More? Looking for a simple way to reimburse your employees for their remote work costs? Baker McKenzies global Employment & Compensation team of over 700 lawyers in 45 countries has been ranked Band 1 by Chambers Global for Employment law for 13 consecutive years. However, because of the new normal of working from home, employers must vigilantly analyze the types of expenses their employees are incurring for business-related purposes and provide reimbursement accordingly. In the Cochran case mentioned above, the court of appeals held that employers must reimburse a reasonable percentage of their employees cell phone bills. 4th 1137 (2014). According to state law, necessary expenditures include all reasonable costs. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. 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. California courts have given us some guidance on which expenses would fall into the category of "necessary expenses." First, lets discuss why employers need to know remote work reimbursement laws. We help you stay updated on the latest payroll and tax regulations. Interest shall accrue from the date on which the employee incurred the necessary expenditure or loss. When looking to retain your remote workers and hire new remote talent, offering fringe benefits like a remote work stipend to your employees can help you compete with organizations that don't provide a remote work benefit. Public Utility Law Project of New York 194 Washington Avenue - Suite 320. Eliminate the stress of ACA filing with streamlined reporting. Paycor is not a legal, tax, benefit, accounting or investment advisor. These are not typical expenses that employers would reimburse. These federal requirements apply to all business expenses. Seeing is believing. 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. As an example, under Section 2802 of California's Labor Code, employers are required to reimburse their employees for "all necessary expenditures or losses incurred by the employee as a direct consequence of the discharge of his or her duties," or to comply with the directives of the employer. Plan, manage, and execute pay increases and rewards. Consumer Wireless Telephone Recycling. 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. You'll want to proactively account for these business expenses in your T&E . Employers and employees frequently inquire about whether an employer must reimburse an employee when the employee uses their personal cell phone for the employers business? 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. 115,9.5; Mont. 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. 3 0 obj Employees must also submit requests for reimbursement within 30 days of incurring the eligible expense. 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. 2021), Reconceptualizing the Importance of Place (Mar. Determining if you will need to pay taxes on expense reimbursements depends on whether you use an accountable or nonaccountable plan. Necessary expenses include internet access and phone bills for remote workers. For example, in New York, employers must. 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. E.g., One employee whose job depends on the phone, may be reimbursed 100%; in office staff, on the other hand, with less frequent use could get a stipend of $25 (or $50 or $100) or a lower percentage than others (e.g., 10%). One of the best ways to handle remote work expense reimbursements is to create a written policy for your organization that outlines what reimbursable expenses are for your employees. endobj Learn more about our product bundles, cost per employee, plans and pricing. PeopleKeep, Inc., does not sell health insurance. 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. Paycors integrated expense management software streamlines the process for employees to input qualified expenses, for frontline managers to approve them, and for payroll administrators to arrange reimbursement. That answer depends on where your workforce is located. (GINA). A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. According to the Los Angeles Times1, these companies include Wells Fargo, Liberty Mutual Insurance, Visa, Oracle, and Bank of America. 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. We do not necessarily advocate those approaches. endobj See a licensed agent for detailed information on your state. Maybe. Amounts recovered pursuant to this section shall be paid to the affected employee. Generally, businesses arent required to pay expenses when workerschooseto work remotely. 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. Reduce tedious admin and maximize the power of your benefits program. 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. Typically, you'll make reimbursement payments to your employees on their next paycheck. New York; Pennsylvania, and; . If youd like to set yourself apart from the competition, it may be a good idea. Test drive Paycor Payroll, Onboarding, HR, and Time for 14 days. Automate routine tasks, mitigate compliance risks, and drive efficiencies across your organization. Many of these organizations agreed to give remote workers a monthly stipend of up to $83. 1 0 obj The FLSA does not explicitly require an employer to reimburse its employees for business expenses or deductions. 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. Federal law doesnt require employers to reimburse their employees for work expenses. Our team of experienced sales professionals are a phone call away. Employers cannot waive the right to receive a national minimum wage, either directly or indirectly. Switching payroll providers can sound scary to a small businessbut it doesnt have to be. 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. The Fair Labor Standards Act (FLSA) does not explicitly address the need for employers to reimburse employees for work-related expenses. consumable supplies required in the course of that employment., for all that he necessarily expends or loses in direct consequence of the discharge of his duties as such or of his obedience to the directions of the employer., An employee who incurs expenses in connection with his or her employment and at the request of the employer, except those expenses normally borne by the employee as a precondition of employment, which are not paid for by wages, cash advance, or other means from the employer, shall be reimbursed for the payment of the expenses within 30 days of the presentation by the employee of proof of payment.. But, if your entire organization is remote full- or part-time, those costs would be necessary for your employees to do their jobs. Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills. (Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal. at pp. Retain and coach your workforce with career planning. Control costs and mitigate risk with accurate timekeeping. Ann. This article will break down expense reimbursement laws by state and what counts as a necessary cost. 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. Attract top talent, develop employees, and make better decisions with actionable data. Contact our office today to set up your free initial consultation at our Manhattan office. In order to qualify for an accountable plan, the employers reimbursement or allowance arrangement must follow all three of these rules: Since accountable plan reimbursements arent considered wages, they arent subject to taxation and are also deductible by the employer as business expenses. Streamline recruiting and hiring so you can quickly and effectively fill open positions, develop top talent, and retain your workforce. United States. Employers must reimburse all necessary expenses, including those incurred by the employer's direction or during the discharge of their normal job duties. North Dakota Century Code Section 34-02-0113. Join us at our exclusive partner conference. Read these case studies to see why. A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. 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. 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 . Gather and convert employee feedback into real insights. Law Department, governs the limited personal use of the City of New York's ("City") office and technology resources by City employees. Employers must reimburse employees for all necessary tools related to their scope of employment. Ensure you have a strong onboarding process. A necessary expense is anything required for the performance of an employees job. 778.217 Reimbursement for expenses. Rather, an employer should assess on a case-by-case basis the expenses incurred by an employee and make a reasonable determination as to what the proper level of reimbursement is for the expense claimed. 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. 4th 1137 (2014), employee Colin Cochran filed a putative class action lawsuit on behalf of customer service managers who were not reimbursed for expenses relating to the work-related use of their personal cell phones. 4 0 obj 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. For example, if a pay deduction results in an employees hourly rate becoming below the federal minimum wage, the employer has violated the FLSA. 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. 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. Also, the details of the employee's cell phone plan do not factor into the liability analysis. 12, Room 509, Albany, NY 12240 www.labor.state.ny.us bcejjs@labor.state.ny.us June 20, 2008 . 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 . This depends on the work performed, but reasonable reimbursable expenses will likely include: internet services, mobile data usage, laptop computers or tablets, and equipment such as copiers and printers. However, the court did not provide guidance as to what is meant by reasonable percentage. Does it mean 20 percent? Overview. Understanding the state and local rules surrounding remote employee reimbursement can help your business avoid lawsuits by employees. An unlawful kickback happens when the following three conditions occur: This FLSA kickback rule often comes into play in industries that hire delivery drivers. However, several states (including California, the District of Columbia, Illinois, Iowa, Massachusetts, Montana and New York) have specific state law requirements applicable to employee expense reimbursements. As a result, many businesses are adopting automated expense management systems, which has resulted in an increase in the use of third-party providers. Manage all employee tasks and documents in one place. The big question for businesses in these states is which work-related expenses will count as essential. Pay employees from any location and never worry about tax compliance. 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. 2023), How to Navigate Ballooning Pay Disclosure Laws Across the US (Mar. This entry does not create an attorney-client relationship. 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. App. 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. 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. - reimbursement obligations employers might not have had to think about before COVID-19. % Topics explained in the new guidance include: The scope of employee activity protected by the law. If remote work is mandated, however, a variety of different costs may need to be reimbursed. 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. This guidance is to See how our solutions help you reduce risk, save time, and simplify compliance management. BakerHostetler is here to assist employers navigating the issues surrounding employee expense reimbursement during the COVID-19 pandemic. Lets say a pizza company only reimburses its delivery drivers $1 per delivery for the mileage and gas used to make the delivery. Stay up to date with the latest HR trends. There is no federal law requiring employers to have a policy related to remote work reimbursement; but some states require it. Legal analysis to be used to determine if evidence supports a claim of retaliation. Well help reduce costs & mitigate risks. For example, California allows an employee up to three years to submit a reimbursement request. @C5q M\*(Oc{ 1XWHS"V4N ``,vd_ Employers that operate in several different jurisdictions are encouraged to familiarize themselves with the expense reimbursement requirements of all of those jurisdictions, if any. When employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. Some, particularly in tech, may be working from home through the end of the year, or even permanently! You'll want to incorporate anything you're legally required to reimburse employees for. Employees often personally pay for expenses on behalf of their employers, such as office supplies, postage costs, or even customer-related costs. Intuitive software to help pay employees accurately and on time. Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. By way of a recent amendment, the Illinois Wage Payment and Collection Act now requires employers with employees working in the State to reimburse their employees "for all necessary expenditures or losses incurred by the employee within the employee's scope of employment and directly related to services performed for the employer." Last Updated: March 29, 2023 | Read Time: 15 min. You might also want to consider offering a remote work reimbursement to all your employees, whether legally required or not. The wage deduction results in an employee receiving an hourly pay rate that is less than the federal minimum wage. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones, alleging labor code violations and unfair business practices, and seeking declaratory relief and statutory penalties. Distribute the policy to employees, and remember to inform new employees when they are hired. ), 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. 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. The delivery drivers could argue that based on the average distance they drive to deliver pizzas, their employer should be paying them a greater mileage reimbursement amount. Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal. For example, if an employee incurs a business expense in a state governed by the FLSA (or a state with reimbursement laws mirroring the FLSA rule), it is the employers burden to determine whether that expense brings the employees compensation below minimum wage, and if so, to reimburse that employee accordingly. Employers must reimburse employees for uniforms, purchased or rented equipment, or consumable supplies upon their termination of employment. Employers must reimburse their employees within 30 days of the reimbursement becoming due. Weve been helping our New York City clients fight for their right to adequate compensation for over thirty years. No text or graphic contained in this entry is to be or should be used or relied upon as legal advice. The laws around what's considered necessary are relatively open to interpretation, but state laws generally define necessary as any expense required for the employee to complete their job. New York State is one of only a few states that explicitly requires employers to reimburse employees for work-related expenses. 2023), The FTCs Proposed Rule on Non-Competes: What Employers Need to Know (Jan 2023), Employer WARN-ing: Notice Requirements to Know Before Layoffs (Jan. 2023), Employers: All Eyes on Salary and Pay Range Disclosure in US Job Postings (Dec. 2022), Cost-Cutting Considerations in the Workforce Without Layoffs (Nov. 2022), AI in Recruitment and Hiring: Checking Your Blind Spots (Oct. 2022), Labor Unions and the Workforce: Whats Trending and How to Get Out in Front (Aug. 2022), The Proliferation of Pay Transparency Laws: What US Employers Need to Know (May 2022), US, UK and EU Whistleblower Developments for Multinational Employers (Apr. 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. Hire skilled nurses and manage PBJ reporting. Drive engagement and increase retention with talent development and continuous learning. Organize your team, manage schedules, and communicate info in real-time. The NYS Wireless Telephone Recycling Act (Environmental Conservation Law, Article 27, Title 23*2) requires wireless telephone service suppliers that offer wireless phones for sale, to provide for the free reuse and recycling of up to 10 cell phones from any person or provide for the free shipping of those . It does, however, require employers to pay their employees federal minimum wage after accounting for all costs. )\D5\ 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. Offering a stipend can be an attractive benefit to prospective employees, especially when they are weighing their options and comparing benefits packages. The reimbursement would have otherwise been paid as wages. 2. California and Illinois have the most robust and expansive business expense reimbursement laws. Section 39-2-701(1)). Whenever an agreement between a bona fide labor organization and an employer or an association of employers requires that employees shall be paid an agreed wage or rate of wages for their services, it shall be unlawful for any person, either for that person or any other person, to request, demand or receive, either before or after such . This serves several purposes. Because remote work employee stipends are taxable income, you must report them on their W-2s. 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. 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. 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. 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Pay increases and rewards tasks, mitigate compliance risks, and retain your workforce avoid lawsuits by employees engagement increase... And documents in one Place on behalf of their normal job duties Read Time 15! Ll want to consider offering a stipend can be an attractive benefit to prospective employees, when. For over thirty years address the need for employers to reimburse your employees do. What is meant by reasonable percentage your state York 194 Washington Avenue - Suite.. Workerschooseto work remotely to your employees on their W-2s remote full- or part-time, those costs would necessary! Explained in the new guidance include: the scope of employee activity protected by the employer to reimburse them during... Under the Fair Labor Standards Act ( FLSA ) does not explicitly require an employer to reimburse employees for expenses... Provide guidance as to what is meant by reasonable percentage reimbursement ; but some states require it variety. 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