Though some expenses will clearly be ones that should be reimbursed, others may be questionable, and it may vary by jurisdiction. Independent contractors are not covered. Employers should take proactive steps and revise policies on employee reimbursements now to avoid class action litigation down the line. And be sure to train your managers, supervisors, and HR on the policy. 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. All is not necessarily lost for employees forced to work at home. Thus, the court held that to be in compliance with Labor Code section 2802, “the employer must pay some reasonable percentage of the employee’s cell phone bill” if the employee uses a personal cell phone for work purposes. If your employer did away with the reimbursement policy, that would be their prerogative. Prior to the amendment, expense reimbursements were not addressed in the IWPCA and its regulations. “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. BYOD, or bring your own device, policies are becoming more common in work environments. If you have operations in several jurisdictions, make sure that you know and follow each applicable jurisdiction’s rules. Unfortunately, not every reimbursable expense is top of mind for employers, especially those who had little experience with a remote workforce before the pandemic. Additional states with expense reimbursement laws include Illinois, New Hampshire, Massachusetts, Pennsylvania, Washington, D.C. and others. Even if you have good intentions, missing those reimbursement deadlines could cost you. 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. What can employers do to ensure they meet reimbursement requirements to steer clear of expense reimbursement class action lawsuits in the US? 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.) However, employers should be on the lookout for these situations, which require more attention: A violation of the FLSA occurs in any workweek in which the cost of the business-related expenses borne by the employee cuts into the minimum or overtime wages required to be paid to the employee. Subscribe to PICPA's personalized The Wage Payment and Collection Law is not just a collection of mandates from on high. 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. See 29 C.F.R. For mobile phone and internet, for example, an employer must be able to show that the reimbursement reasonably related to needs of the business and was reasonably calculated not to exceed the expenses the employee actually incurred. § 531.35. UNIVERSITY PARK, Pa. – Cellphone allowances for Penn State employees will be eliminated effective March 31, the University announced today. Employers consider several factorswhendrafting these policies and determining stipend amounts.Here are just a few: 1. Define the reimbursable expenses necessary for performing remote workers’ job duties, and those expenses that are not required for remote workers’ job duties. The type of technology-related expense, such as phone and internet, that are reimbursable. 2. Am I eligible to seek reimbursement for the entire $150? 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. § 275:57. 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. 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. Expense reimbursement: In a typical reimbursement policy, employees purchase a cell phone (from a list of company-approved devices) along with the service plan. In other words, "reimbursement is always required." Determining how much to reimburse in these situations can be almost impossible. Under newly enacted section 9.5 of the Illinois Wage Payment and Collection Act (“Act”) (effective January 1, 2019), employers are obligated to reimburse employees for all necessary expenses incurred within the scope of their employment. Start a free 7 day trial for member access. Ann. You are also entitled to reimbursement of cell phone expenses if your employer requires you to use a particular “app” or function on the phone. COMMONWEALTH OF PENNSYLVANIA Pennsylvania Labor Relations Board CHAMBERSBURG POLICE OFFICERS ASSOCIATION : : ... choose his own cell phone and plan. ABM Industries, a janitorial service provider, recently agreed to a $5.4 million dollar proposed settlement in Marley Castro, et al. 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. 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. Stat. Iowa Code § 91A.3(6). Take These Four Steps. 43 Pa. Stat. tit. Since shelter-in-place orders were imposed in March, US employers have faced class action lawsuits for a variety of COVID-19 related reasons, including the alleged failure to implement proper workplace safety measures or provide appropriate paid sick leave. Try it out! Lab. Recently, Illinois modified its Wage Payment and Collection Actto include expense reimbursement rules. Reg. N… Under the common law "right of control" test, a worker Mobile management overhead 3. A "necessary” expense is defined in section 9.5 as all reasonable expenses that: (a) are required by the employer in the discharge of the employees’ duties; and (b) are primarily for the benefit … Founded in 1949, Baker McKenzie advises many of the world’s most dynamic and successful business organizations through more than 4,100 locally qualified lawyers and 6,000 professional staff in 77 offices in 47 countries. The same goes for a wireless mouse (if a corded one will work) or a newer cell phone. If your cell phone acts as both your business and personal phone, you are only allowed to deduct the portion used for business. “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. These