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. In order to qualify for an accountable plan, the employer's reimbursement or allowance arrangement must follow all three of these rules: Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. Control costs and mitigate risk with accurate timekeeping. What portion ofthese business-related expenses are, or should be, reimbursable? Unreimbursed employee expenses may be tax-deductible. The employee fails to return excess reimbursements or allowances in a reasonable amount of time. Get The 2022 New Mexico Employment Law Handbook (Printable PDF) today! That's why many forward-thinking companies are now adopting bring-your-own-device . And, those who dont would like to. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. Eliminate large down payments and end-of-year surprises. Code. Contact our office today to set up your free initial consultation at our Manhattan office. Representation in business, real estate, construction, home care, trust and probate litigation and general civil litigation. 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. An unlawful kickback happens when the following three conditions occur: This FLSA kickback rule often comes into play in industries that hire delivery drivers. 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 . Your policy should be part of, or referenced in, your telecommuting policy. Having a written employee expense reimbursement policy in your employee handbook is best to ensure your organization has an action plan for remote workers. For example, California Labor Code Section 2802(a) requires an employer to 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. Failing to reimburse employees can lead to class or collective actions and quickly become incredibly burdensome for employers. %PDF-1.5 An action plan to help you achieve HR excellence based on Paycors proprietary data and research. Organizations learned to operate in this new environment almost overnight. The reimbursement would have otherwise been paid as wages. 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. Illinois' law is slightly more limited in scope than California's expense reimbursement law. We help you stay updated on the latest payroll and tax regulations. Federal law doesnt require employers to reimburse their employees for work expenses. United States. California's stringent wage and hour laws have led to unique legal risks for employers as they manage remote workers during the COVID-19 pandemicwhich makes it essential for employers to. For example, if a pay deduction results in an employees hourly rate becoming below the federal minimum wage, the employer has violated the FLSA. Mitigate risk with proactive payroll and tax alerts. Employers and employees frequently inquire about whether an employer must reimburse an employee when the employee uses their personal cell phone for the employers business? Whether an expense will be deemed necessary for the performance of an employees' job depends primarily on the type of work the employee performs. In sum, employers must reimburse California employees (without distinction) for cell phone use when employees are required to use their personal cell phones for business purposes. 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. The common practice that is evolving is to provide a flat monthly stipend and inform employees in writing that employees may submit expense reimbursement requests to the extent that the stipend does not otherwise cover their business internet and cell phone usage. When looking to retain your remote workers and hire new remote talent, offering fringe benefits like a remote work stipend to your employees can help you compete with organizations that don't provide a remote work benefit. -LGK'rJ;nvmhH^ H`vg9 v2XfK:oLX`|u*0 $m7\Po,X-Xal-PV:(5#e)P~w)t9Zpm[L}N~N+3rg'L14WIB V00'B%&e|4(b?%iCX`:mIBf%}ap/YOpK+5cU&y=^gPDG '!JBE9yDZ3d_ Dr`[)# ]0IYw!lM75t|IEU53J&KsEs!1lv=T>1K^-.- &xI%#ct?>b/P 'M z21,uq jU +8)#?TtyZ m^_Sb1:lONa0SQ+h*g\U MsE>GPv88DnwP)(+hW4'OB2#RLD:NY" vU 3+O)~d =6vVa@]*PDLEd;,%Xk1p(#(GzE9f|`[f:DP^vs, @=xx{$#>?vD&2yW^_(hmhw/ According to a 2022 Reuters article17, several clients of Ackermann & Tilajef have settled cases with their employers over unreimbursed remote work expenses. 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. Were growing and want to hear from you. Heres our guide to choosing and moving to a better payroll provider. Other than those authorized by state or federal law, wage deductions generally require an employee's written authorization ( Iowa Code Ann. Build a Morning News Brief: Easy, No Clutter, Free! 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 procedures for issuing, contesting, and enforcing judgments for citations or civil penalties issued by the commissioner shall be the same as those set forth in Section 1197.1. This article will break down expense reimbursement laws by state and what counts as a necessary cost. However, the court did not provide guidance as to what is meant by reasonable percentage. Does it mean 20 percent? If youd like to set yourself apart from the competition, it may be a good idea. endobj It is irrelevant whether the employee changed plans to accommodate work-related cell phone usage. The federal minimum wage is currently $7.25 an hour. 1144.). See how were taking the right STEP toward inclusion and belonging. Paycor is not a legal, tax, benefit, accounting or investment advisor. 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. Our unparalleled expertise is coupled with an ability to provide a single point of contact for full-service, seamless employment support. 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. When employees pay for necessary business expenses, their employers must promptly pay the employee expense reimbursement. 