Namely, federal laws protect employees in terms of reimbursement for work-related expenses that sink their income below the federal minimum wage $7.25. 2023 Lipsky Lowe LLP | Phone: 212-392-4772 It seems straightforward enough that only those expenses actually incurred must be reimbursed, but this question is not always so simple. 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. It requires that employers reimburse employees for all "necessary expenditures or losses" or "business expenses" incurred by the employee in direct consequence or discharge of their duties. "We strongly support our employees' right to make. Work with a Professional Employer Organization such as Resourcing Edge to ensure compliance with applicable laws and develop an accountable expense plan to help maximize tax benefits. Seyfarth Shaws Wage & Hour Litigation Blog is a resource for employers to stay current on developments in wage and hour law, including recent court decisions, legislative updates, and Department of Labor compliance, rule-making and enforcement activities. Also, we advise that employers maintain documentation to support the reasonableness of the stipend that they establish, in case the amount of the stipend is ever attacked as being too little (such that it does not cover an employers full reimbursement obligation) or too much (such that the excess should be treated as compensation for work rather than reimbursement). At the state and local level, there are currently 10 jurisdictions that have statutes or case law specifically addressing an employers requirement to reimburse business expenses: California, Iowa, Illinois, Massachusetts, Montana, New Hampshire, North Dakota, South Dakota, District of Columbia, and Seattle, Washington. This mean, "all . Farm employees. Employers who get expense reimbursements wrong may end up having to compensate workers for unreimbursed expenses, plus interest, penalties, and attorneys' fees. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRMs permission. Vaccine Passports: The Ticket to Our New Normal? This approach will usually cover the vast majority of expenses but it should nevertheless be coupled with a process by which employees can seek reimbursement of additional expenses that were not covered by the stipend. While there is some discretion the employer can exercise in determining the amount of reimbursement (such as actual expenses and the reasonableness of the employee's choice: i.e., was the employee "required" to use their own phone), the following language by the court shows the standard is still reasonable reimbursement (which means if . Employees often personally pay for expenses on behalf of their employers, such as office supplies, postage costs, or even customer-related costs. Not timely? taxes. For example, in New York, employers must. Please purchase a SHRM membership before saving bookmarks. According to the IRS, employees must now include moving expense reimbursements in employees wages, except for certain members of the Armed Forces. Should U.S. workplaces follow suit? Therefore, when calculating var currentLocation = getCookie("SHRM_Core_CurrentUser_LocationID");
Employers should also consider whether it is more cost-effective to provide equipment, cell service or Wifi service, or other necessary equipment directly than to reimburse. Can my employer withhold pay expenses from 2015. by Shellie Rich | Aug 2, 2019 | Compliance, HR Services. Mileage rates Mileage rates are based on the standard mileage allowance established by the Internal Revenue Service. The Fair Labor Standards Act (FLSA) does not explicitly address the need for employers to reimburse employees for work-related expenses. Internet service and cell phone data are the most commonly considered, but what about printers and paper? We recommend you direct state specific inquiries directly to your Seyfarth lawyer of choice. The potential obligation to reimburse employees for remote work expenses is not limited to California, however. If you havent revisited your employee expense reimbursement policies recently, some business expenses may no longer qualify for an accountable plan. Some of the common telecommuting expenses that state law may cover include Internet services and cellphone fees, office supplies and other equipment, and any paid services that are required to perform a job. income. Expense Reimbursements in the Era of Remote Working, Supreme Court Holds That Highly-Compensated Employees Solely Paid a Day Rate Must Meet Reasonable Relationship Test, Policy Matters Podcast Episode 34: Presidents Second Nominee for Wage and Hour Administrator Stuck in CommitteeAgain, Ninth Circuit Rehearing Suggests a FAArewell to Californias Arbitration Prohibition, Not Remotely Helpful: DOL Issues Guidance on Compensability of Teleworking Breaks, Now Available! expenses and follow procedure, any expense reimbursements could become taxable
"Obviously, some people need to be onsite. The Results: The amendment to the IWPCA provides that employers must reimburse their employees for all necessary expenditures and losses they incur within the scope of their employment, subject to the terms of the employer's expense reimbursement policy. For example, if a pay deduction results in an employees hourly rate becoming below the federal minimum wage, the employer has violated the FLSA. By: Christina Jaremus, Kyle Petersen, Daniel Small, and Gena Usenheimer. SHRM Employment Law & Compliance Conference. In light of this, as many as 11 US states, and Washington D.C., have introduced state laws that further protect their employees Remote Employee Reimbursement Laws. "It builds employee morale and generally results in better work when employees don't look for ways to avoid incurring expenses that otherwise would allow them to work more efficiently.". Watch Now! Can employers require employees to use of personal devices & internet for work duties? 0000007980 00000 n
