Reimbursing employees for expenses

Under California employment law, employers must reimburse employees for all necessary business expenses 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.

Are Employers Required to Reimburse Employees Who Work from Home?

Federal law tells us that employers only need to reimburse employees for work-related costs in one situation: when the employee’s expenses make their earnings drop below minimum wage.

Many employees work from home these days, so companies need to be aware of their employees who earn a salary close to the minimum wage to ensure that the remote work costs are not taking too much of the workers required to pay.

In multiple states, including Massachusetts, Illinois, New York, the District of Columbia, California, Montana, and Iowa, companies are not required to repay or reimburse workers for their obligatory business-related expenses. Therefore, employers should reference their location’s state laws to determine the accepted manner of expense reimbursement.

In California, for example, employers must reimburse workers who use their cell phones, even if the worker does not pay an increased cost. So, for example, an employee who uses their cell phone for both work and non-employment conversations and pays a set rate should be reimbursed.

Typically, employers utilize a written policy that includes information about employee reimbursement when they work from home. Employers with workers in various states often decide to use a different policy for each state. However, some employers find it best to find the most generous policy of all the states and use that one for all employees. The choice of how to deal with employees working in multiple states is up to the employer.

Employee telecommuting costs such as cell phone bills, internet charges, office supplies and printers, and other services and equipment may be covered by state law reimbursement requirements. When employers or employees have questions about how these policies work in their states, they should contact an experienced attorney for a consultation.

In California, companies must reimburse their workers for all necessary expenses related to their duties and for financial losses due to work. So, for example, if an employee who works as a paralegal spends many hours making work calls on her cell phone, the law firm will reimburse her for all or part of the cell phone bill. Likewise, if an employee needs a new computer monitor to enhance their productivity, most California companies would see that as a necessary expense, especially if the old monitor needed an upgrade.

For California workers, expense reimbursements can include using personal cell phones, vehicles, computers, public transportation, and more. In this case, the goal of the law is to stop employers from passing on their expenses and costs to employees. In short, employees should not have to pay their employer’s expenses to properly complete their jobs.

How Can California Employers Track Workers’ Expenses?

The best way for California companies to keep track of their workers’ expenses is to create a designated system. The company’s system should make it easy for employees to submit their cost forms and understand what costs are reimbursable and what is not.

If California employers convey their reimbursement plans to employees, the workers will understand the guidelines and not overstep them. Employers use different methods to record expenses, from having workers save receipts to entering costs into online tracking software. Receipts can be scanned and/or emailed, too, and should include the amount spent, the item or service purchased, and the date.

Employers do not reimburse all expenses and must be clear with employees about their policies. Usually, expenses to be reimbursed depend on three main factors:

If the purchase was a reasonable condition of employment and/or has a clear and necessary reason behind it

If the purchase was contingent on a worker’s employment obligations, or the purchase came at the employer’s direction.

If the purchase is covered by the company’s reimbursement policy

By analyzing and being aware of these factors, employers and employees should be able to figure out how remote reimbursement should work.

What Are Common Work-Related Expenses for Employees?

Expenses vary based on the employee’s job duties, their position, and their employers’ instructions. Here are some of the most common expenses that typically become eligible for employer reimbursement:

Car mileage and gas
Traveling expenses such as Taxis or Ride Shares
Cell phone bills
Parking costs, such as garages, lots, or street parking
Public transportation fees, such as the subway
Auto rentals

All California employers should have set procedures in place for reimbursement. Then, when employers have a reimbursement strategy, there is a plan to fall back on, and they can easily justify their reimbursement policies for employees.

However, sometimes workers cannot submit their expense receipts or forget to do so. When workers do not submit their expenses, employers have to decide if they believe that the worker truly incurred the expenses. Suppose the employer is aware, for example, that an employee took a taxi to a work conference. In that case, they may reimburse the worker for that work-related expense, even if the employee failed to obtain a receipt.

In California, workers can seek reimbursement for necessary expenditures within three years of the initial expense.

For California employers, the best choice is to implement a clear, logical policy that outlines the company’s rules regarding reimbursing employees who work from home or incur costs in other ways. On the other hand, employees should always be aware of their companies’ policies, and when they have questions about reimbursements, they should feel comfortable asking. Clear communication between employers and employees helps eliminate any reimbursement misunderstandings or controversies.

Contact Nakase Wade

Even when employers have clear employee reimbursement policies, misunderstandings occur between employees and employers. Our employer attorneys can help fix these problems before they damage relationships, the company, or both.

For more information about expense reimbursement law, contact Nakase Wade. Our skilled attorneys and experienced lawyers are well-versed in California employment law.

If you are an employer who feels that your employees are taking advantage of remote reimbursement policies, contact Nakase Wade for a free consultation today.

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Reimbursing employees for expenses

Are Employers Required to Reimburse Employees Who Work from Home?

How Can California Employers Track Workers’ Expenses?

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