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. The requirements of the Americans With Disabilities Act (ADA) may also alter employer reimbursement obligations. 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. 115,9.5; Mont. In most cases, the costs wouldn't be considered necessary if an employee chooses to work remotely. Access collaboration tools and resources that help champion equality and promote DE&I best practices in the workplace. Necessary expenses include internet access and phone bills for remote workers. And, those who dont would like to. Interestingly, this law has been interpreted to require employers to reimburse employees for a reasonable percentage of their monthly internet or mobile telephone bill for work-related uses, even in instances where the employee has an unlimited wireless data plan or where their internet bill does not increase based on usage. Alphabet stock slid as much as 4% on Monday, erasing about $55 billion in market value after a report from The New York Times suggested that competition is heating up in the mobile search market . The Cochran court determined that Labor Code section 2802 included an employers obligation to reimburse an employee whenever the employee uses his/her cell phone for work related duties. D.C. Municipal Register Title 7 Section 9105. Law Department, governs the limited personal use of the City of New York's ("City") office and technology resources by City employees. New York, Employees often use their personal resources to pay for expenses necessary to carry out their employment. The trial court denied Cochran's motion to certify the class and Cochran appealed. Offering a stipend can be an attractive benefit to prospective employees, especially when they are weighing their options and comparing benefits packages. By way of a recent amendment, the Illinois Wage Payment and Collection Act now requires employers with employees working in the State to reimburse their employees "for all necessary expenditures or losses incurred by the employee within the employee's scope of employment and directly related to services performed for the employer." Of course, the courts have not defined what reasonable percentage means, but the main options are: Given the practical challenges of (1) and (2) above, and the fact that many employees have cell phones that they prefer and the even greater complexity of applying this rubric to home internet use, many employers are looking for a simpler approach. If you have employees working remotely in different states, you can outline the differences in how you'll reimburse their work from home expenses in your expense policy. RF%|h3H c"40JOwF}\5Y UGUn}:xIdRu :I8U xys B Jir:TxwO1;ZL&)[G&+E,NU; You'll want to proactively account for these business expenses in your T&E . Consumer Wireless Telephone Recycling. Code. In the Cochran case mentioned above, the court of appeals held that employers must reimburse a reasonable percentage of their employees cell phone bills. 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. Employers must provide reimbursements to employees for expenses if there's an agreement, such as an employment contract, that outlines expense reimbursement. Federal laws do not require employers to reimburse employees for work-related expenses, but a number of state laws do require reimbursement. New York Governor Kathy Hochul has signed into law a bill that will require employers to provide notice to employees of electronic monitoring of telephone, email, and internet access and usage.. Whether an expense will be deemed necessary for the performance of an employees' job depends primarily on the type of work the employee performs. For more information: www.bakermckenzie.com, Reimbursement Refresher: Cell Phone and Internet Expenses Related to Telecommuting in the US, International Considerations for Executive Severance Plans, Proposed Expansion of NYC's Pay Transparency Law Includes Bonuses, Equity Awards and Other "Non-Wage Compensation", Practical Considerations When Addressing New DOJ Compensation Incentives and Clawbacks Program, Protecting Against Unintended Discrimination During Layoffs (Apr. 4th 1137 (2014), employee Colin Cochran filed a putative class action lawsuit on behalf of customer service managers who were not reimbursed for expenses relating to the work-related use of their personal cell phones. expiration of such state disaster emergency declaration, New York State Medicaid will reimburse telephonic assessment, monitoring, and evaluation and management services provided to members in cases where face- to-face visits may not be recommended and it is appropriate for the member to be evaluated and managed by telephone. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. 4th 1137 (2014). The employee fails to return excess reimbursements or allowances in a reasonable amount of time. NY https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LABionNum=2802. 75 percent? Our attorneys are familiar with the applicable federal, state, and local laws surrounding employee reimbursements and will help you explore your legal options for pursuing reimbursement from your employer. Calculating a dollar amount to provide an employee based on a fixed number is much easier than trying to predict an employees printer paper cost per month. Through The Employer Report blog, our lawyers provide legal updates and practical insights to help clients understand, prepare for and respond to the latest domestic and cross-border Labor and Employment issues affecting US and multinational employers. Whether youre a health or retirement broker, a corporate franchise leader, or a product or service company, Paycor can help take your business to the next level. Also, the details of the employee's cell phone plan do not factor into the liability analysis. App. In some cases, local jurisdictions such as cities and counties may impose their own rules regarding expense reimbursement. Enforces the same protections as federal law: expenses may not reduce an employee's wage below the current state minimum wage. These federal requirements apply to all business expenses. This serves several purposes. 