Who Picks Up the Tab for Employee Expenses?
A number of states across the country have passed expense reimbursement statutes or regulatory guidance discussing who is responsible for employee expenses. Among the curious developments are the list of expenses that states are mandating employers must pay. For instance, California courts have held employers are required to pay a reasonable percentage of employees’ personal cell phones bills when the phone was used for work. But California is just one of the states involved.
Employers in Illinois have similar obligations. Effective January 1st of this year, Illinois employers were required to reimburse employees for all necessary expenditures or losses incurred within the employee’s scope of employment and directly related to services performed for the employer. Under Illinois law, “necessary expenditures” are all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.
While these statutes only apply to employers in those respective states, these statutes evidence a growing trend of state legislation on this topic. In the age of technology and the ability to work remotely, there are many expenses employers may now have to pay. California courts, for instance, have found employers must reimburse employees for things like data plans, internet expenses and other computing expenses – regardless of how small the cost is to the employee.
Employers should closely monitor this issue as more and more states and localities are passing such legislation. While the laws vary, the bottom line is the same – employers are picking up the tab for additional employee expenses they were not anticipating. To get ahead of the curve, employers should reassess their current expense reimbursement policies and contemplate what types of expenses may become theirs in the coming days. It is also a good time to clarify what constitutes a reasonable expense under your policies. While an all-expenses-paid trip to Las Vegas on the company dime is without a doubt out, a portion of the employee’s monthly cell phone bill is likely in.
If employers want to avoid such exposure, they need to define what employee-owned tools are allowed to be used for business purposes and what are not. If the employer provides a cell phone to employees, your policy should expressly state whether or not an employee is allowed to use a personal cell phone for work purposes. If the policy says no, the liability should be avoided. It’s a new world and it changes every day; if you want to avoid such exposure, you need to anticipate what’s coming around the corner and prepare accordingly.
Brody and Associates regularly advises management on complying with state and federal employment laws including wage and hour laws. If we can be of assistance in this area, please contact us at firstname.lastname@example.org or 203.454.0560.