Expense Reimbursement Lawyer

Many employers and employees have questions about the expenses the employers must cover. In this article, we will go over what employer reimbursements cover and what they do not.

What Expenses Should a Business Cover?

All businesses are legally required to reimburse workers for qualifying expenses. What expenses qualify for reimbursements? Expenses must be:

Deemed reasonable and needed
Known by the employer
Realized as a part of the job

Most employees are aware that employers must reimburse them for mileage. However, many other areas qualify for reimbursement:

Airfare
Phone and Internet / Wireless Charges
Hotel Accommodation
Laptops
Conference Registration
Uniforms
Tolls
Cell Phones
Postage
Taxi and Ride Share Fees

When an employee incurs an expense, it must be deemed “reasonable” and “necessary” to qualify for a reimbursement.

A Reimbursement Scenario

Nick finds a great job as a writer for the magazine Sports Illustrated. The magazine provides him with a desktop computer, but Nick finds it slow and antiquated. So Nick decides to buy a brand-new laptop.

The magazine will probably not reimburse Nick for his brand-new laptop. Nick already has a computer that works; though a faster, sleeker machine is helpful, it is not “necessary.”

What Expenses Are Not Reimbursed?

Not all expenses are the responsibility of the employer. These typical expenses are:

Traffic fines
Continuing Education
Fees for Professional licensing
Uniforms
Meals During Work Trips

How Much Reimbursement Do Companies Have to Provide to Employees?

The amount of the reimbursement depends on two things:

The type of the item
How the employee uses the item

Some expenses are easy to clarify for employers because they are only used for business purposes. For example, if Jim is a contractor and pays tolls on the way to the job site, or if Clara is attending a work conference and must pay for airfare.

However, some funds support business and personal purposes. These may include tools, computers, cell phones, and more.

When an employee purchases an item on behalf of the employer, the expense and amount must be reasonable. For example, if Veronica is traveling from Boston to New York for work, her company might agree to buy her an Amtrak ticket. However, if Veronica buys a first-class ticket, it is acceptable for the company to provide the amount for an economy ride and therefore not reimburse Veronica the entire amount.

How Much Are Mileage Reimbursements?

Employees who drive their cars for work-related reasons are reimbursed for their expenses. However, the law does not dictate the rate of mileage repayment.

Instead, companies must pay a reasonable mileage rate. To arrive at that rate, most businesses and organizations turn to the Internal Revenue Service’s chart of mileage rates, which is updated annually.

IRS Mileage Rates

The IRS sets three unique mileage rates for company reimbursement. These rates depend on the type of activity or the organization itself.

Business Mileage Rate: For-profit companies normally use the Business Mileage Rate, which is also the IRS Mileage Rate. It varies, but for the last six months of 2022, the rate went to 62.5 cents per mile. Before that, it was 58.5 cents; in 2021, the rate was 56 cents per mile.

More about IRS mileage rates are on the website of the IRS.

How Can Employees Recover Their Unreimbursed Work Expenses?

For many employees, the challenge of collecting unreimbursed work expenses is proving what the employer owes them.

Employees should also be aware that they can only recover work-related expenses within four years. Workers need to collect and save all information related to their work-related expenses. These come in different forms, including:

Logs of mileage
Requests for reimbursement
Emails or other messages from supervisors requesting that an item be purchased
Receipts in paper or online form (email)
Company policies regarding reimbursement
Messages from employees to employers requesting reimbursement
Paystubs
Bank statements
Credit Card statements

In our increasingly technological world, concrete paper trails are becoming a thing of the past. However, this information exists in emails, texts, or other online messages. The key is for employees to save all data regarding work-related expenses.

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