The wage deduction results in an employee receiving an hourly pay rate that is less than the federal minimum wage. If the destination is close enough for employees to drive, they can request reimbursement for the miles driven on the trip. 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. 162 0 obj <> endobj . "Some plaintiffs' counsel have suggested that employers also have an obligation in today's workplace to reimburse employees for overhead expenses, such as utilities, rent or mortgage, and the cost of furniture. Does your employer fail to compensate you for other regular expenses? ", 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.". To 0000002481 00000 n There is no federal requirement to reimburse employees for business-related expenses. 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. New York State Finance Law Section 202 - Reimbursement for Travel and Moving Expenses Upon Transfer, Reassignment or Promotion New York Laws State Fin. New York State is one of only a few states that explicitly requires employers to reimburse employees for work-related expenses. a nonaccountable plan, any reimbursement or other allowance arrangement is Example: Mario is an employee forced to work at home due to the coronavirus for two months. Build specialized knowledge and expand your influence by earning a SHRM Specialty Credential. "If we can expense it, we believe that legally we must allow for it since the tax code no longer supports the employee deductions. Non-teaching employees of school districts are subject to the NYS Minimum Illinois was the newest addition this year. Most employee expenses will be reimbursed through the Travel and Expense module in the Statewide Financial System (SFS). the employer must have "authorized or required" the employee to incur the expense; and the expense reimbursement request must be submitted to the employer in writing within 30 calendar days of the date the expense was incurred, with appropriate documentation proving the expense ( i.e., receipts). 0000001739 00000 n Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. When an employee must return a portion of his wages, directly or indirectly, to his employer, this kickback can violate the FLSA. Imagine that after weeks of working remotely due to COVID-19, you return to your office only to discover a stack of papers on your desk in a folder titled "requests for reimbursement." You peer through the contents and find cell phone bills, a receipt for a $750 printer, a bank statement with the account fees highlighted, a clothing store shipping invoice with $49.95 of expedited shipping . According to the IRS, employees must now include moving expense reimbursements in employees' wages, except for certain members of the Armed Forces. City of New York. It is good practice to ask terminating employees to submit expense reimbursement timely, telling them that late submissions are likely to be rejected. Learn more about how to use and manage your travel card. Therefore, when calculating For example, in New York, employers must. These claims are not likely to succeed," he said. Stay tuned for more on that! If you havent revisited your employee expense reimbursement policies recently, some business expenses may no longer qualify for an accountable plan. Employee expenses reimbursed through the Travel and Expense module include travel expenses, claims for damages, and other employee reimbursements. Depending on what type of expense is reimbursed, the amounts received . The contractor can then deduct business expenses on their own tax return. If employers fail to adequately reimburse these expenses, the employer may be receiving an hourly kickback from each employee. The date reimbursement is due is typically the date that the employee submitted the expense for reimbursement. NYC's Commuter Benefits Law took effect on January 1, 2016. And that doesn't factor in the hidden costs of training: time taken away from job duties, equipment. }); if($('.container-footer').length > 1){ Attorney Advertising|Disclaimer | Terms | Website Development by 190 0 obj <>stream 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. Montana's employee business expense reimbursement law is similar to that of California's and Illinois'. The policy should clearly articulate the employers expectations for the tools and equipment that are necessary to do the job from home, and establish guardrails for when and how employees can purchase equipment with the expectation that the company will foot the bill. (a) General rule. Location: 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. accountable plan, this does not disqualify other reimbursements that meet the Please log in as a SHRM member. 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 . Our unparalleled expertise is coupled with an ability to provide a single point of contact for full-service, seamless employment support. Since so many people are working remotely now, employers will need to ensure that employees earning near minimum wage are not spending so much on expenses that their paycheck falls too low. Expense reimbursements can include use of . See Cochran v. Schwans Home Serv., Inc. There is no federal requirement to reimburse employees for business-related expenses. Employers who get expense reimbursements wrong may end up having to compensate workers for unreimbursed expenses, plus interest, penalties, and attorneys' fees. Amended U.S. Form 2106 or 2106 EZ* with U.S. 1040, Schedule A* if the deduction was not taken . 