Staffing Kansas City

Are You Up to Date on Employer Expense Reimbursement Obligations?

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Much has changed for employers and employees with remote working becoming more common. With many predicting the probability of remote work continuing for the immediate future, employers are receiving more questions about what expenses, if any, they are obligated to reimburse. With change being the norm, it is a good idea to start re-evaluating your businesses’ legal obligations for reimbursement and ensure written policies reflect any changes.

Recently Seyfarth Shaw LLC, an international law firm in Chicago, provided a summary of the evolving legal landscape around this topic. This information should serve as a recommendation and not legal advice. There are many differences between specific state inquiries and mandates.

Differing Requirements

Currently, under the Fair Labor Standards Act (FLSA) there is no direct expense reimbursement requirement, according to information provided by Seyfarth. For many employers, this is a situation they have never encountered and therefore, the subject requires consideration.

FLSA can be implicated if an employee’s unreimbursed business expenses create a scenario where the individual’s wages fall below the minimum wage or impact overtime wages. Currently 10 jurisdictions have statutes or case law specifically addressing the requirement of an employer to reimburse business expenses. These states include California, Iowa, Illinois, Massachusetts, Montana, New Hampshire, North Dakota, South Dakota, District of Columbia and Seattle, Washington.

There are 14 other states with statutes that address the obligation of an employer to reimburse for tools and equipment: Colorado, Indiana, Kansas, Maine, Nebraska, North Carolina, Michigan, Minnesota, North Carolina, Oregon, Tennessee, Vermont, Virginia, and Wyoming. Other states also have requirements that employers should reimburse for expenses in a manner consistent with related written policies. Again, laws regarding reimbursement vary state by state.

Defining Necessary

Because the needs and requirements for each job role can be different, it is important for employers to create clear expectations of the tools they believe are necessary for an employee’s home office. It will also be important to set expectations through written policies with guidelines and procedures regarding purchases.

Navigating Compliance

How an employer chooses to reimburse for expenses is largely up to the individual business. This might take the form of a fixed monthly stipend with the ability to inquire about reimbursement for purchases not covered by the stipend. Another option is to create a reimbursement policy where a receipt and/or other documentation is required for reimbursement. Options to purchase tools and equipment directly through the employer offer another option.

In conclusion, Seyfarth Shaw recommended any policies created to address this question should clearly state expectations of the employer regarding tools and equipment necessary to do the job from home, including when and how employees can purchase equipment with the expectation it will be paid for by the employer.