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. Whether an expense will be deemed necessary for the performance of an employees' job depends primarily on the type of work the employee performs. See a licensed agent for detailed information on your state. Another approach is to purchase company cell phones for employees. 1144.). 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. That's why many forward-thinking companies are now adopting bring-your-own-device . Due to the pandemic, employees in the US are working from home in unprecedented numbers. A: Employers should have a written reimbursement policy that requires employees to submit reimbursement requests by a certain deadline after the expense is incurred. 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. Legal analysis to be used to determine if evidence supports a claim of retaliation. A: No, an employer is not typically required to reimburse an employee for business-related expenses when they are neither required nor encouraged to work from home. No text or graphic contained in this entry is to be or should be used or relied upon as legal advice. Employers must pay any benefits or wage supplements, including reimbursement for business-related expenses, that have been promised to an employee. 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. Only a small percentage of companies surveyed 20% in 2020 reported sharing the costs of remote work with employees (Owl Labs). These state laws often require reimbursement for necessary job expenses such as: internet access, cell phone use, and; office supplies and equipment, like printers and ink. Necessary expenses include internet access and phone bills for remote workers. 115,9.5; Mont. These are not typical expenses that employers would reimburse. The trial court denied Cochran's motion to certify the class and Cochran appealed. Remote work has become the new normal for many Americans with over 27 million people working from home. xwM1]XQ\D@T>i/i;h>%a%011m}D@9KrS'd04 dr@qi$oM0wwx&]je;Su`~O|>_z|D~QG HR solutions purpose-built to help CFOs mitigate risk and control costs. 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. 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. Of course, the courts have not defined what reasonable percentage means, but the main options are: Given the practical challenges of (1) and (2) above, and the fact that many employees have cell phones that they prefer and the even greater complexity of applying this rubric to home internet use, many employers are looking for a simpler approach. (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. Toll-Free Hotline: 877-669-2572. If youd like to set yourself apart from the competition, it may be a good idea. have one or more wireless communications customers in New York State. Reimbursements must be paid out within 30 days. Leverage AI to automate sourcing and increase candidate diversity. The consequences to the employer for violations are severe, including penalties, interest and attorneys fees (subsections (b), (c) and (d).). Learn more about our product bundles, cost per employee, plans and pricing. . Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. The employee fails to properly substantiate expenses in a reasonable amount of time. More? Put this policy in writing and expressly state that employees may submit expense reimbursement requests each month to the extent that the flat rate does not cover the total expenses for the usage that month. 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. The employee fails to return excess reimbursements or allowances in a reasonable amount of time. Similar to California's law, the Illinois law has also been interpreted to require reimbursement for cell phone and internet expenses when employees are required to use their cell phones or internet for work purposes in addition to equipment such as routers, laptops, and printers. Reduce risk, save time, and simplify compliance management. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. Employers can specify what theyll pay for each type of expense. You'll want to proactively account for these business expenses in your T&E . 1144-1145.). San Diego, CA, 92108 Under this approach, the onus is on the employee to prove that the stipend didnt cover the cell phone and internet expense; further if they were to bring a claim, it would be off-set by the stipend. Illinois Wage Payment and Collection Act, Section 9.5: Reimbursement of employee expenses6. The mileage reimbursement rate set forth by the Internal Revenue Service (IRS) is currently 57.5 cents per mile as of 2019. There arent any federal guidelines on remote work-specific expenses. Manage all employee tasks and documents in one place. Yes. Not doing so could subject an employer to potential liability. South Dakota Statute Codified Law 60-2-114. This can be tricky, however, as the employer must be sure to document/identify the amount of compensation attributable to the expense actually incurred. More 0 found this answer helpful | 0 lawyers agree Helpful Unhelpful 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 . 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. Employers must provide reimbursements to employees for expenses if there's an agreement, such as an employment contract, that outlines expense reimbursement. 4th 1137 (2014). 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. A nonaccountable plan treats any reimbursement or other allowance arrangement as supplemental wages and subject to taxes. 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. Contact us today so we can learn more about your business. 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. A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. 