payments are referred to as mobile stipends. Several jurisdictions have specific rules regarding employee expense reimbursements, so you’ll need to check your local law. That position i… Code § 2802. This figure varies depending on the company and the agreed-upon policy. One quick way to a lawsuit is to set employee expectations higher than your follow-through. Trend Watch: The First Wave of COVID-Related Employment Litigation — What's on the minds of employers and litigators during COVID-19? D.C. Mun. The method used to submit expenses for reimbursement. Such a claim would not include the potential recovery of liquidated damages and attorney’s fees, as are available under the IWPCA. When you look at the laws applicable to your jurisdiction, check specifics on when your employees must be reimbursed. [10] 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. 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. 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. And New Hampshire also requires employers to reimburse employees for reimbursable expenses (those not normally borne by the employee as a precondition of employment) within 30 days after the employee submits an expense claim. 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. However, employers should not use this option if employee wages are close to the threshold for FLSA purposes. Nationally, the U.S. Labor Department has not placed any strict reimbursement requirements on employers when they tell employees to work remotely. For years I have been, but it just recently changed. In addition, the policy will guide supervisors and managers, who are often in charge of initially approving reimbursements. Know the rules that apply in your jurisdiction. 820 ILCS 115/9.5. Similarly, Illinois requires reimbursement of all “necessary expenditures or losses” an employee incurs within the scope of employment that are “directly related to services performed for the employer,” unless the employer has a written reimbursement expense policy and the employee fails to comply with that policy. No credit card required. So would cell-phone and Internet use, although employer and employee would likely have to come to agreement on percentages. Though California and Illinois are silent on when reimbursement must be made, other jurisdictions are not. (N.T. Small tools; Office supplies; Professional license fees; Some moving expenses; Certain educational costs; Union dues, agency fees or initiation fees PICPA members get full access to all of our articles, forums, podcasts, and more. Pennsylvania's wage and hour law applies to all individuals who are employees of an employer. But only “necessary” expenses incurred by employees must be reimbursed, not optional expenses. The company then reimburses the initial cost of the cell phone and the service plan fees each month on receiving the associated receipts. In addition, the Fair Labor Standards Act (FLSA) may apply. The expenses must be reasonable. In some states employers are required by state law to reimburse their employees for their necessary job expenses. Privacy Policy | Terms and Conditions | Site Map, Interested in becoming a sponsor? Not every jurisdiction (including California) requires a specific number of days by which employee expenses must be submitted, but giving employees a deadline will make it easier for you to track reimbursements for cost purposes (for instance, to see whether it would be more cost effective for the company to purchase and provide the equipment); for tax purposes; and, more importantly, to be assured that you are properly reimbursing employees to avoid a class action or other lawsuit. As a result, employers reasonably took the position that expense reimbursements were not “wages” and thus were not covered by the IWPCA. For instance, in California, when an employee must use a personal cell phone for work, the employer must reimburse a “reasonable percentage” of cell phone bills. It contains teeth for the enforcement of its provisions. Practical Considerations What “reasonable percentage” means has not been defined, leaving employers with a few options. They will likely be the front line in handling employee reimbursement requests, and they should know any legal requirements in applicable jurisdictions, as well as how to handle employee claims for expenses. Generally, an employer must provide employees with equipment and resources necessary for employees to perform their jobs, without passing on the employer’s operating costs to employees. Your company required or approved the employee to make the expense. Electronic supplies (such as a mouse, a headset, and additional cables). Employers who get expense reimbursements wrong may end up having to compensate workers for unreimbursed expenses, plus interest, penalties, and attorneys’ fees. I am eligible for reimbursement from my employer for my cell phone. Section 17.6 - Expense reimbursement (a) The name and address of the source and the amount of a payment for or reimbursement of actual expenses for transportation and lodging or hospitality received in connection with public office or employment where the actual expenses for transportation and lodging or hospitality exceed $650, or the amount as adjusted under 65 Pa.C.S. Or a newer cell phone expenses when reimbursement must be made, other jurisdictions are.... Policy | Terms and conditions | Site Map, Interested in becoming a sponsor may vary by jurisdiction by. Relations Board CHAMBERSBURG POLICE OFFICERS ASSOCIATION::... choose his own cell phone and internet,... 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