for non-profit, educational, and government users. Accountable Plan In Law Salaries & Employee Benefits Reimbursement for Travel & Moving Expenses Upon Transfer, Reassignment or Promotion New York State Finance Law Sec. 0000002059 00000 n
The employee fails to
Federal law excludes some types of employees from the requirement to receive one and one-half times their regular rate of pay. ordinary and necessary business expenses, Introducing a New BenefitHealth Advocate, Assurity Benefits Protecting you and the ones that you love, Flexible Spending Account (FSA) vs. Health Savings Account (HSA), What Is Progressive Discipline and How It Helps Your Business, How Employment Screening in 2023 Will Change the Way You Do Business, The Top 5 Best Ways to Handle Workplace Negativity in Your Business, Dues and subscriptions,
Lets say a pizza company only reimburses its delivery drivers $1 per delivery for the mileage and gas used to make the delivery. involved, such as compliance issues and how to report the reimbursements on
The information on MEL is not legal advice, but general information related to legal issues commonly encountered. Your session has expired. Since so many people are working remotely . Here at LaborLawCenter our Compliance Experts are constantly working to stay on top of the many compliance changes so you don't have to. Build specialized knowledge and expand your influence by earning a SHRM Specialty Credential. Attorney Advertising|Disclaimer | Terms | Website Development by 0000003840 00000 n
In that instance, even if there is no additional cost to the employee, the employer must reimburse so as not to enjoy a windfall, some courts have reasoned. for employees to submit expenses. "It is good practice to reimburse employees for expenses that they have to incur to do their jobs, even if not required by law, because it is the equitable thing to do," he said. basis. In addition, The public hearing will take place on Thursday, November 3, 2022 at 2:00 p.m. at the NH Department of Labor, 95 Pleasant Street, Concord, NH 03301. The State Minimum Wage Law does not apply to public agencies. }
Use the NYS Travel Card (T-Card) to pay appropriate travel expenses while traveling on official state business to minimize your out-of-pocket costs. Significantly, even if a state does not have a statute covering general business expenses, the inquiry might not end there because case law might create an obligation. The COVID-19 Employment Litigation Landscape Is It All Uphill From Here? The employee can be reimbursed for the home office percentage of rent or mortgage expenses, depreciation, utilities, and other costs of maintaining the home. Under the law, for-profit and nonprofit employers with 20 or more full-time non-union employees in New York City must offer their full-time employees the opportunity to use pre-tax income to purchase qualified transportation fringe benefits. Whether or not you pay taxes on expense reimbursements depends on whether you use an accountable plan or nonaccountable plan. Virtual & Washington, DC | February 26-28, 2023. Reimbursement: Compensation paid by an organization for out-of-pocket expenses incurred or overpayment made by an employee, customer, or other party. create a detailed reimbursement procedures guide, team up with Resourcing Edge. ", Lewis said that he implemented a written policy that anything expensed "is subject to return upon termination of employment, and [we created] an addendum that there could be a payroll deduction for any non-consumable expense not returned.". 0000020567 00000 n
If employers hire employees in multiple states, they may modify their policies accordingly or simply make one generous policy for everyone. income, social security, Medicare, and FUTA taxes. 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. We will always provide free access to the current law. Not within 30 days of submission? New York. Other states, including Illinois, Iowa, Montana, New Hampshire and South Dakota, have enacted laws which may require reimbursement of employee expenses, although case law in these states is not as well-developed as in California. professional licenses. The reimbursement would have otherwise
BYOD, or bring your own device, policies are becoming more common in work environments. 0000001407 00000 n
DETERMINING NUMBER OF FULL-TIME EMPLOYEES, IV. Need help with a specific HR issue like coronavirus or FLSA? How can a failure to reimburse employees result in minimum wage violation? Privately Owned Vehicle (POV) Mileage. var temp_style = document.createElement('style');
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The Tax Cuts and Jobs Act, passedin December 2017, eliminated the federal income tax deduction for most unreimbursed employee expenses for 2018 through 2025. 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. Expense reimbursement is an area of California employment law that receives little attention, but can result in significant liability. 202 Non-teaching employees of school districts are subject to the NYS Minimum Your company required or approved the employee to make the expense. Business Units may use the Travel and Expense module directly or bulkload the Travel and Expense module from their systems. Most employee expenses will be reimbursed through the Travel and Expense module in the Statewide Financial System (SFS). ", Employers should have a written policy that outlines all expense reimbursements. By way of example, some of these statesnotably California and Illinoishave strict reimbursement laws. order to qualify for an accountable plan, the employers reimbursement or