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. 4th 1137 (2014). Android, iPhone, etc. Today, more than 27.6 million people work from home as opposed to the roughly 9 million people in 2019 (American Community Survey). 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 . 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. An employer shall indemnify the employers employee, except as prescribed in section 34-02-02, for all that the employee necessarily expends or loses in direct consequence of the discharge of the employees duties.. What portion ofthese business-related expenses are, or should be, reimbursable? RF%|h3H c"40JOwF}\5Y UGUn}:xIdRu :I8U xys B Jir:TxwO1;ZL&)[G&+E,NU; 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. With a remote work stipend, you can offer your employees a monthly allowance for their home office costs. You'll want to incorporate anything you're legally required to reimburse employees for. 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. If employers fail to adequately reimburse these expenses, the employer may be receiving an hourly kickback from each employee. See how our solutions help you reduce risk, save time, and simplify compliance management. 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? However, the FLSA does include an exception that requires employers to finally and unconditionally pay an employees wage. Read these case studies to see why. 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. 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. Maybe. All communication from Paycor should be confirmed by your companys legal, tax, benefit, accounting or investment advisor before making any decisions. 1144.). 2021), Tying Compensation to Furthering Inclusion and Diversity Goals (Mar. 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. So, what to do? As the COVID-19 pandemic hit, several states and localities implemented shelter-in-place orders to slow the spread of the coronavirus. Connect with new hires and make a lasting first impression. The wage deduction results in an employee receiving an hourly pay rate that is less than the federal minimum wage. 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. However, the court did not provide guidance as to what is meant by reasonable percentage. Does it mean 20 percent? Consumer Wireless Telephone Recycling. Well help reduce costs & mitigate risks. Get The 2022 New Mexico Employment Law Handbook (Printable PDF) today! Engage new hires with onboarding and control costs with timekeeping. Generally, reasonable reimbursable expenses will likely include: The employee who prefers the convenience of a standing desk, a wireless computer mouse, or an ergonomic chair will likely foot the bill for these expenses, as such items are generally not deemed reasonable or necessary, absent an employer's legal requirement to provide them. You might also want to consider offering a remote work reimbursement to all your employees, whether legally required or not. @C5q M\*(Oc{ 1XWHS"V4N ``,vd_ Once you understand your obligations, set clear guidelines for your employees. Switching payroll providers can sound scary to a small businessbut it doesnt have to be. Schwan's Home Service, 228 Cal. A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. California and Illinois have the most robust and expansive business expense reimbursement laws. Find quality candidates, communicate via text, and get powerful analytics. Examples of benefits or wage supplements listed in the statute include, but are not limited to, the following: Is your employer refusing to compensate you for business-related expenses that you paid out of your pocket? View our product demos to get a deeper dive into the technology. Paycors HR software modernizes every aspect of people management, which saves leaders time and gives them the powerful analytics they need to build winning teams. Hire skilled nurses and manage PBJ reporting. 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. New Hampshire Revised Statutes Title 23 Section 275:5711. Q: What constitutes a reasonable reimbursement amount? 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. Heres our guide to choosing and moving to a better payroll provider. 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. At least ten states Illinois, California, Massachusetts, Montana, Pennsylvania, New York, New Hampshire, North Dakota, South Dakota, Iowa and the District of Columbia have enacted laws requiring employers to reimburse employees for certain remote work expenses. Distribute the policy to employees, and remember to inform new employees when they are hired. Learn a lot in a little bit of time with our HR explainers. Some states and local governments have enacted laws or extended existing laws for employee reimbursement to include remote work costs. United States. 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. 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. Collaborative Compliance: Tax and Employment Old Issues, New Lens, USERRA: Insulate Your Business from Violation Liability, FFCRA Credits Extended, but Leave is Not Mandated, Sitting with the C-Suite: Remote Work - Increasing Communication on Collaboration Platforms, Common Ground: Embracing Remote Work for Better or for Worse. Mitigate risk with proactive payroll and tax alerts. Equipment such as copiers, printers, and fax machines, if necessary. As the pandemic continues, many employers are attempting to adapt to their workforce's new normal, which may include a continuation of their current remote model or the implementation of a hybrid work model. 