The Division of Labor Standards protects all workers, including those that are undocumented or paid off the books, and ensures employers are following Labor Laws. Your policy should be part of, or referenced in, your telecommuting policy. 4. 480 E. Winchester St., Suite 230, Salt Lake City, UT 84107, Remote employee reimbursement rules by state, https://www.latimes.com/business/story/2022-04-07/covid-work-from-home-lawsuits-pandemic-business-expenses-litigation, https://www.linkedin.com/news/story/amazon-sued-over-remote-work-costs-5351604/, https://www.dol.gov/agencies/whd/flsa/pandemic#14. You can use the table below to quickly reference state and local laws about remote work employee reimbursement. Otherwise, the employer would receive a windfall because it would be passing its operating expenses on to the employee. 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 . Get real-time analytics to HR & Payroll data. Paycor has the right defenses in place to protect your data. 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). 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? Test drive Paycor Payroll, Onboarding, HR, and Time for 14 days. Mitigate risk with proactive payroll and tax alerts. Currently, 11 states, the District of Columbia, and Seattle, Washington, have laws about reimbursing employees for necessary work-related expenses. In the most employee-friendly state, California, employers may even be required to pay a portion of home utilities, such as air conditioning. A: Given that many employees have shifted to working from home, employers should establish or revamp their reimbursement policies and make sure that their employees are aware that they can secure reimbursement of their expenses. (d) In addition to recovery of penalties under this section in a court action or proceedings pursuant to Section 98, the commissioner may issue a citation against an employer or other person acting on behalf of the employer who violates reimbursement obligations for an amount determined to be due to an employee under this section. Illinois' law is slightly more limited in scope than California's expense reimbursement law. (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. Ann. 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/. Longer Answer with Practice Recommendations: An Employer Must Reimburse An Employee For The Employees Use Of A Personal Cell Phone For Work Related Duties. App. Our goal is to ensure that all New York workers are being paid the proper wages, do not have their right to a meal period or day of rest violated, and to uphold New York . Whether an expense will be deemed necessary for the performance of an employees' job depends primarily on the type of work the employee performs. Get The 2022 New Mexico Employment Law Handbook (Printable PDF) today! 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%). 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. 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. These kickbacks may result in an employee not earning the federal minimum hourly wage. "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. 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. Our customers are our heroes. The trial court denied Cochran's motion to certify the class and Cochran appealed. Review, reimburse, and report on employee expenses in one location. The answer is that reimbursement is always required. Drive engagement and increase retention with talent development and continuous learning. This blog article was originally published on March 23, 2022. In this case, it is also recommended that you develop general guidelines around reimbursement to avoid confusion or unequal application. We help you stay updated on the latest payroll and tax regulations. 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. Read how HR solutions offer technology that is key to success. Employers must provide reimbursements to employees for expenses if there's an agreement, such as an employment contract, that outlines expense reimbursement. Switching payroll providers can sound scary to a small businessbut it doesnt have to be. Access collaboration tools and resources that help champion equality and promote DE&I best practices in the workplace. There is no federal requirement to reimburse employees for business-related expenses. 4th 1137, 1140. This can be a valuable employee perk to help attract and retain employees in the tight labor market. South Dakota Statute Codified Law 60-2-114. A nonaccountable plan treats any reimbursement or other allowance arrangement as supplemental wages and subject to taxes. Stay up to date with the latest HR trends. The requirements of the Americans With Disabilities Act (ADA) may also alter employer reimbursement obligations. Posted on January 7, 2022 Federal law generally does not require employers to reimburse employees for cell phone expenses. PHA+Q2hlY2sgeW91ciBpbmJveCBmb3IgYW4gZW1haWwgY29uZmlybWluZyB5b3VyIHN1YnNjcmlwdGlvbi4gRW5qb3khPC9wPg==, Remote Employee Reimbursement Rules by State, Massachusetts General Law Chapter 149, 148A, Paycors integrated expense management software, 5 Benefits of AI Talent Sourcing Technology for Recruiters, Get Our Customizable Employee Review Template, Boost Efficiency and Transform Your Workplace Culture with HR Technology, 10 Tips for Small Businesses Considering a Payroll Provider Switch, Onboard like a Pro: Tips for Successful Employee Integration, all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties., the cost of purchasing and maintaining any tools required of the employee in the performance of the business of the employer., all necessary expenditures or losses incurred by the employee within the employees scope of employment and directly related to services performed for the employer., Expenses by the employee which are authorized by the employer and incurred by the employee shall either be reimbursed in advance of expenditure or be reimbursed not later than thirty days after the employees submission of an expense claim.. 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. 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. 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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. 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. Track critical documentation and control labor expenses. -LGK'rJ;nvmhH^
