Also, we advise that employers maintain documentation to support the reasonableness of the stipend that they establish, in case the amount of the stipend is ever attacked as being too little (such that it does not cover an employers full reimbursement obligation) or too much (such that the excess should be treated as compensation for work rather than reimbursement). The policy should clearly articulate the employers expectations for the tools and equipment that are necessary to do the job from home, and establish guardrails for when and how employees can purchase equipment with the expectation that the company will foot the bill. You must have JavaScript enabled to use this form. California has one of the most complicated and well-defined employee expense reimbursement laws. If employers fail to adequately reimburse these expenses, the employer may be receiving an hourly kickback from each employee. THERES A BETTER WAY TO WORK with NYCs Commuter Benefits Law. 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, particularly in tech, may be working from home through the end of the year, or even permanently! Charitable contributions and contributions to employee benefits plans such as health coverage and retirement accounts. California Labor Code 2802. While that might sound like only those costs that would not have been incurred but for work, that is not how the statute has been interpreted. The maximum allowable Contact our office today to set up your free initial consultation at our Manhattan office. xref NYC's Commuter Benefits Law took effect on January 1, 2016. Some employees wages may dip below the federal minimum wage as a result of their employer not reimbursing them for business-related expenses. By: Christina Jaremus, Kyle Petersen, Daniel Small, and Gena Usenheimer. Google Translate cannot translate all types of documents, and it may not give you an exact translation all the time. The FLSA, however, is implicated if an employees unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. Law Salaries & Employee Benefits Reimbursement for Travel & Moving Expenses Upon Transfer, Reassignment or Promotion New York State Finance Law Sec. requesting reimbursement. Reimbursement for business-related expenses. Recent research offers a warning to employers about implementing return-to-office policies: Nearly 7 in 10 employees (68 percent) said they would rather look for a new job than return to the . Your company required or approved the employee to make the expense. EMPLOYEES COVERED/NOT COVERED BY THE LAW, V. TRANSIT COVERED/NOT COVERED BY THE LAW, VI. 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. The expense reimbursement process enables an employer to pay funds back to an employee for business-related expenses they paid for with their own money. This figure varies depending on the company and the agreed-upon policy. Where an employee incurs expenses on his employer's behalf or where he is required to expend sums by reason of action taken for the convenience of his employer, section 7 (e) (2) is applicable to reimbursement for such expenses. 0000007980 00000 n Another component of assessing whether an incurred expense was necessary is whether the employee could have fulfilled the need at a lower cost. Zillow said it would reimburse its employees up to $7,500 when significant travel is required for medical procedures including abortions. The information on MEL is not legal advice, but general information related to legal issues commonly encountered. For Now. if(currentUrl.indexOf("/about-shrm/pages/shrm-china.aspx") > -1) { 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. New York. We recommend you direct state specific inquiries directly to your Seyfarth lawyer of choice. NY The New York State Office of the State Comptroller's website is provided in English. Exception: If the employer has 20 or more full-time employees who are not covered by the CBA, the employer must offer these employees commuter benefits. Since so many people are working remotely . Are companies legally required to reimburse employees for work-related expenses? Search and download FREE white papers from industry experts. excess reimbursements or allowances. Your access to and use of this website is subject to additional Terms of Use. Key Considerations for Employers as States Lift Mask Mandates, Momentum to Mandate Vaccinations in the Workplace: What Employers Need to Know Now, Navigating Political Speech in the Workplace, Providing Perspective on President Biden's Executive Order on Promoting Competition in the American Economy, Reconceptualizing the Importance of Place, Religious Beliefs in the Workplace Following the Supreme Court's Bostock Decision. Federal law doesn't require employers to reimburse their employees for work expenses. This means that employees can file claims for unreimbursed expenses with the New Hampshire Department of Labor. Patagonia reaffirmed its commitment to covering employee travel expenses for abortions: "Caring for employees extends beyond basic health insurance," the company said on LinkedIn. Just reimburse on a reasonable and legal basis," he said. Depending on what type of expense is reimbursed, the amounts received . According to the IRS, employees must now include moving expense reimbursements in employees wages, except for certain members of the Armed Forces. However, if the . Reimbursement forms and instructions Forms and instructions can be found at Voucher packet . accountable or nonaccountable. The IRS has different reporting requirements reduced expenses. In California, for example, the statutory language requires employers to reimburse for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of the employees duties or at the direction of the employer. allowance arrangement must follow all three of these rules: Since For example, if a pay deduction results in an employees hourly rate becoming below the federal minimum wage, the employer has violated the FLSA. income. See IRS Publication 535 to learn more about business expenses. the employer reimburses the employee. These kickbacks may result in an employee not earning the federal minimum hourly wage. Tuition reimbursement to a State employee will be processed by the Governors Office of Employee Relations (GOER) through a single pay voucher in the Accounts Payable module of the SFS. To . 