Several jurisdictions have specific rules regarding … But only “necessary” expenses incurred by employees must be reimbursed, not optional expenses. 820 ILCS 115/9.5. However, employers should not use this option if employee wages are close to the threshold for FLSA purposes. Employers consider several factorswhendrafting these policies and determining stipend amounts.Here are just a few: 1. Read More. Explain the process for employees to submit necessary expenses for reimbursement, including those expenses necessary for the performance of remote workers’ job duties even if those expenses are not otherwise listed in the policy. Unfortunately, under tax reform, if you incur expenses for your employment that are not reimbursed by your employer, they are no longer deductible on Schedule A as an itemized deduction. When Should Employers Reimburse Expenses for Remote Workers? If an employer requires an employee to work from home and an employee needs a laptop to do so, the employer must reimburse the employee for the cost of the laptop if the employer doesn’t provide one. All rights reserved. At this time, Penn State employees who use cellular services on official University business have been able to choose between a Penn State-provided phone or use their personal phone and receive an allowance. Contact, Coronavirus FAQs - Postponements and Cancellations. Knowing what costs you are required to reimburse, and communicating that to your employees, will go a long way toward ensuring that you don’t end up wrongly refusing reimbursement for a reimbursable expense. This does not mean you won’t have to reimburse for any other necessary expenses, but it does provide guidance for employees so they have an understanding (and reasonable expectations) of the difference between those items necessary for their jobs and those that aren’t. As soon as employee wages dip below the applicable threshold, the damage is done, and employers can be liable for violation of the “kickback” rule. Therefore, employers can more easily run afoul of the FLSA in these scenarios, especially if the business-related expenses paid in any given workweek happen to be hefty. *Note: Illinoi… Independent contractors are not covered. [10] All is not necessarily lost for employees forced to work at home. The “inure to the primary benefit of the employer” language in the law could reasonably be interpreted to allow an employer to refuse to reimburse – outright or partially – expenditures for cell phones, data plans or home Internet service that an employee already has for personal use, such that the employee is not incurring any reimbursable expenses by teleworking. It would still be $150 for just the one line. unreimbursed business expenses, which can be excluded from compensation on Line 1A of the PA-40 Personal Income Tax Return. “Reasonable percentage” could mean the actual costs incurred for business purposes, which would require, for instance, that employees figure out how much time they spent on the phone for work as compared to personal calls and provide a percentage to the employer. If your employer did away with the reimbursement policy, that would be their prerogative. Before setting the terms of the policy, make sure any employer obligations in the policy, including when and how reimbursements will be paid, are manageable in terms of administration. Copyright © 1998- PICPA. § … Some common reimbursable items for remote work situations could include reimbursement for the purchase of (or the cost of a portion of): Be careful: employers may have to reimburse employees for items that incurred no additional expense to the employee if the employer is requiring the employee to use the item for work. Several jurisdictions have specific rules regarding employee expense reimbursements, so you’ll need to check your local law. Therefore, under an accountable plan with your employer, I would suspect that you would have to give an itemized list of business calls and personal calls from each month’s bill to your employer, and would only get reimbursed for that portion each month used for business. The following memo was just released by the IRS and is addressed to IRS auditors on cell phone usage and reimbursement by employers of employee personal cell phone for business usage and the employer paid cell phone used for some personal usage by the employee. The type of technology-related expense, such as phone and internet, that are reimbursable. As of Jan. 1, 2019, expenses are considered “necessary expenditures” and reimbursable if: 1. All expenses will be paid by the ... $30.00 to $36.00 the monthly reimbursement for police officers using a personal cell phone for Borough business. tit. Unfortunately, not every reimbursable expense is top of mind for employers, especially those who had little experience with a remote workforce before the pandemic. When you look at the laws applicable to your jurisdiction, check specifics on when your employees must be reimbursed. If your reimbursement policy does not yet address working from home, update it, and then communicate it. In addition, the Fair Labor Standards Act (FLSA) may apply. Pennsylvania's wage and hour law applies to all individuals who are employees of an employer. Reg. Contact Our NYC Wage Theft Attorneys. In California, an employer must reimburse an employee for all “necessary expenditures or losses incurred by the employee in direct consequence or discharge of his or her