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The FLSA does not explicitly require an employer to reimburse its employees for business expenses or deductions. The surcharge for all violations can be up to $93. Eliminate the stress of ACA filing with streamlined reporting. Other than those authorized by state or federal law, wage deductions generally require an employee's written authorization ( Iowa Code Ann. The Cochran case provides guidance on how to calculate a reasonable reimbursement for the mandatory use of personal devices such as cell phones: employers must compensate their employees for a "reasonable percentage" of the employee's cell phone bill under Section 2802. Are you a delivery driver who uses your vehicle to make deliveries for your employer? Typically, you'll make reimbursement payments to your employees on their next paycheck. Explore our product tour to see how. If remote work is mandated, however, a variety of different costs may need to be reimbursed. Schedule a call with a personalized benefits advisor today to see how employee stipends can help your organization offer remote work benefits. Manage all employee tasks and documents in one place. More? New York; Pennsylvania, and; . 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. Leverage AI to automate sourcing and increase candidate diversity. We do not necessarily advocate those approaches. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. 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. Theres never been a better time to join. Soon, employees wondered who should be responsible for the expenses theyd accumulated for remote work. New York is one of only a handful of states that has an explicit statute directed at employer reimbursement. However, the FLSA does include an exception that requires employers to finally and unconditionally pay an employees wage. 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. It does not matter whether the phone bill is paid for by a third person, or at all. Paycors leadership brings together some of the best minds in the business. If your employer is not adequately reimbursing you for expenses, you may not be receiving the federal minimum wage as required by the FLSA. And, even if your state does not mandate reimbursement, a reimbursement policy will help manage expectations with your employees. The Cochran court did note that the employer can engage in some calculations: In calculating the reimbursement amount due under section 2802, the employer may consider not only the actual expenses that the employee incurred, but also whether each of those expenses was necessary, which in turn depends on the reasonableness of the employee's choices. (Id. It was last updated on February 9, 2023. Employees often personally pay for expenses on behalf of their employers, such as office supplies, postage costs, or even customer-related costs. California courts have given us some guidance on which expenses would fall into the category of "necessary expenses." If youd like to set yourself apart from the competition, it may be a good idea. 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. )\D5\ 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. RF%|h3H c"40JOwF}\5Y UGUn}:xIdRu
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B Jir:TxwO1;ZL&)[G&+E,NU; Connect with new hires and make a lasting first impression. Its also important to determine your states tax rules regarding reimbursements and how they will impact your companys and your employees taxes. Accordingly, we offer the following guidance: A: Under the Fair Labor Standards Act (FLSA), an employee is entitled to reimbursement of expenses incurred on the employers behalf if that expense brings the earnings of an employee below the federal minimum wage. However, given the shift to remote work occasioned by the COVID-19 pandemic, employers will want to be mindful of the ways in which their employees are working and business-related expenses are being incurred to ensure employees are being properly reimbursed per applicable federal and state law. And, those who dont would like to. Cell phone reimbursement - When are workers entitled to it? 4th 1137 (2014). Employers cannot waive the right to receive a national minimum wage, either directly or indirectly. As the COVID-19 pandemic hit, several states and localities implemented shelter-in-place orders to slow the spread of the coronavirus. Public Utility Law Project of New York 194 Washington Avenue - Suite 320. 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. What portion ofthese business-related expenses are, or should be, reimbursable? Save time, pay employees from wherever you are, and never worry about tax compliance. A necessary expense is anything required for the performance of an employees job. In Mid-March, much of the nations workforce began working from home due to the COVID-19 pandemic. Find quality candidates, communicate via text, and get powerful analytics. Read these case studies to see why. Employers must pay any benefits or wage supplements, including reimbursement for business-related expenses, that have been promised to an employee. *Represents approximately 30,000 corporate clients covering 40,000 businesses employing people. Whether the employees have cell phones. Maximize training and development with personalized content. Seeing is believing. Lets say a pizza company only reimburses its delivery drivers $1 per delivery for the mileage and gas used to make the delivery. Reduce labor spend, manage overtime, and maximize productivity across your workforce. These are not typical expenses that employers would reimburse. 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. Overview. 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 . 