California allows an employee up to three years to submit a reimbursement request. A necessary expense is anything required for the performance of an employees job. Offering a stipend can be an attractive benefit to prospective employees, especially when they are weighing their options and comparing benefits packages. With the WorkPerks employee stipend administration platform from PeopleKeep, you can create a quality remote employee benefits package that works for everyone. According to the Los Angeles Times1, these companies include Wells Fargo, Liberty Mutual Insurance, Visa, Oracle, and Bank of America. 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. It is irrelevant whether the employee changed plans to accommodate work-related cell phone usage. 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. Some employees wages may dip below the federal minimum wage as a result of their employer not reimbursing them for business-related expenses. The reality is, its open to interpretation. These are not typical expenses that employers would reimburse. 2023 Paycor, Inc | Refer Paycor | Privacy Policy | 1-800-501-9462 | Whether the employees have cell phones. (July 2021), Providing Perspective on President Bidens Executive Order on Promoting Competition in the American Economy (July 2021), Best Practices for Tracking Proof of Employee Vaccinations (May 2021), Key Considerations in High Profile Investigations (May 2021), Avoiding Discrimination Lawsuits Following Layoffs (Mar. Substantiate expenses: There must be accounting with substantiation (date, place, amount, purpose) made within a reasonable period of time (60 days). endobj Seattle: Employers must pay employees all compensation owed to them, including any business expenses. Federal law states that an employer only needs to reimburse their employees for work-related expenses that drop their earnings below theminimum wage. Due to the pandemic, employees in the US are working from home in unprecedented numbers. While most states don't have reimbursement laws, "it's up to the employer to do the right thing," said Laura Handrick, an HR professional at Choosing Therapy in Brooklyn, N.Y. The following is our summary of significant U.S. legal and regulatory developments during the first quarter of 2023 of interest to Canadian companies and their advisors. Cochran v. Schwan's Home Serv., Inc., 228 Cal. 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. NY Tell us about your organization and what you want to accomplish and well recommend a custom solution. An action plan to help you achieve HR excellence based on Paycors proprietary data and research. We do not necessarily advocate those approaches. Generally, under the federal Fair Labor Standards Act (FLSA), employers are not required to reimburse employees for work-related expenses incurred working remotely. 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. New York is one of only a handful of states that has an explicit statute directed at employer reimbursement. Understanding the state and local rules surrounding remote employee reimbursement can help your business avoid lawsuits by employees. Control costs and make every dollar count with reporting. So, what to do? If an employer knows that an employee will regularly incur a certain business-related/work-related expense, it can choose to increase that employees salary to cover the costs of those expenses. ), 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. Differences in reimbursement can be justified based on position (and amount of usage). 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 . 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? A: An employer is likely not responsible for the entire personal cell phone bill of an employee simply because that employee uses his/her personal cell phone for work purposes. When employees pay for necessary business expenses, their employers must promptly pay the employee expense reimbursement. . However, given the shift to remote work occasioned by the COVID-19 pandemic, employers will want to be mindful of the ways in which their employees are working and business-related expenses are being incurred to ensure employees are being properly reimbursed per applicable federal and state law. App. If the employer is a corporation, the New York statute holds its President, Secretary, and Treasurers each guilty of a misdemeanor for failing to pay their employees benefits or wage supplements. It is important to note that the provisions in this section do not apply to bona fide professional, administrative, or executive employees who earn over $900 US per week. 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What you want to incorporate anything you 're legally required to reimburse their employees for work expenses on the... Via text, and communicate info in real-time employer reimbursement less than the federal wage.