duties.” Cal. I am eligible for reimbursement from my employer for my cell phone. In some states employers are required by state law to reimburse their employees for their necessary job expenses. Answered by: Loretta M. Tubiello-Harr, CPA, is a principal with Tubiello-Harr & Associates LLC in Coopersburg, Pa. Read the latest from the Pennsylvania CPA Journal online or via the mobile app and digital edition. One quick way to a lawsuit is to set employee expectations higher than your follow-through. If your cell phone is exclusively used for business, then you can be reasonably assured that you could get a reimbursement for the entire $150 from your employer, as long as your employer has an employee reimbursement policy for such expenses. Though some expenses will clearly be ones that should be reimbursed, others may be questionable, and it may vary by jurisdiction. Where employees are subject to overtime for working more than 40 hours in a workweek; Where a particular pay threshold (whether under federal or state law) must be met for the employee to meet an exemption from overtime (in which case the employee will become nonexempt and must be paid overtime for any work over 40 hours in a workweek); or. Employees working from home may incur any number of expenses – home computers, printers, Internet service, WiFi connections, smartphones and even paper, pens and other office equipment. Am I eligible to seek reimbursement for the entire $150? Small tools; Office supplies; Professional license fees; Some moving expenses; Certain educational costs; Union dues, agency fees or initiation fees “We hold that when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. It contains teeth for the enforcement of its provisions. What “reasonable percentage” means has not been defined, leaving employers with a few options. The actual amount paid must be reported. § 275:57. However, if the employee chooses to purchase an additional monitor along with the laptop for the employee’s own convenience, or an upgraded laptop not otherwise necessary for the employee’s work duties, the monitor is not “necessary” and is not likely reimbursable, and neither is the difference between the standard laptop and the upgraded one. To keep workers safe from contracting the virus at work, many employers have allowed employees to continue to work from home indefinitely, which likely decreases the odds that an employer will be sued in class action litigation for failing to provide appropriate PPE in the workplace. COMMONWEALTH OF PENNSYLVANIA Pennsylvania Labor Relations Board CHAMBERSBURG POLICE OFFICERS ASSOCIATION : : ... choose his own cell phone and plan. Reimbursement May Be Required by Law. If your cell phone is exclusively used for business, then you can be reasonably assured that you could get a reimbursement for the entire $150 from your employer, as long as your employer has an employee reimbursement policy for such expenses. Less than 30 days is not acceptable according to the new law but 30 days or more is fine. In other words, "reimbursement is always required." As a final step, provide the policy to employees and managers, and ask them to sign a statement acknowledging they’ve read it. Pennsylvania has several statutes regulating issues such as minimum wage, maximum hours and overtime, and record keeping. Take These Four Steps. In addition, by putting the onus on employees to submit a request for reimbursement for any amounts above the stipend, employers are throwing a possible wrench in a putative class’s typicality argument, because each employee’s request for any additional reimbursement will have to be evaluated on an individual basis. PICPA members get full access to all of our articles, forums, podcasts, and more. The Illinois Wage Payment and Collection Act has been amended to require reimbursement of employees expenses, which may include higher ticket items like cellular phones, cellular data service fees, home computers and internet provider fees for employees who are expected to work remotely and more travel expenses. For more information: www.bakermckenzie.com, Want to Avoid Employee Reimbursement Class Actions for Remote Work? The Firm is known for its global perspective, deep understanding of the local language and culture of business, uncompromising commitment to excellence, and world-class fluency in its client service. The Cochran case expressly extended the expense reimbursement requirement to cover personal cell phone usage where the employer does not otherwise provide the equipment and/or a cellular plan. Cell phone usage; Uniforms; Materials; Equipment and tools; License and permit fees; If you have questions about expense reimbursement, consult our knowledgeable employment law attorneys. Nationally, the U.S. Labor Department has not placed any strict reimbursement requirements on employers when they tell employees to work remotely. For instance, though Pennsylvania doesn’t mandate expense reimbursements, if an employer has an agreement or policy that requires expense reimbursements to employees, those reimbursements are considered “fringe benefits or wage supplements” and must be paid to the employee within 10 or 60 days after a claim, depending on the circumstance. Instead, some employers are providing a monthly stipend to employees and communicating in writing that employees can submit requests for reimbursement if the stipend doesn’t cover their business