2000-2023 Neil Klingshirn. Information on MEL is public. 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. If an employee fails to properly substantiate Join thousands of people who receive monthly site updates. Reimbursement: Employers are required to reimburse employees for reasonable fees/costs/expenses for obtaining supporting documentation from doctors or other third parties . var currentUrl = window.location.href.toLowerCase(); Businesses should re-examine their reimbursement and allowance policies in light of the new Tax Cut and Jobs Act, effective for 2018 through 2025 tax years. The IRS determines reimbursements on an employee-by-employee Please confirm that you want to proceed with deleting bookmark. BYOD, or bring your own device, policies are becoming more common in work environments. Pandemic or no, reimbursement policies for work-related employee expenditures "should already be on employers' radar," according to Lenore Horton, an employment attorney with FisherBroyles . In addition, The new law in Illinois states that employers must reimburse all "necessary expenditures". Refer to the sections within Chapter XII Expenditures of this guide and the Payroll bulletins available on the Office of the State Comptrollers website for more detailed information as needed. Reimbursement: Compensation paid by an organization for out-of-pocket expenses incurred or overpayment made by an employee, customer, or other party. These include, but are not limited to: Because Google Translate is intellectual property owned by Google Inc., you must use Google Translate in accord with the Google license agreement, which includes potential liability for misuse: Google Terms of Service. reduced expenses. Additional states with expense reimbursement laws include Illinois, New Hampshire, Massachusetts, Pennsylvania, Washington, D.C. and others. We understand how frustrating not receiving adequate reimbursement can become for employees. 2006 Jackson Lewis P.C. Quite the contrary, courts in the Golden State interpret this to require reimbursement of a reasonable percentage of employees monthly cellular data and internet costs even if the employee had unlimited data plans and home internet network for personal use and even if the employees monthly bills did not increase as a result of the business use. For any questions please email or call Sarah Fuller at Sarah.F.Fuller@dol.nh.gov or 603-271-3597. An Accountable Plan allows the employee to either receive and advance/allowance or be reimbursed for expenses under the following conditions: The expense must be in connection with the performance of services as an employee. 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. accountable plan amounts arent considered wages, they arent subject to Employer has not reimbursed expenses for months. II. With "If they don't reimburse, it's as if employees took a salary cut. California Employers Still Can Require Arbitration. The FTCs Proposed Rule on Non-Competes: What Employers Need to Know, The Proliferation of Pay Transparency Laws: What US Employers Need to Know, Tying Compensation to Furthering Inclusion and Diversity Goals, US, UK and EU Whistleblower Developments for Multinational Employers. 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. The employee fails to Be aware, however, that some states have their own laws surrounding expense 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. } submit reimbursable expenses within 30 days of incurring the expense. wages subject to income, social security, Medicare, and FUTA taxes. Please enable scripts and reload this page. Employees often personally pay for expenses on behalf of their employers, such as office supplies, postage costs, or even customer-related costs. been paid as wages. 0000003840 00000 n Members may download one copy of our sample forms and templates for your personal use within your organization. Most businesses prefer to include reimbursement amounts in the 1099 income rather than go through reimbursing expenses. 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. Please purchase a SHRM membership before saving bookmarks. Employers can also attract and retain employees by offering transportation benefits. The law is based on the Internal Revenue Code that authorizes pre-tax commuter programs, which benefit employers and employees. Common business Employees can lower their monthly expenses by using pre-tax income to pay for their commute. 