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. Leave payroll and taxes to the experts so you can focus on your business. Federal law doesnt require employers to reimburse their employees for work expenses. A: With employees having historically worked in an office environment, many of the supplies and resources they utilized to complete their job duties were provided for by the employer (i.e., printer paper, pens/pencils, computers, electricity, computer monitors, internet, phones, etc.) )\D5\ ), Per the Cochran court, The purpose of this statute is to prevent employers from passing their operating expenses on to their employees. (Id. 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/. Organizations learned to operate in this new environment almost overnight. Health insurance regulations differ in each state. <> The Reimbursement Amount Is A Reasonable Percentage Of The Employees Phone Bill. If you want specific legal advice about your particular legal issues, or if you want to create an attorney-client relationship, you need to retain the Law Offices of Ron A. Stormoen by a signed written retainer agreement. The District of Columbia's expense reimbursement law, found in Title 7 Section 910.1 of the D.C. Municipal Regulations, requires employers to pay the cost of purchasing and maintaining any tools that the employer requires to perform the employer's business. It is irrelevant whether the employee changed plans to accommodate work-related cell phone usage. 2023), How to Navigate Ballooning Pay Disclosure Laws Across the US (Mar. This article will break down expense reimbursement laws by state and what counts as a necessary cost. Specifically, you should identify what is considered a necessary expense to be reimbursed and what is not. 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. Enforces the same protections as federal law: expenses may not reduce an employee's wage below the current state minimum wage. Cartel and Government Antitrust Investigations Task Force, Employee Benefits and Executive Compensation, International Trade and National Security, White Collar, Investigations and Securities Enforcement and Litigation, Blockchain Technologies and Digital Assets, Digital Assets Executive Order Resource Center. Our employment law attorneys offer free initial consultations about expense reimbursement. Longer Answer with Practice Recommendations: An Employer Must Reimburse An Employee For The Employees Use Of A Personal Cell Phone For Work Related Duties. While not required, the Massachusetts Attorney Generals Office recommends reimbursing employees for all expenses that are unavoidable and necessary. Federal law states that an employer only needs to reimburse their employees for work-related expenses that drop their earnings below theminimum wage. Its probably safe to say that remote work is the new normal for many Americans. *Represents approximately 30,000 corporate clients covering 40,000 businesses employing people. Test drive Paycor Payroll, Onboarding, HR, and Time for 14 days. You'll simply approve these amounts up to their eligible allowance. Unreimbursed employee expenses may be tax-deductible. Other than those authorized by state or federal law, wage deductions generally require an employee's written authorization ( Iowa Code Ann. Amounts recovered pursuant to this section shall be paid to the affected employee. First, lets discuss why employers need to know remote work reimbursement laws. Expense reports can be reimbursed through a separate check, deposit or sent through payroll using expense management software. Typically, you'll make reimbursement payments to your employees on their next paycheck. Build a Morning News Brief: Easy, No Clutter, Free! Its time to be agents of change. However, there's still quite a bit of a gray area in other states. 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. Maximize training and development with personalized content. 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. But, if your entire organization is remote full- or part-time, those costs would be necessary for your employees to do their jobs. When employees work from home, they use their own electricity, internet and (often) office supplies. With so many employees working remotely, employers also began to wonder if they should reimburse their employees. The way you bring a new employee in can make all the difference in how quickly they reach their potential. Soon, employees wondered who should be responsible for the expenses theyd accumulated for remote work. Cochran v. Schwan's Home Serv., Inc., 228 Cal. 4 0 obj Employers should also be aware of any potential reimbursement obligations under the FLSA or the obligations for employees working remotely as a reasonable accommodation under the ADA. 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. Our popular webinars cover the latest HR and compliance trends. 2023 Lipsky Lowe LLP | Phone: 212-392-4772 Get real-time analytics to HR & Payroll data. It was last updated on February 9, 2023. 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And make a lasting first impression, there 's still quite a bit of a gray in. With over 27 million people working from home, they use their own electricity internet... Is on the employer to potential liability business-related expenses reimburse these expenses, that expense. Drop their earnings below theminimum wage monthly allowance for their home office costs counts as a necessary expense be! Schwan & # x27 ; s home Service, 228 Cal % in 2020 reported sharing the costs of work! Wireless communications customers in new York state a licensed agent for detailed information on state... Sharing the costs of remote work with employees ( Owl Labs ) earnings below theminimum....