"If the employee's Internet bill is $90 a month [for Internet use only, not TV, DVR, phone, etc. One of the key components of the most onerous expense reimbursement laws is the requirement to reimburse for any necessary expense, which begs many a question about what types of expenses must be reimbursed. Employers can save by reducing their payroll taxes. These expenses can include fuel costs, maintenance. New York opted not to follow changes made by the TCJA to the deduction for moving expenses and to the exclusion from gross income (wages) for moving expenses reimbursement for tax years 2018-2025. https://newyork.public.law/laws/n.y._labor_law_section_198-c. Reimbursement of business expenses, insurance . Seyfarth Synopsis: The COVID-19 pandemic thrust remote working upon many employers without notice or adequate time to prepare. Original Source: For any questions please email or call Sarah Fuller at Sarah.F.Fuller@dol.nh.gov or 603-271-3597. If you have questions, contact our Educational Services unit by phone at (518) 474-1764 or by email to: orpts.edservices@tax.ny.gov. Where the practice is widespread (or just alleged to be) the claims can be brought on a class-wide basis. The California Supreme Court Will Weigh In, Paid Leave For USERRA? new Tax Cut and Jobs Act, effective for 2018 through 2025 tax years. if(currentUrl.indexOf("/about-shrm/pages/shrm-china.aspx") > -1) {
Expense reimbursements can include use of . Employees can lower their monthly expenses by using pre-tax income to pay for their commute. When Should Employers Reimburse Expenses for Remote Workers? As explained below, reimbursement might be required in these states for business-related use even if the employee will not incur an extra expense, such as when an employee has an unlimited amount of data and minutes on their cell phone. The employee can also ask the Labor Commissioner to cite the employer or anyone acting on the employers behalf under Labor Code Section 2802(d). accountable or nonaccountable. 10170 A: No. This Google translation feature is provided for informational purposes only. New York State is one of only a few states that explicitly requires employers to reimburse employees for work-related expenses. All rights reserved. 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, New Jersey Franchise Owner Settles Disability Discrimination Lawsuit With EEOC, New Federal Protections For Pregnant Workers, When Jokes at Work Become Sexual Harassment, When Gift Giving At Work Becomes Sexual Harassment, 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. treated as supplemental wages and subject to taxes. Illinois Expense Reimbursement Law. 0000019915 00000 n
We understand how frustrating not receiving adequate reimbursement can become for employees. THERES A BETTER WAY TO WORK with NYCs Commuter Benefits Law. The State of New York, its officers, employees, and/or agents are not liable to you, or to third parties, for damages or losses of any kind arising out of, or in connection with, the use or performance of such information. The cost of providing employee-requested copies of employment records. 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. entrepreneurship, were lowering the cost of legal services and Weve been helping our New York City clients fight for their right to adequate compensation for over thirty years. Search and download FREE white papers from industry experts. Is there a reimbursable expense if the employee incurs no incremental cost in using a personal cell phone or connecting to their home wireless internet network for work purposes? New York Labor Law 198-C. 43 Pa. Stat. . Reimbursement for business-related expenses. Please confirm that you want to proceed with deleting bookmark. For example, California requires employers to reimburse some cell phone . . Depending on what type of expense is reimbursed, the amounts received . Even if your company is in a state that does not have reimbursement laws, it's ideal to reimburse anyway, said Robin Samuel, a partner in the Employment Practice Group of Baker McKenzie in Los Angeles. Rely on us for all your payroll, HR,
Under these policies, many employers are paying anywhere from $30 to $50 per month toward employee cell phone bills. https://www.nysenate.gov/legislation/laws/STF/202 2000-2023 Neil Klingshirn. However, the FLSA does include an exception that requires employers to finally and unconditionally pay an employees wage. This is why a good employee expense reimbursement policy can be handy. Pre-pandemic, employees whose wages were at or close to the minimum wage were typically not among the ranks of workers routinely working remotely. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organizations culture, industry, and practices. ], and we calculate one third of the day is work-related, we'd round up to $30 for the month," he said. But for those who do not, or who do not daily, this is a good alternative.". NY policy should include the following: Employees
wages subject to income, social security, Medicare, and FUTA taxes. Due to the pandemic, employees in the US are working from home in unprecedented numbers. 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. Business Units are required to follow the policies outlined in this chapter. requirements. The facts in your case may be different too. The FLSA, however, is implicated if an employee's unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. Expenses may no longer qualify for an accountable plan alternative. `` We recommend you direct state specific directly. The pandemic, employees whose wages were at or close to the,... Fuller at Sarah.F.Fuller @ dol.nh.gov or 603-271-3597 and expense module from their systems lawyer of choice February,! 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