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(a) General rule. }); if($('.container-footer').length > 1){ While there is some discretion the employer can exercise in determining the amount of reimbursement (such as actual expenses and the reasonableness of the employee's choice: i.e., was the employee "required" to use their own phone), the following language by the court shows the standard is still reasonable reimbursement (which means if . In addition, 0000002636 00000 n . The reimbursement would have otherwise Create an Expense Reimbursement Policy for the Employee Handbook. "It means . any of these conditions are not met, the reimbursements are treated as paid under Example: Mario is an employee forced to work at home due to the coronavirus for two months. Where the practice is widespread (or just alleged to be) the claims can be brought on a class-wide basis. EMPLOYERS COVERED/NOT COVERED BY THE LAW, III. If you need to manage your card, make changes to it, or have a question about a procedure related to your T-Card, check here. 0000020567 00000 n 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. Should We Panic Due To The FTCs Proposed Rule? No. Information on MEL is public. submit reimbursable expenses within 30 days of incurring the expense. Employers should also consider whether it is more cost-effective to provide equipment, cell service or Wifi service, or other necessary equipment directly than to reimburse. Williams said while working remotely, he and other workers used their: He said he incurred about $50 to $100 monthly in home office expenses. Non-teaching employees of school districts are subject to the NYS Minimum Join thousands of people who receive monthly site updates. benefits, and compliance needs. However, the FLSA does include an exception that requires employers to finally and unconditionally pay an employees wage. %%EOF Montana's employee business expense reimbursement law is similar to that of California's and Illinois'. for non-profit, educational, and government users. The more employees who sign up for transportation benefits, the more the employer can save. payment, but what about reimbursements? Businesses If youve personally paid out of your pocket for your employers business expenses and havent received compensation, you may be entitled to expense reimbursement plus interest and attorney fees and costs. The law is based on the Internal Revenue . Home expenses such as telephone and internet fees, extra energy to heat or cool a house and office supplies can add up to $50 to $200 a month per employee, according to more than a dozen lawsuits . By: Tiffany H. Rouhi. (last accessed Dec. 13, 2016). New York State Finance Law Section 202 - Reimbursement for Travel and Moving Expenses Upon Transfer, Reassignment or Promotion New York Laws State Fin. Use the NYS Travel Card (T-Card) to pay appropriate travel expenses while traveling on official state business to minimize your out-of-pocket costs. An Accountable Plan allows the employee to either receive and advance/allowance or be reimbursed for expenses under the following conditions: The expense must be in connection with the performance of services as an employee. Employers are therefore well advised to re-evaluate the scope of potential expenses, legal obligations for reimbursement, and the state of written policies to ensure the greatest measure of compliance with law. This includes Internet access, printers, office supplies, ink and software, but they've also approved laptops, whiteboards and iPads in select cases. Our mission is to be your solution for the easiest and most effective way to stay on top of To assist in these efforts, below, we provide a high-level summary of relevant laws, policy considerations, and best practices. Illinois, for example, requires employers to reimburse employees for all necessary expenditures incurred by the employee within the employees scope of employment and directly related to services performed by the employer.. Illinois Expense Reimbursement Law. "Some plaintiffs' counsel have suggested that employers also have an obligation in today's workplace to reimburse employees for overhead expenses, such as utilities, rent or mortgage, and the cost of furniture. depending on whether you have an accountable or nonaccountable plan. I most recently submitted my expenses as well as my consulting fees to my ex employer my ex employer responded back by telling me that it is company policy that I only have three months to submit any expense reimbursement and consulting fees, because my e. Can a company not reimburse employees for expenses submitted past 3 months from date of purchase? The vast majority of W-2 workers can't deduct unreimbursed employee expenses in 2020. 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. This approach will usually cover the vast majority of expenses but it should nevertheless be coupled with a process by which employees can seek reimbursement of additional expenses that were not covered by the stipend. 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 well-developed as in California. If there's an . . A common approach is to provide a fixed monthly stipend based on a good faith and reasonable estimate of an employees reimbursable expenses. BYOD, or bring your own device, policies are becoming more common in work environments. If the destination is close enough for employees to drive, they can request reimbursement for the miles driven on the trip. Gain the intel you need now to successfully anticipate and navigate employment laws, stay compliant and mitigate legal risks. Does your employer fail to compensate you for other regular expenses? "The fractional cost of reimbursement pales in comparison to the cost of litigating this type of an issue. a nonaccountable plan, which are considered wages, treated as supplemental entrepreneurship, were lowering the cost of legal services and And that doesn't factor in the hidden costs of training: time taken away from job duties, equipment. 