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. Gather and convert employee feedback into real insights. When an employee must return a portion of his wages, directly or indirectly, to his employer, this kickback can violate the FLSA. Albany, NY 12210 . An unlawful kickback happens when the following three conditions occur: This FLSA kickback rule often comes into play in industries that hire delivery drivers. 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. Authorship Credit:Carter Norfleet and Shareef Farag. An action plan to help you achieve HR excellence based on Paycors proprietary data and research. But, the Fair Labor Standards Act3 (FLSA) requires employers to reimburse employees for work expenses if those expenses cause an employees earnings to fall below the federal minimum wage. (Cal. Reimbursements must be paid out within 30 days. Drive engagement with talent development and career management. Join us at our exclusive partner conference. No, it is not required but it is highly recommended. You can also choose to only offer the benefit to employees in certain states or classes. App. See Cochran v. Schwans Home Serv., Inc. There is no federal requirement to reimburse employees for business-related expenses. The big question for businesses in these states is which work-related expenses will count as essential. 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 . Eliminate large down payments and end-of-year surprises. 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 and retain staff with earned wage access. Some states and local governments have enacted laws or extended existing laws for employee reimbursement to include remote work costs. A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. A: Alaska, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and Washington, DC all have enacted statutes which bear on expense reimbursement. 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. New York States Labor Law provides that employers who fail, neglect, or refuse to pay benefits or wage supplements to their employees are guilty of a misdemeanor. 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. (July 2021), Providing Perspective on President Bidens Executive Order on Promoting Competition in the American Economy (July 2021), Best Practices for Tracking Proof of Employee Vaccinations (May 2021), Key Considerations in High Profile Investigations (May 2021), Avoiding Discrimination Lawsuits Following Layoffs (Mar. 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.. 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. Reduce tedious admin and maximize the power of your benefits program. The way you bring a new employee in can make all the difference in how quickly they reach their potential. 4 0 obj
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. For example, if a pay deduction results in an employees hourly rate becoming below the federal minimum wage, the employer has violated the FLSA. How can a failure to reimburse employees result in minimum wage violation? Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal. 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. Whether youre a health or retirement broker, a corporate franchise leader, or a product or service company, Paycor can help take your business to the next level. all that the employee necessarily expends or loses in direct consequence of the discharge of the employees duties.. Provide employees with a cell phone or another communication alternative for business use. Some employees wages may dip below the federal minimum wage as a result of their employer not reimbursing them for business-related expenses. Some say the safest approach is to pay the entire cost of an employees phone. App. With the WorkPerks employee stipend administration platform from PeopleKeep, you can create a quality remote employee benefits package that works for everyone. An agency may adopt agency-specific standards and . 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. Even fewer states require reimbursement for remote work expenses. Engage new hires with onboarding and control costs with timekeeping. 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. This can be tricky, however, as the employer must be sure to document/identify the amount of compensation attributable to the expense actually incurred. Its probably safe to say that remote work is the new normal for many Americans. With over 30 years of employment law experience, Lipsky Lowe LLP has a proven track record of advocating for clients in all areas of employment law, including employee expense reimbursements. 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. Reimbursement is required even if the employee does not actually incur extra expenses as a result of his or her use. Federal laws do not require employers to reimburse employees for work-related expenses, but a number of state laws do require reimbursement. Ann 260.3. Determining if you will need to pay taxes on expense reimbursements depends on whether you use an accountable or nonaccountable plan. This shift raises the all-important question of who foots the bill for these expenses going forward. Have laws about remote work costs slightly more limited in scope than California 's expense reimbursement of... Some say the safest approach is to pay the entire cost of an employees.... 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Some employees wages may dip below the federal minimum hourly wage require an employer to reimburse result! Unconditionally pay an employees phone employees duties requires employers to reimburse its employees for business-related.. Personalized benefits advisor today to see how employee stipends can help your organization remote! Have to be reimbursed generally does not actually incur extra expenses as a result of or... $ 1 per delivery for the mileage and gas used to make deliveries for your employer is the new for! Been promised to an employee to it reimbursements and how they will impact your budgets forward!