Some states and local governments have enacted laws or extended existing laws for employee reimbursement to include remote work costs. However, an important caveat to that rule is that an employer may not require employees to pay or reimburse their employer for work-related expenses if it would cause the employee's pay rate to fall below the required minimum wage ($7.25) for hourly employees or salary threshold ($684 per week) for exempt employees. Before you decide, ask us to send you written information about our qualifications and experience. The consequences to the employer for violations are severe, including penalties, interest and attorneys fees (subsections (b), (c) and (d).). 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. With a remote work stipend, you can offer your employees a monthly allowance for their home office costs. As a result, many employers had to rapidly adjust to utilizing a virtual workforce. Some states require employers to reimburse employees only for necessary expenditures. 1144.). But, employers should be sure to consider tax implications when considering the best route for their business. Eliminate the stress of ACA filing with streamlined reporting. Employers must reimburse employees for business expenses related to necessary duties or at the employer's direction. 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. Even if your state does not mandate reimbursement to employees, experts recommend offering some type of reimbursement policy because it helps build loyalty and morale among your employees. 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. HR solutions purpose-built to help leaders create great places to work. Labor Code section 2802, referenced by the court, governs this area [concerning reimbursement for all necessary employee expenditures or losses, not just cell phone use) and provides the backdrop for the courts opinion: (a) An employer shall 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, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. Intuitive software to help pay employees accurately and on time. If an employer doesnt pay the reimbursement request, they must provide a written notice explaining why within 30 calendar days. For example, in New York, employers must. Employers must reimburse authorized expenses in advance or within 30 days of the employee submitting an expense claim ( Iowa Code Ann. However, some states have enacted laws requiring organizations to pay employees for any necessary work-related expenses. 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. Learn a lot in a little bit of time with our HR explainers. Test drive Paycor Payroll, Onboarding, HR, and Time for 14 days. While expense reimbursement policies aren't required, they can help you stay consistent in what's being reimbursed and allow your employees to know what's reimbursable beforehand. Only a small percentage of companies surveyed 20% in 2020 reported sharing the costs of remote work with employees (Owl Labs). Drive engagement and increase retention with talent development and continuous learning. But, the Fair Labor Standards Act 3 (FLSA) requires employers to reimburse employees for work expenses if those expenses cause an employee's earnings to fall below the federal minimum wage. These federal requirements apply to all business expenses. The reimbursement would have otherwise been paid as wages. App. The Reimbursement Amount Is A Reasonable Percentage Of The Employees Phone Bill, Employers Must Reimburse Employees For Work Related Cell Phone Use. Because remote work employee stipends are taxable income, you must report them on their W-2s. Control costs and make every dollar count with reporting. Alphabet stock slid as much as 4% on Monday, erasing about $55 billion in market value after a report from The New York Times suggested that competition is heating up in the mobile search market . 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. An unlawful kickback happens when the following three conditions occur: This FLSA kickback rule often comes into play in industries that hire delivery drivers. That means that employers in D.C. are also generally not required to reimburse employees for the cost of tools and supplies necessary to perform their job where an employee's remote work arrangement is entirely voluntary, meaning they are neither required nor encouraged to continue to work remotely. 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. It was last updated on February 9, 2023. App. https://casetext.com/regulation/district-of-columbia-administrative-code/title-7-employment-benefits/chapter-7-9-wage-hour-rules/rule-7-910-tools, https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2402&ChapterID=68, https://www.legis.iowa.gov/docs/code/91A.3.pdf, https://malegislature.gov/laws/generallaws/parti/titlexxi/chapter149/section148, https://www.revisor.mn.gov/statutes/cite/177.24, https://leg.mt.gov/bills/1995/mca/39/2/39-2-701.htm, 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, https://newyork.public.law/laws/n.y._labor_law_section_198-c, 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, https://sdlegislature.gov/Statutes/Codified_Laws/2077532, https://lni.wa.gov/workers-rights/wages/getting-paid/, http://www.seattle.gov/laborstandards/ordinances/wage-theft, https://www.reuters.com/legal/government/amazon-sued-over-employees-remote-work-costs-during-covid-19-pandemic-2022-03-25/. 2022), Guidelines for Accommodating Sincerely Held Religious Beliefs and Disabilities for Employers Mandating Vaccinations (Sept. 2021), Religious Beliefs in the Workplace Following the Supreme Courts Bostock Decision (Sept. 2021), The COVID-19 Employment Litigation Landscape Is It All Uphill From Here? And, even if your state does not mandate reimbursement, a reimbursement policy will help manage expectations with your employees. 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. Overview. See Cochran v. Schwans Home Serv., Inc. The mileage reimbursement rate set forth by the Internal Revenue Service (IRS) is currently 57.5 cents per mile as of 2019. The answer is that reimbursement is always required. The Cochran court determined that Labor Code section 2802 included an employers obligation to reimburse an employee whenever the employee uses his/her cell phone for work related duties. App. In the Cochran case mentioned above, the court of appeals held that employers must reimburse a reasonable percentage of their employees cell phone bills. 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. Check out this guided tour to see for yourself how our platform works. at p. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. Its also important to determine your states tax rules regarding reimbursements and how they will impact your companys and your employees taxes. Illinois' law is slightly more limited in scope than California's expense reimbursement law. 