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 . The answer is that reimbursement is always required. at p. Reduce risk, save time, and simplify compliance management. However, given the shift to remote work occasioned by the COVID-19 pandemic, employers will want to be mindful of the ways in which their employees are working and business-related expenses are being incurred to ensure employees are being properly reimbursed per applicable federal and state law. Federal law doesn't require employers to reimburse their employees for work expenses. Intuitive software to help pay employees accurately and on time. 98% of respondents in Buffers 2023 Remote Work Survey of 3000 would like to work remotely for the rest of their careers (Buffer). Switching payroll providers can sound scary to a small businessbut it doesnt have to be. 4. 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. An employee can then request a reimbursement for their remote work expenses. This guidance is to 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). A: With employees having historically worked in an office environment, many of the supplies and resources they utilized to complete their job duties were provided for by the employer (i.e., printer paper, pens/pencils, computers, electricity, computer monitors, internet, phones, etc.) Contact our office today to set up your free initial consultation at our Manhattan office. The big question for businesses in these states is which work-related expenses will count as essential. Code. (GINA). The hiring of a lawyer is an important decision that should not be based solely upon advertisements. App. You'll want to incorporate anything you're legally required to reimburse employees for. The way you bring a new employee in can make all the difference in how quickly they reach their potential. Consequently, many workforces were thrust into remote work models without adequate time and resources to develop thoughtful remote work plans and fully contemplate the impact of the shift on their businesses. Notably, employers are only required to reimburse "necessary" expenses in California, so businesses that do not require or encourage employees to work remotely are not required to reimburse these expenses, as employees have the option to work in the office, absent the FLSA and ADA restrictions noted above. Employers must reimburse California employees for all necessary expenses, including those incurred at the employer's direction. Typically, you'll make reimbursement payments to your employees on their next paycheck. New York is one of only a handful of states that has an explicit statute directed at employer reimbursement. Section 2802; 820 Ill. Comp. at p. In 2021 and 2022, some employees sued their employers over unreimbursed remote work costs. Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal. Q: What constitutes a reasonable reimbursement amount? According to state law, necessary expenditures include all reasonable costs. Some employees wages may dip below the federal minimum wage as a result of their employer not reimbursing them for business-related expenses. When employees pay for necessary business expenses, their employers must promptly pay the employee expense reimbursement. For many companies, managing expenses used to require generating paper reports, keeping receipts, and undergoing a time-intensive approval procedure. What may be reasonable in one instance might not be in another. Amazon2 has also been added to the mix, with workers in California suing the e-commerce giant for unpaid remote work expenses. Engage new hires with onboarding and control costs with timekeeping. However, the court did not provide guidance as to what is meant by reasonable percentage. Does it mean 20 percent? Finally, employers operating in these above-referenced jurisdictions should coordinate with a Labor & Employment attorney to review your existing expense reimbursement policy or create and implement such a policy. More 0 found this answer helpful | 0 lawyers agree Helpful Unhelpful Build a great place to work where employees show up, make a difference and win together. Reimburse for the actual voice and/or data fees incurred for business purposes, which requires employees to submit expense reports itemizing the costs of calls made for work purposes and the costs of data used for work supported with cell phone bills or other evidence of the costs (this is a time intensive process for employees); Reimburse for a percentage of voice and/or data fees that accurately reflects the amount of mandatory business usage, and if a percentage or flat monthly amount is used, then allow employees to seek reimbursement for any additional costs incurred over the percentage or flat amount if the actual costs of business use exceed those amounts (this can be hard to determine given the number of different plans available); or. Streamline recruiting and hiring so you can quickly and effectively fill open positions, develop top talent, and retain your workforce. The FLSA, however, is implicated if an employee's unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. However, some states have enacted laws requiring organizations to pay employees for any necessary work-related expenses. Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. have one or more wireless communications customers in New York State. The Division of Labor Standards protects all workers, including those that are undocumented or paid off the books, and ensures employers are following Labor Laws. Albany, NY 12210 . -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/ As an example, under Section 2802 of California's Labor Code, employers are required to reimburse their employees for "all necessary expenditures or losses incurred by the employee as a direct consequence of the discharge of his or her duties," or to comply with the directives of the employer. You can edit the text in this area, and change where the contact form on the right submits to, by entering edit mode using the modes on the bottom right. United States. Employers must reimburse all necessary expenses, including those incurred by the employer's direction. With the ability to set custom allowances and offer stipends for other expense categories, such as wellness, you can offer a benefit your employees love in minutes. all that the employee necessarily expends or loses in direct consequence of the discharge of the employees duties.. Control costs and mitigate risk with accurate timekeeping. Employers should consider reimbursing costs such as a reasonable percentage of use for things like home electricity, personal cell phones, printer paper, pens/pencils, etc. 2021), Charged Speech in the Workplace: Knowing When to Step In (Jan. 2021), Diversity, Equity & Inclusion | Best Practices for Managing & Collecting Employee Diversity Data (Oct. 2020), How Employment Counsel Add Value to a Companys Inclusion & Diversity Programs (Sept. 2020), Navigating Political Speech in the Workplace (Aug. 2020), 2023: Discussion on The New Legal Restructuring Landscape in Europe Series (Jan. Feb. 2023), Annual Illinois Employer Update (Jan. 2023), Annual California Employer Update (Dec. 2022), Navigating the World: An Update on Key Global Employment Laws and Trends for US Multinational Employers series (June 2022), California Seeks to Ban Most Criminal Background Checks, Employer WARN-ING: Potential Changes to New Yorks and Californias WARN Acts Barreling Down the Turnpike, Global Employment Law Fastpass for US Multinationals (Webinar Series), Reading the Tea Leaves: What the NLRB GCs New Guidance on Separation Agreements Means for Employers. Other than those authorized by state or federal law, wage deductions generally require an employee's written authorization ( Iowa Code Ann. General Email: info@utilityproject.org Examples of reimbursement arrangements that may be in excess of the expenses reasonably related to the needs of the employer's business and should be examined more closely include: (1) reimbursement for international or satellite cell phone coverage to a service technician whose business clients and otherbusiness contacts are all in the local . Given this, when crafting a nationwide policy, sometimes its simplest to use California as the high water mark. Expense reimbursement lawsuits were already commonplace before the pandemic, and with no end in sight to the pandemic and employees working from home, employers can expect additional lawsuits to be filed. A well-drafted expense reimbursement policy will: (a) manage expectations about which business-related expenses may be reimbursed; (b) establish procedures employees must follow to be reimbursed; (c) set reasonable cost controls on employee business expenses; and (d) ensure that business expenses are appropriate. Maximize training and development with personalized content. stream In Mid-March, much of the nations workforce began working from home due to the COVID-19 pandemic. Law Firms: Be Strategic In Your COVID-19 Guidance [GUIDANCE] On COVID-19 and Business Continuity Plans. Employees can claim unreimbursed expenses as deductible according to Pennsylvania Personal Income Tax law. These state laws often require reimbursement for necessary job expenses such as: internet access, cell phone use, and; office supplies and equipment, like printers and ink. A necessary expense is anything required for the performance of an employees job. See our vetted tech & services alliances. 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. The NYS Wireless Telephone Recycling Act (Environmental Conservation Law, Article 27, Title 23*2) requires wireless telephone service suppliers that offer wireless phones for sale, to provide for the free reuse and recycling of up to 10 cell phones from any person or provide for the free shipping of those . Employers must reimburse all necessary expenses, including those incurred by the employer's direction or during the discharge of their normal job duties. Soon, employees wondered who should be responsible for the expenses theyd accumulated for remote work. This includes reimbursement for internet access and phone bills when used for remote work purposes. The California Court of Appeal agreed there were violations and held (which means, its now the law): 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. 2022), Guidelines for Accommodating Sincerely Held Religious Beliefs and Disabilities for Employers Mandating Vaccinations (Sept. 2021), Religious Beliefs in the Workplace Following the Supreme Courts Bostock Decision (Sept. 2021), The COVID-19 Employment Litigation Landscape Is It All Uphill From Here? The reality is, its open to interpretation. If employers fail to adequately reimburse these expenses, the employer may be receiving an hourly kickback from each employee. Many of these organizations agreed to give remote workers a monthly stipend of up to $83. 4th 1137 (2014). Organize your team, manage schedules, and communicate info in real-time. Transform open enrollment and simplify the complexity of benefits admin. 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