It is undeniable that remote positions and remote work options have become a persistent and desirable employment trend. As a result of this shift, though, many employees who could previously rely on employer equipment and tools to perform their job in the office, are now covering those expenses by working from home. As an employer, this begs the question – what, if any, of these expenses must be reimbursed to employee?
Federal law, under the Fair Labor Standards Act (FLSA), does not require employers to reimburse employees for remote or other business expenses unless those expenses cause earnings to drop below minimum wage. However, several jurisdictions have their own laws that require reimbursement for business expenses.
These jurisdictions include:
- California;
- Illinois;
- Iowa;
- Massachusetts;
- Montana;
- New Hampshire;
- North Dakota;
- Seattle, Washington;
- South Dakota; and
- Washington, D.C.
Of these ten jurisdictions, the requirements enacted by California and Illinois are notably strict.
California and Illinois both require that employers with employees working in California to reimburse those employees “for all necessary expenditures or losses incurred” in performing duties. Whether or not an expense is considered “necessary,” will depend on each employee’s job type and responsibilities. Costs that are voluntarily or unnecessarily incurred by an employee will not subject their employer to reimbursement obligations.
The courts of both states have required reimbursement for internet phone bills and internet access. For employees with unlimited phone or data plans, California courts have calculated reimbursement based off of a “reasonable percentage” of the monthly use. Illinois courts, however, have imposed a 30 day time limit for employees to submit reimbursement requests to their employer.
The other nine jurisdictions require and limit required reimbursements differently. States such as Montana, New Hampshire, North Dakota, and South Dakota will require that losses be reimbursed when attributed to the performance of job duties. In comparison, Seattle’s Wage Theft Ordinance defines “compensation” as including business expense reimbursement.
Generally, employers will also be liable for reimbursement to employees where reimbursement is included in employment policies or individual employment agreements.
Summary
Several jurisdictions now require that employers reimburse employees for expenses incurred at their employer’s direction or in furtherance of their job duties.
If you have any questions about these required expense reimbursements, please reach out to us.