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. New York Labor Law 198-C. 43 Pa. Stat. 3 0 obj 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. Under California law, an employer that does not reimburse employees risks a lawsuit where the damages will include not just the unreimbursed expenses but the attorneys fees incurred by the employee seeking reimbursement. Due to the pandemic, employees in the US are working from home in unprecedented numbers. @C5q M\*(Oc{ 1XWHS"V4N ``,vd_ Paycor has the right defenses in place to protect your data. Employees working from home instead of at the office often had to rely on their own equipment and internet instead of using the employer-provided tools they were used to. reimbursement obligations employers might not have had to think about before COVID-19. With so many employees working remotely, employers also began to wonder if they should reimburse their employees. Employee reimbursements are at the employers discretion. Track critical documentation and control labor expenses. 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. 0S],IIGV}4n ``. endobj A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. 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. To find out if you have a claim, send an online inquiry or call our law office at 917-639-5350 or toll free 1- 877-390-8732. Employees often use their personal resources to pay for expenses necessary to carry out their employment. 1144.). Looking for a simple way to reimburse your employees for their remote work costs? California, however, does have a law requiring employers to reimburse employees for business-related expenses. -LGK'rJ;nvmhH^ H`vg9 v2XfK:oLX`|u*0 $m7\Po,X-Xal-PV:(5#e)P~w)t9Zpm[L}N~N+3rg'L14WIB V00'B%&e|4(b?%iCX`:mIBf%}ap/YOpK+5cU&y=^gPDG '!JBE9yDZ3d_ Dr`[)# ]0IYw!lM75t|IEU53J&KsEs!1lv=T>1K^-.- &xI%#ct?>b/P 'M z21,uq jU +8)#?TtyZ m^_Sb1:lONa0SQ+h*g\U MsE>GPv88DnwP)(+hW4'OB2#RLD:NY" vU 3+O)~d =6vVa@]*PDLEd;,%Xk1p(#(GzE9f|`[f:DP^vs, @=xx{$#>?vD&2yW^_(hmhw/ 91A.3 (6) ). Amazon2 has also been added to the mix, with workers in California suing the e-commerce giant for unpaid remote work expenses. General Email: info@utilityproject.org New York State Department of Labor David A. Paterson, Governor M. Patricia Smith, Commissioner Phone: (518) 457-4380 Fax: (518) 485-1819 W. Averell Harriman State Office Campus, Bldg. 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. Distribute the policy to employees, and remember to inform new employees when they are hired. Reimbursement for business-related expenses. You'll want to incorporate anything you're legally required to reimburse employees for. 2. 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. Drive engagement with talent development and career management. <>>> Save time, pay employees from wherever you are, and never worry about tax compliance. Employers have several options for reimbursing remote work expenses. Cochran v. Schwan's Home Serv., Inc., 228 Cal. Hire and retain staff with earned wage access. All communication from Paycor should be confirmed by your companys legal, tax, benefit, accounting or investment advisor before making any decisions. Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. "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. Expense reports can be reimbursed through a separate check, deposit or sent through payroll using expense management software. Hire skilled nurses and manage PBJ reporting. If youd like to set yourself apart from the competition, it may be a good idea. Remedies available for retaliation. 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. Some states (like California, Illinois, and Montana) have more robust reimbursement laws in that employers are required to reimburse employees for all necessary expenditures or losses or business expenses incurred by the employee in direct consequence or discharge of his or her duties. In those cases, the Department of Labor (DOL) has instructed that employers may not require employees to pay or reimburse their employers for remote work costs such as internet access, a computer, additional phone line, and increased use of electricity if telework is being offered as a reasonable accommodation. The employee fails to return excess reimbursements or allowances in a reasonable amount of time. Wireless communications services include all commercial mobile services which offer real-time, two-way voice or data service that is interconnected with the public switched telephone network or otherwise provides access to emergency communications services. Employees must also submit requests for reimbursement within 30 days of incurring the eligible expense. Paycor delivers deep product functionality, standard integrations, and certified expertise in sales and service to meet the needs of the industries and organizations we serve. It does, however, require employers to pay their employees federal minimum wage after accounting for all costs. Employees can claim unreimbursed expenses as deductible according to Pennsylvania Personal Income Tax law. Table Of Contents Hours Worked Leave Laws Wage and Hour Wage Payment Employer Obligations Updated Laws States Employment and Labor Laws New York Resources Minimum Wage: $14.20/$15.00 Overtime: $21.30/$22.50 New York Labor Department Civil Rights New York Legislature Connect with new hires and make a lasting first impression. We think a more palatable and reasonable approach is for the employer to pay a flat monthly stipend (e.g., $10 - $100 or some estimated percentage like 10-50%: the reimbursement number is a business decision based on history of usage). Android, iPhone, etc. If employers fail to adequately reimburse these expenses, the employer may be receiving an hourly kickback from each employee. Stock Exchanges Publish Clawback Proposals As required by Rule 10D-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the New York Stock Exchange (the "NYSE") and Nasdaq have issued their . all that the employee necessarily expends or loses in direct consequence of the discharge of the employees duties.. New Hampshire Revised Statutes Title 23 Section 275:5711. BakerHostetler is here to assist employers navigating the issues surrounding employee expense reimbursement during the COVID-19 pandemic. Control costs and mitigate risk with accurate timekeeping. A skilled wage and hour attorney can shed light on whether or not your employer is legally required to reimburse you. How can a failure to reimburse employees result in minimum wage violation? Federal law doesnt require employers to reimburse their employees for work expenses. Soon, employees wondered who should be responsible for the expenses theyd accumulated for remote work. If remote work is mandated, however, a variety of different costs may need to be reimbursed. It is irrelevant whether the employee changed plans to accommodate work-related cell phone usage. 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. Ann. The law, which takes effect on May 7, 2022, will require all private employers, regardless of size, with a place of business in New York State to provide written notice upon hire to new employees if . Code. 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