expenses. For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator. The expenses must be reasonable. Even if you have good intentions, missing those reimbursement deadlines could cost you. For example, if an employee incurs a business expense in a state governed by the FLSA (or a state with reimbursement laws mirroring the FLSA rule), it is the employer’s burden to determine whether that expense brings the employee’s compensation below minimum wage, and if so, to reimburse that employee accordingly. Under these policies, many employers are paying anywhere from $30 to $50 per month toward employee cell phone bills. However, managing employees working from home can create other issues worthy of class-action litigation, including reimbursing those employees for work-related expenses. Employers who get expense reimbursements wrong may end up having to compensate workers for unreimbursed expenses, plus interest, penalties, and attorneys’ fees. Determining how much to reimburse in these situations can be almost impossible. Define the reimbursable expenses necessary for performing remote workers’ job duties, and those expenses that are not required for remote workers’ job duties. For years I have been, but it just recently changed. Though the FLSA does not require employers to reimburse their employees, under the FLSA “kickback” rule, employees cannot be required to directly pay business-related expenses or reimburse their employer for such expenses if doing so would cause the employee’s wage rate to fall below the required minimum wage or overtime compensation thresholds. Go through the four considerations, below. Generally, expenses that may qualify for an itemized deduction include: Travel and mileage; Certain mobile phone uses; Uniforms (required by the employer that are not suitable for street wear.) Under federal law, employers are generally not required to reimburse employees for their business related expenses. Which states are at the forefront of this legislativemovement? (N.T. BYOD, or bring your own device, policies are becoming more common in work environments. Trend Watch: The First Wave of COVID-Related Employment Litigation — What's on the minds of employers and litigators during COVID-19? Stat. Employees may be incurring necessary expenses for tools and equipment incidental to their working remotely, such as personal cell phone and … And in the District of Columbia, employers must pay the cost of purchasing and maintaining any tools that the employer requires to perform the employer’s business. Though California and Illinois are silent on when reimbursement must be made, other jurisdictions are not. § 531.35. Expenses may not be estimated or guessed. No credit card required. It could mean an employer provides a flat monthly reimbursement amount reflecting the estimated percentage to be utilized for business purposes, and permitting the employee to seek reimbursement for any additional costs, but estimating the percentage of use of a cell phone for business purposes could be difficult and could vary depending on the industry and time of year. Start a free 7 day trial for member access. The Wage Payment and Collection Law is not just a collection of mandates from on high. The court wrote that to be in compliance with section 2802, “the employer must pay some reasonable percentage of the employee’s cell phone bill.” The appellate court left it to the trial court to sift through the various cell phone plans and calculate the reimbursement owed to each employee. The same goes for a wireless mouse (if a corded one will work) or a newer cell phone. For instance, an employee or labor organization can bring a claim against the employer under the law, or can refer its claim to the Pennsylvania Secretary of Labor. With approximately 700 lawyers globally, Baker McKenzie’s Employment & Compensation group is the largest in the world and the only one to be ranked Band 1 by Chambers Global in 2020. In comparison with reviewing each employee’s supporting documents to prove a reasonable percentage every month, this method will likely be less of an administrative nightmare–even if several employees do seek reimbursement of additional costs. These payments are referred to as mobile stipends. The employee submitted the expense for reimbursement with proper supporting documentation* (i.e., a receipt) within 30 calendar days of when it was incurred. For guidance on your employee expense reimbursements, contact your Baker McKenzie employment attorney. Provide a date by which reimbursable expenses and any required documentation or certification must be submitted. For an expense to be allowable, it must meet the following conditions, and supporting documentation is required: 1. Whether the employees have cell phones with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills. Such a claim would not include the potential recovery of liquidated damages and attorney’s fees, as are available under the IWPCA. Try it out! See 29 C.F.R. Where state or local minimum wages are higher (such as Chicago’s $14 per hour or California’s $12 per hour), making it more likely that an employee’s payment of business-related expenses would cause their wages to dip below the minimum wage. Practical Considerations If you have operations in several jurisdictions, make sure that you know and follow each applicable jurisdiction’s rules. However, the determination can be difficult. 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