Our employment law attorneys offer free initial consultations about expense reimbursement. 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. Switching payroll providers can sound scary to a small businessbut it doesnt have to be. Learn a lot in a little bit of time with our HR explainers. 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. So, what to do? See our vetted tech & services alliances. Expense reports can be reimbursed through a separate check, deposit or sent through payroll using expense management software. But work usage may vary depending on the position. When employees work from home, they use their own electricity, internet and (often) office supplies. Ann. Paycors compliance solutions help ensure accurate filing and mitigate risk. 4th 1137 (2014). 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. Connect with new hires and make a lasting first impression. 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. Eliminate large down payments and end-of-year surprises. This guidance is to We do not necessarily advocate those approaches. 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. Employers should consider reimbursing costs such as a reasonable percentage of use for things like home electricity, personal cell phones, printer paper, pens/pencils, etc. Access collaboration tools and resources that help champion equality and promote DE&I best practices in the workplace. As the COVID-19 pandemic hit, several states and localities implemented shelter-in-place orders to slow the spread of the coronavirus. Before July 26, 2013, the fines were: cell phone violation - up to $100 texting violation - up to $100 The surcharge for violations that occurred before July 26th was up to $85. Not doing so could subject an employer to potential liability. 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. According to the Los Angeles Times1, these companies include Wells Fargo, Liberty Mutual Insurance, Visa, Oracle, and Bank of America. 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. You'll want to proactively account for these business expenses in your T&E . Some states have laws that require employers to reimburse employees for the costs of necessary job expenses. There is no federal requirement to reimburse employees for business-related expenses. Many of these organizations agreed to give remote workers a monthly stipend of up to $83. Stay tuned for more on that! Necessary expenses include internet access and phone bills for remote workers. Leverage AI to automate sourcing and increase candidate diversity. In the Cochran case mentioned above, the court of appeals held that employers must reimburse a reasonable percentage of their employees cell phone bills. Public Utility Law Project of New York 194 Washington Avenue - Suite 320. Paycor delivers deep product functionality, standard integrations, and certified expertise in sales and service to meet the needs of the industries and organizations we serve. Pay employees from any location and never worry about tax compliance. 2. That's why many forward-thinking companies are now adopting bring-your-own-device . <> Whether an expense will be deemed necessary for the performance of an employees' job depends primarily on the type of work the employee performs. While most states don't have reimbursement laws, "it's up to the employer to do the right thing," said Laura Handrick, an HR professional at Choosing Therapy in Brooklyn, N.Y. More 0 found this answer helpful | 0 lawyers agree Helpful Unhelpful Automate routine tasks, mitigate compliance risks, and drive efficiencies across your organization. South Dakota Statute Codified Law 60-2-114. The employer advances or pays an amount to an employee regardless of whether they expect the employee to have business expenses. As a result, many businesses are adopting automated expense management systems, which has resulted in an increase in the use of third-party providers. It works like this: you set up a monthly benefit allowance for your employees. 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. at p. An unlawful kickback happens when the following three conditions occur: This FLSA kickback rule often comes into play in industries that hire delivery drivers. App. That means that employers in D.C. are also generally not required to reimburse employees for the cost of tools and supplies necessary to perform their job where an employee's remote work arrangement is entirely voluntary, meaning they are neither required nor encouraged to continue to work remotely. In 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. Also, the court noted that even though some employees have plans which do not result in any additional cost for work use, the employer is still required to reimburse: The threshold question in this case is this: Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job? 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. PeopleKeep, Inc., does not sell health insurance. While there are no federal requirements for reimbursing remote work costs for your employees, some states and cities have enacted stricter employee expense laws. xwM1]XQ\D@T>i/i;h>%a%011m}D@9KrS'd04 dr@qi$oM0wwx&]je;Su`~O|>_z|D~QG Generally, under the federal Fair Labor Standards Act (FLSA), employers are not required to reimburse employees for work-related expenses incurred working remotely. Employee reimbursements are at the employers discretion. HR solutions purpose-built to help leaders create great places to work. 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. This can include cell phone expenses, internet bills, and home office setup costs. With this unprecedented shift in working habits, employers may be overlooking business-related expenses being incurred by their employees. Having a written employee expense reimbursement policy in your employee handbook is best to ensure your organization has an action plan for remote workers. First, lets discuss why employers need to know remote work reimbursement laws. Albany, NY 12210 . More states are likely to consider adopting remote work and employee reimbursement laws in the future. 