420 Lexington Avenue, Suite 1830, document.head.append(temp_style); You may be trying to access this site from a secured browser on the server. The FLSA, however, is implicated if an employee's unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. taxes. Preferred suppliers for If you are not exempt as per paragraph 3 below they get 30 days to pay. Internet service and cell phone data are the most commonly considered, but what about printers and paper? Please log in as a SHRM member. The answer likely depends on where the employee is located. SHRM Employment Law & Compliance Conference. And in other states still, employers are obligated by statute only to reimburse for losses suffered that fall outside of ordinary risks of the business in which he is employed. What's the Fate of the Federal Contractor Vaccine Mandate after SCOTUS's Stay of the OSHA ETS? ordinary and necessary business expenses, Introducing a New BenefitHealth Advocate, Assurity Benefits Protecting you and the ones that you love, Flexible Spending Account (FSA) vs. Health Savings Account (HSA), What Is Progressive Discipline and How It Helps Your Business, How Employment Screening in 2023 Will Change the Way You Do Business, The Top 5 Best Ways to Handle Workplace Negativity in Your Business, Dues and subscriptions, In light of this, as many as 11 US states, and Washington D.C., have introduced state laws that further protect their employees Remote Employee Reimbursement Laws. See: 1 answer | asked Oct 5, 2015 12:27 PM [EST] | applies to, wage payment and reimbursement of bs expenses, Can my company withhold my last check as reimbursement for moving expenses. Keep in mind that if one employee fails to meet the requirements of the As a result of the Tax Cuts and Jobs Act of 2017, you can no longer reimburse employees moving expenses. We Recommend a Comparability Analysis. For more information on accountable plans, see IRS Publication 463. Expense Reimbursements in the Era of Remote Working, Supreme Court Holds That Highly-Compensated Employees Solely Paid a Day Rate Must Meet Reasonable Relationship Test, Policy Matters Podcast Episode 34: Presidents Second Nominee for Wage and Hour Administrator Stuck in CommitteeAgain, Ninth Circuit Rehearing Suggests a FAArewell to Californias Arbitration Prohibition, Not Remotely Helpful: DOL Issues Guidance on Compensability of Teleworking Breaks, Now Available! Many states do have remote worker reimbursement laws, including California, New York, Illinois, Iowa and Montana. This is particularly true in certain states with respect to mixed use items that an employee uses for both business and personal reasons, such as a cell phone data plan or home internet. My Company Requires Employees Sign Non-competes. Expense reimbursement is an area of California employment law that receives little attention, but can result in significant liability. amount for certain expenses. Under this new normal, employers must be mindful of the expenses these workers might be incurring; in particular, with respect to one-time higher ticket purchases that could drop them below minimum wage, such as a printer or other home office equipment that is necessary for their job (more to come on the critical modifier necessary). 0000020281 00000 n Often, employers have bulk discounts or stock on hand at the office that can be shipped to an employees home at a lower cost. 0000008675 00000 n If you havent revisited your employee expense reimbursement policies recently, some business expenses may no longer qualify for an accountable plan. The process for When Should Employers Reimburse Expenses for Remote Workers? It is good practice to ask terminating employees to submit expense reimbursement timely, telling them that late submissions are likely to be rejected. Reimbursement for Travel and Moving Expenses Upon Transfer, Reassignment or Promotion, Reimbursement for Travel & Moving Expenses Upon Transfer, Reassignment or Promotion. Policy Statement. The new law in Illinois states that employers must reimburse all "necessary expenditures". The process for returning If you're considering reimbursing expenses for home-based employees, it first helps to know the laws. The Tax Cuts and Jobs Act, passedin December 2017, eliminated the federal income tax deduction for most unreimbursed employee expenses for 2018 through 2025. Employees can lower their monthly expenses by using pre-tax income to pay for their commute. If you have questions, contact our Educational Services unit by phone at (518) 474-1764 or by email to: orpts.edservices@tax.ny.gov. 0000004273 00000 n 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. While expense reimbursement is only required if it is stipulated in an employment contract or if the business expenses bring the employees wages below minimum wage, most businesses reimburse work-related expenses incurred by employees as a job perk. treated as supplemental wages and subject to taxes. Here at LaborLawCenter our Compliance Experts are constantly working to stay on top of the many compliance changes so you don't have to. Attorneys Labor Law A to Z Wrongful Termination Wage & Hour Discrimination Workers' Comp Locations Call or Message Us 24/7 877-783-6926 Required Field 24/7 Help: 1-(877)-SUE-MY-BOSS Before you call us: Reimbursement: Employers are required to reimburse employees for reasonable fees/costs/expenses for obtaining supporting documentation from doctors or other third parties . All rights reserved. The law is based on the Internal Revenue Code that authorizes pre-tax commuter programs, which benefit employers and employees. Regardless of the specific avenue for ensuring the employer does not improperly shift business expenses to its employees, all employers should be aware of their obligations to reimburse and review and update their expense reimbursement policies to take into account the applicable law and the expenses their newly-expanded remote workforce might incur. "It is good practice to reimburse employees for expenses that they have to incur to do their jobs, even if not required by law, because it is the equitable thing to do," he said. GET to KnowNew York State ComptrollerThomas P. DiNapoli. requirements. NYCs Commuter Benefits Law took effect on January 1, 2016. 2023 All Rights Reserved, NYC is a trademark and service mark of the City of New York. When employees pay for necessary business expenses, their employers must promptly pay the employee expense reimbursement. involved, such as compliance issues and how to report the reimbursements on 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.