2. When the COVID-19 pandemic hit, many salaried employees around the world started working virtually from home. 0000007406 00000 n 0000008983 00000 n 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. She said that many employers are saving money on office overhead, such as facilities maintenance and electricity, while employees are working from home. New York will continue to allow you to exclude qualified moving expenses reimbursement and moving expenses from your NYAGI. Use this small business expense reimbursement policy guide to create accountable plans and a policy that can reduce your tax burden while encouraging employee compliance. By way of example, some of these states-notably California and Illinois-have strict reimbursement laws. Just reimburse on a reasonable and legal basis," he said. 0000008928 00000 n The employee can be reimbursed for the home office percentage of rent or mortgage expenses, depreciation, utilities, and other costs of maintaining the home. There are a variety of ways employers can fulfill their obligations to reimburse business expenses. expenses that can be reimbursed include: Usually, California Labor Code 2802. benefits, and compliance needs. California has one of the most complicated and well-defined employee expense reimbursement laws. 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. GET to KnowNew York State ComptrollerThomas P. DiNapoli. If an employer misrepresented job, do I have to pay back moving costs? There must be receipts and invoices that document the nature and amount of the expenditures. Once you understand your obligations, set clear guidelines for your employees. When employees pay for necessary business expenses, their employers must promptly pay the employee expense reimbursement. Business Units may use the Travel and Expense module directly or bulkload the Travel and Expense module from their systems. They are deductible by the Setting expectations in written policies with guidelines and procedures for advance approval of such purchases will allow the employer to define the universe of necessary expenses. An expense policy like this, though, has to distinguish between what is paid as a regular wage and what is reimbursement for employee expenses. The Tax Cut and Jobs Act (TCJA) eliminated unreimbursed employee expense deductions for all but a handful of . Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. Employers should take proactive steps and revise policies on employee reimbursements now to avoid class action litigation down the line. THERES A BETTER WAY TO WORK with NYCs Commuter Benefits Law. While employers typically provide a range of office supplies to remote workers, including laptops, keyboards and printers, employees often payfor additional expenses. Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. to an employee regardless of whether they expect the employee to have $("span.current-site").html("SHRM China "); Sungevity has always reimbursed employees for certain expenses, Trust said, and if office equipment or supplies are needed to work at home, they are provided to the employee or reimbursed with prior approval for the expenditure. Unique COVID-Related Wage & Hour Issues Employers Need to Know, US Immigration Considerations During the Pandemic, Workplace Safety | Practical Tips for COVID-19 Notifications, Protecting trade secrets in the rapid remote world, The Reopening Playbook: What US Employers Should Be Thinking About Right Now, COVID-19: 3 Key Areas for US Employers to Master Now, Cost-Cutting Strategies in the Wake of COVID-19. Another component of assessing whether an incurred expense was necessary is whether the employee could have fulfilled the need at a lower cost. . The employer advances or pays an amount Alternatively, employers can establish a process by which employees are only reimbursed after submitting a receipt or other documentation confirming that they indeed incurred the expense. Policy Statement. return excess reimbursements or allowances in a reasonable amount of time. XIII.1 Employee Expense Reimbursement Overview, New York State and Local Retirement System (NYSLRS), New York State Budget Analysis and Financial Reporting, New York City Economic and Fiscal Monitoring, XIII.2 Employee Expense Reimbursement Policies, XIII.2.A Expense Report Mandatory Header Fields, XIII.3 Record Retention Travel and Expense, XIII.4 Employee Travel Expense Reimbursement, XIII.4.A Employee Travel Card Reconciliation, XIII.4.D Meals and Incidental Expenses Breakdown, XIII.5 Alternatives to the State Travel Card, XIII.6 Potential Tax Consequences of Assigning an Incorrect Official Station, XIII.7 Office of the State Comptroller Travel Manual, XIII.8 - Procedures for Employee Non-Travel Expense Reimbursement, XIII.9 Allowed Values for Processing Payments in SFS, XIII.10 Refunds Owed to the State by an Employee, XIII.10.A Refunds Owed to the State by an Employee - Using a State-Issued Check, XIII.10.B Refunds Owed to the State by an Employee - Using an Employee Check, XIII.10.C Refunds Owed to the State by an Employee, XIII.10.D Refunds Owed to the State by an Employee - Using a Due to State Offset, XIII.11 Submitting Travel and Expense Reimbursement Requests for Inactive Employees, XIII.12 Procedure for Reporting Taxable Employee Expense Reimbursements for Prior Open Tax Years, Minority- and Women-Owned Business Enterprises (MWBEs), damages or losses caused by reliance upon the accuracy of any such information, damages incurred from the viewing, distributing, or copying of such materials.