4. The date reimbursement is due is typically the date that the employee submitted the expense for reimbursement. (c) For purposes of this section, the term necessary expenditures or losses shall include all reasonable costs, including, but not limited to, attorneys fees incurred by the employee enforcing the rights granted by this section. Secondly, select your perk spending categories. See a licensed agent for detailed information on your state. Paycors HR software modernizes every aspect of people management, which saves leaders time and gives them the powerful analytics they need to build winning teams. The consequences to the employer for violations are severe, including penalties, interest and attorneys fees (subsections (b), (c) and (d).). The best practice is to reimburse an employee for a necessary business-related expense even if an employer is not made aware of the expense by the employee. Washington State Department of Labor & Industries15. Amazon2 has also been added to the mix, with workers in California suing the e-commerce giant for unpaid remote work expenses. In other words, it is no concern to the employer that the employee may pass on the expense to a family member or friend, or to a carrier that has to then write off a loss. When developing and implementing a policy, employees need to be treated equally in that they all need to be reimbursed for work related phone use. xwM1]XQ\D@T>i/i;h>%a%011m}D@9KrS'd04 dr@qi$oM0wwx&]je;Su`~O|>_z|D~QG <> Damages, of course, raise issues that are more complicated. (Id. Employers must reimburse employees for expenses connected with their employment and at the employer's request within 30 days of when the employee presents proof of payment to the employer. stream With a remote work stipend, you can offer your employees a monthly allowance for their home office costs. Massachusetts General Laws Part I, Title XXI, Chapter 149, Section 1488. 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). Unfortunately, in the years after Cochran was decided, employers still dont have a good answer because the courts and government agencies have not provided specific guidance. Cell phone reimbursement - When are workers entitled to it? 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. A: An employer is likely not responsible for the entire personal cell phone bill of an employee simply because that employee uses his/her personal cell phone for work purposes. 4th 1137 (2014). Schedule a call with a personalized benefits advisor today to see how employee stipends can help your organization offer remote work benefits. Cochran v. Schwan's Home Serv., Inc., 228 Cal. <> Employees must also submit requests for reimbursement within 30 days of incurring the eligible expense. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. You'll want to incorporate anything you're legally required to reimburse employees for. North Dakota Century Code Section 34-02-0113. Its time to be agents of change. Collaborative Compliance: Tax and Employment Old Issues, New Lens, USERRA: Insulate Your Business from Violation Liability, FFCRA Credits Extended, but Leave is Not Mandated, Sitting with the C-Suite: Remote Work - Increasing Communication on Collaboration Platforms, Common Ground: Embracing Remote Work for Better or for Worse. Provide employees with a cell phone or another communication alternative for business use. Our customers are our heroes. Ensure you have a strong onboarding process. Yes. With so many employees working remotely, employers also began to wonder if they should reimburse their employees. It was last updated on February 9, 2023. Some states (like California, Illinois, and Montana) have more robust reimbursement laws in that employers are required to reimburse employees for all necessary expenditures or losses or business expenses incurred by the employee in direct consequence or discharge of his or her duties. 3. 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.. In Mid-March, much of the nations workforce began working from home due to the COVID-19 pandemic. In a 2014 case, an employee in California brought a lawsuit against his employer on behalf of customer service managers (essentially a class action on this issue!) Its probably safe to say that remote work is the new normal for many Americans. According to the Los Angeles Times1, these companies include Wells Fargo, Liberty Mutual Insurance, Visa, Oracle, and Bank of America. We think a more palatable and reasonable approach is for the employer to pay a flat monthly stipend (e.g., $10 - $100 or some estimated percentage like 10-50%: the reimbursement number is a business decision based on history of usage). An employer, at the termination of an employees employment, must reimburse the full amount deducted, directly or indirectly, for purchased or rented equipment used in employment, except tools of a trade, a motor vehicle, or any other equipment which may be used outside the employment; . If youve personally paid out of your pocket for your employers business expenses and havent received compensation, you may be entitled to expense reimbursement plus interest and attorney fees and costs. Looking for a simple way to reimburse your employees for their remote work costs? Human resource teams need to gain efficiencies in their workday. (Cal. Join us at our exclusive partner conference. Employers must reimburse their employees within 30 days of the reimbursement becoming due. 480 E. Winchester St., Suite 230, Salt Lake City, UT 84107, Remote employee reimbursement rules by state, https://www.latimes.com/business/story/2022-04-07/covid-work-from-home-lawsuits-pandemic-business-expenses-litigation, https://www.linkedin.com/news/story/amazon-sued-over-remote-work-costs-5351604/, https://www.dol.gov/agencies/whd/flsa/pandemic#14. You can use the table below to quickly reference state and local laws about remote work employee 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. Employers cannot waive the right to receive a national minimum wage, either directly or indirectly. Our employment law attorneys offer free initial consultations about expense reimbursement. PeopleKeep, Inc., does not sell health insurance. 1. https://www.latimes.com/business/story/2022-04-07/covid-work-from-home-lawsuits-pandemic-business-expenses-litigation, 2. https://www.linkedin.com/news/story/amazon-sued-over-remote-work-costs-5351604/, 3. https://www.dol.gov/agencies/whd/flsa/pandemic#14. Reduce labor spend, manage overtime, and maximize productivity across your workforce. Public Utility Law Project of New York 194 Washington Avenue - Suite 320. Disclaimer: The information provided on this website is general in nature and does not apply to any specific U.S. state except where noted. Similar to California's law, the Illinois law has also been interpreted to require reimbursement for cell phone and internet expenses when employees are required to use their cell phones or internet for work purposes in addition to equipment such as routers, laptops, and printers. Section 2802; 820 Ill. Comp. reimbursement obligations employers might not have had to think about before COVID-19. Legal analysis to be used to determine if evidence supports a claim of retaliation. A: Given that many employees have shifted to working from home, employers should establish or revamp their reimbursement policies and make sure that their employees are aware that they can secure reimbursement of their expenses. Whether or not you're required to reimburse employees for remote work expenses, doing so can increase employee morale and be considered an employee benefit. That answer depends on where your workforce is located. 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