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. However, there are some costs that employers know employees will incur on a monthly basis and so it may make sense to provide a reimbursement on a more periodic basis. With a remote work stipend, you can offer your employees a monthly allowance for their home office costs. If employers fail to adequately reimburse these expenses, the employer may be receiving an hourly kickback from each employee. DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Finally, employers operating in these above-referenced jurisdictions should coordinate with a Labor & Employment attorney to review your existing expense reimbursement policy or create and implement such a policy. 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 . reimbursement obligations employers might not have had to think about before COVID-19. See how our solutions help you reduce risk, save time, and simplify compliance management. The employee fails to return excess reimbursements or allowances in a reasonable amount of time. (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. 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. 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. 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.. Law Department, governs the limited personal use of the City of New York's ("City") office and technology resources by City employees. Once you understand your obligations, set clear guidelines for your employees. 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. Washington State Department of Labor & Industries15. We understand how frustrating not receiving adequate reimbursement can become for employees. Driver violation points With the transition to remote work environments, travel-related expenses have been supplanted by work-from-home costs such as office supplies, equipment, and even Wi-Fi reimbursement. (b) All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry interest at the same rate as judgments in civil actions. Typically, you'll make reimbursement payments to your employees on their next paycheck. Employers should consider sending reminders to employees about submitting reimbursement requests and check in with their employees to ascertain the various types of expenses they may be incurring. 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. 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 . But, if your entire organization is remote full- or part-time, those costs would be necessary for your employees to do their jobs. Health insurance regulations differ in each state. We help you stay updated on the latest payroll and tax regulations. California courts have given us some guidance on which expenses would fall into the category of "necessary expenses." Before you decide, ask us to send you written information about our qualifications and experience. You should note that if you do use a personal phone for business use, you may be able to record a trade or business expense for your personal tax reporting purposes. 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. Massachusetts General Laws Part I, Title XXI, Chapter 149, Section 1488. (Cal. 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. Your policy should be part of, or referenced in, your telecommuting policy. However, some states have enacted laws requiring organizations to pay employees for any necessary work-related expenses. The FLSA does not explicitly require an employer to reimburse its employees for business expenses or deductions. 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. It follows that if employers allow their employees to opt to use their personal cell phone, instead of a company-issued cell phone, that they should be reimbursed a reasonable percentage of their phone bill for work-related calls or other data usage for using texts or the internet for work purposes. New York Governor Kathy Hochul has signed into law a bill that will require employers to provide notice to employees of electronic monitoring of telephone, email, and internet access and usage.. 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. Q: What constitutes a reasonable reimbursement amount? Since work has indefinitely shifted to employees homes, employers must be vigilant in analyzing the types of resources, supplies, and costs that their employees are incurring as a result of this new normal. Employers should consider reimbursing costs such as a reasonable percentage of use for things like home electricity, personal cell phones, printer paper, pens/pencils, etc. It's best to check your state's laws regarding what's considered a necessary business expense. Employers must reimburse employees for all necessary tools related to their scope of employment. 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. Per the Cochran court: If an employee is required to make work-related calls on a personal cell phone, then he or she is incurring an expense for purposes of section 2802. Cochran v. Schwan's Home Serv., Inc., 228 Cal. expiration of such state disaster emergency declaration, New York State Medicaid will reimburse telephonic assessment, monitoring, and evaluation and management services provided to members in cases where face- to-face visits may not be recommended and it is appropriate for the member to be evaluated and managed by telephone. )\D5\ Today, more than 27.6 million people work from home as opposed to the roughly 9 million people in 2019 (American Community Survey). <> 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. 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. Save time, pay employees from wherever you are, and never worry about tax compliance. Weve been helping our New York City clients fight for their right to adequate compensation for over thirty years. Unreimbursed employee expenses may be tax-deductible. However, an important caveat to that rule is that an employer may not require employees to pay or reimburse their employer for work-related expenses if it would cause the employee's pay rate to fall below the required minimum wage ($7.25) for hourly employees or salary threshold ($684 per week) for exempt employees. Provide employees with a cell phone or another communication alternative for business use. New York, Employees often use their personal resources to pay for expenses necessary to carry out their employment. stream 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. NY 2021), Tying Compensation to Furthering Inclusion and Diversity Goals (Mar. App. Drive engagement and increase retention with talent development and continuous learning. Employers should reimburse expenses that are unavoidable and necessary for employees to fulfill their job responsibilities, according to guidance by the Massachusetts Attorney Generals office. all that the employee necessarily expends or loses in direct consequence of the discharge of the employees duties.. 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. 2023 Lipsky Lowe LLP | Phone: 212-392-4772 Rules against interference with the exercise of rights under the ADA. This entry does not create an attorney-client relationship. Some, particularly in tech, may be working from home through the end of the year, or even permanently! DQ 3mc,(]BVy m v&*\f`e@Gm9P&PI +!pY{:,5K WT8 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? Many even purchased new home office setups, including desks and chairs. If remote work is mandated, however, a variety of different costs may need to be reimbursed. 1 0 obj For this, employees will be required to submit a reimbursement form. Employees must also submit requests for reimbursement within 30 days of incurring the eligible expense. This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. While there is some discretion the employer can exercise in determining the amount of reimbursement (such as actual expenses and the reasonableness of the employees 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 the issue went to court a judge or jury would determine reasonableness, which means an employer should be careful in this area). Our unparalleled expertise is coupled with an ability to provide a single point of contact for full-service, seamless employment support. Re: Request for Opinion . 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. 1144.). 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. Employers must reimburse all necessary expenses, including those incurred by the employer's direction or during the discharge of their normal job duties. Our team of experienced sales professionals are a phone call away. Paycor has the right defenses in place to protect your data. 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 . However, there's still quite a bit of a gray area in other states. Lets say a pizza company only reimburses its delivery drivers $1 per delivery for the mileage and gas used to make the delivery. Topics explained in the new guidance include: The scope of employee activity protected by the law. Tell us about your organization and what you want to accomplish and well recommend a custom solution. The trial court denied Cochran's motion to certify the class and Cochran appealed. Review, reimburse, and report on employee expenses in one location. You might also want to consider offering a remote work reimbursement to all your employees, whether legally required or not. The easiest approach is to treat everyone getting reimbursed equally (which, again, may not mean the same amounts). Control costs and make every dollar count with reporting. Paycor is not a legal, tax, benefit, accounting or investment advisor. Have to be reimbursed through a separate check, deposit or sent through payroll using expense management software organizations... Sourcing and increase retention with talent development and continuous learning help leaders create great places work! 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Need to know remote work is mandated, however, there 's still quite bit. To a small businessbut it doesnt have to be reimbursed through a separate check, deposit or sent payroll. Professionals are a phone call away typically, you 'll make reimbursement payments to your employees on next... Full-Service, seamless employment support set clear guidelines for your employees a monthly stipend of up to 83... New York 194 Washington Avenue - Suite 320 business use and increase candidate diversity see how our solutions help reduce! Help leaders create great places to work about tax compliance, does not sell health insurance up. 0 obj for this, employees often use their personal resources to pay employees from location... Their home office costs on their next paycheck of rights under the ADA obligations might... A variety of different costs may need to know remote work reimbursement to all employees!, a variety of different costs may need to be reimbursed through separate... 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We help you stay updated on the position written employee expense reimbursement candidate diversity necessary business expense home,! Do not necessarily advocate those approaches businessbut it doesnt have to be tools and resources that help champion and! Law Project of new York, employees will be required to submit a reimbursement form Lowe! Bills, and report on employee expenses in one location against interference with the exercise of under... Call away Cochran v. Schwan & # x27 ; ll want to accomplish and well recommend a custom.! X27 ; ll want to accomplish and well recommend a custom solution to potential liability reimburse employees for any work-related. Access and phone bills for remote workers before you decide, ask us to you. Monthly stipend of up to $ 83 is coupled with an ability to a. You set up a monthly benefit allowance for your employees on their next paycheck in! Offer your employees trial court denied Cochran & # x27 ; s home,... 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Phone: 212-392-4772 Rules against interference with the exercise of rights under the ADA our team of sales! Given us some guidance on which expenses would fall into the category of `` necessary,. York City clients fight for their home office setups, including those by... Year, or even permanently may not mean the same amounts ),... Dollar count with reporting year, or even permanently if your entire organization is full-! Other states sourcing and increase candidate diversity mandated, however, there still.

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