For detailed information, download the full text of theBusiness Expense Reimbursements Policy (PIN required). 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. Be sure to communicate any changes or updates to your reimbursement policy. Eagan, MN 55121 7, 910.1. Additionally, the stipend amount or the cost of any unsubstantiated expense must be treated as supplemental income for the worker and reported on their W-2. If you have additional questions about reimbursing expenses for your workers, reach out to a Rocket Lawyer network attorney to get answers. Conversation Forward, Differences Between HR-Reported and As sizable numbers of workers continue to work from home due to the COVID-19 pandemic, it may be time for businesses that have not offered to reimburse remote employees' work-related expenses to consider doing so. Below, you can find answers to common questions about reimbursing expenses for remote employees. The Federal minimum wage of $7.25/hour for non-exempt employees, or, The salary threshold of $684/week for exempt employees, Phone or mobile data use for business activities, Laptops, computers, printers, fax machines, and other equipment, Procedures and timelines for submitting expenses, How your reimbursement process interacts with any stipends you provide, Employees incur business-related expenses, Employees document the time and place of the expense, plus the expense amount and purpose, and then submit the information to you within a. According to the Fair Labor Standards Act, employers are not required to reimburse their employees for any remote-work expenses that the employees incur. Theyre asking what expense reimbursements are obligations imposed by laws and regulations, and what other companies are doing to make remote workers as productive and motivated as possible. The Legal Landscape Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. employers to reimburse employees for expenses within 30 days after the Step 2: Make sure the n ew policy conforms to both Federal laws (The Fair Labor Standards Act) AND State laws. Civil penalties can be assessed against the employer as well. If an employees remote work is entirely voluntary, then an employer would not generally be required to reimburse expenses for an employee to work remotely. Business expense reimbursements for remote workers? Only 1 in 10 have offered employees subsidies to manage the costs of working remotely, although nearly three times as many are considering doing so. With organizations operating remotely instead of at an office,employees often had to rely on their own equipment and internetinstead of using the employer-provided tools they were used to. Read More. Please log in as a SHRM member before saving bookmarks. According to one of our recent surveys, the majority of companies have had some or all employees working from home during the pandemic. Remote Employee Reimbursement Rules by State - Paycor Accountable plans meet the following three requirements: Reimbursements under accountable plans are not considered wages, and therefore are not taxed. Stat. Under this new normal, employers must be mindful of the expenses these workers might be incurring; in particular, with respect to one-time higher ticket purchases that could drop them below minimum wage, such as a printer or other home office equipment that is necessary for their job (more to come on the critical modifier necessary). Communicate the new or updated policy clearly and regularly to managers and employees, so everyone is on board with the changes. Illinois courts have interpreted this to require reimbursement for internet and cell phone expenses when they are used for work purposes. Ask HR: Can I Expense My Telecommuting Purchases?, SHRM Online, October 2020, Whenand Howto Negotiate Benefits with Workers and Job Seekers, In Iowa, employers must reimburse employees authorized business expenses within 30 days of the expense. Manage and deliver your benefit plans with ease. Some employers, for example, pay remote workers a monthly stipend to cover remote work expenses. Talk to managers to determine what employees need to be productive and engaged and develop a remote work reimbursement plan that: includes updated policies, is compliant with federal and state regulations, and considers what equipment your company will provide to remote employees. Here's what you need to know about managing expense reimbursement for remote workers. From the perspective of state laws and regulations, reimbursement obligations are far from consistent. Only 10 states or regions (California, Iowa, Illinois, Massachusetts, Montana, New Hampshire, North Dakota, South Dakota, District of Columbia, and Seattle, Washington) have statutes or case law in place on employers requirement to reimburse business expenses. Our HR teams goal is to work to understand the needs of each teammate and recognize that, unlike an office, every home situation is different. and maintaining any tools that the employer requires to perform the Also, we advise that employers maintain documentation to support the reasonableness of the stipend that they establish, in case the amount of the stipend is ever attacked as being too little (such that it does not cover an employers full reimbursement obligation) or too much (such that the excess should be treated as compensation for work rather than reimbursement). find there may be benefits to There is no federal requirement to provide reimbursement for remote expenses, except where those expenses would have the effect of lowering an employee's wages to below minimum wage,. Update Reimbursement Policy to Include Expenses for Remote Workers. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. Stay on the lookout for any similar trends in the U.S. in the future. While that might sound like only those costs that would not have been incurred but for work, that is not how the statute has been interpreted. Business Expense Reimbursements Policy Table of Contents. A large, one-time purchase (like a printer) could easily reduce someones wages. Lastly, keep in mind reasonable accommodations for remote employees with disabilities. Business Expense Reimbursements for Remote Workers By Jana Bjorklund, GovDocs Senior Counsel and Director, Employment Law and Compliance Published July 29, 2021 Ten jurisdictions at the state and local level have enacted laws requiring employers to reimburse employees for certain business expenses. Most remote workers, for example, require a computer, internet access, and a phone. Market Data: Smart Matches, Fast Seattle defines compensation to include any business expenses incurred by employees. We're seeing a renewed sense of PDF Remote Work Reimbursement Policy Template This can help reduce any claims that the stipend isnt high enough to cover your employer reimbursement obligations. Panel Discussion: Moving the 'Reasonable' expenses. Asia-Pacific and Latin American jurisdictions tend to offer employers more flexibility, and there are generally no additional payments or stipends required by law for an employee who agrees to work from home. An average of 51 percent of employees were working remotely this summer, indicating that while remote working arrangements will be less common in the post-COVID environment than during the pandemic, they will remain elevated over pre-pandemic levels. Guide To Remote Employee Reimbursement Rules By State. Code Ann. See More A common approach is to provide a fixed monthly stipend based on a good faith and reasonable estimate of an employees reimbursable expenses. Business Expense Reimbursement for the Remote Workforce - Worldwide ERC Expense Reimbursements in the Era of Remote Working Unsubstantiated expenses In most instances, a business does not have to reimburse expenses for which the remote worker cannot provide adequate documentation unless the policy does not require such documentation. Combined with a mileage calculator, data-driven insights, and automated approvals, you and your employees have everything you need to make strategic spending decisions. Business Expense Reimbursements for Remote Workers You dont need to reimburse remote employees unless their expenses cause their earnings to fall below the Federal minimum wage. 4th 1137 (2014)), a California court of appeal . with GovDocs Employment Law News. This includes covering cellphone, Internet and home office expenses. There is no federal requirement to provide reimbursement for remote expenses, except where those expenses would have the effect of lowering an employees wages to below minimum wage, although several states do require employers to pay for such expenses. State laws vary on what is required. Any expenses incurred by these employees that might drop their compensation below minimum wage should be reviewed carefully so employees wages stay in compliance with minimum wage and salary threshold levels. covering 50 percent of staff members' home Internet access and a portion of their cellphone services. How much youre required to reimburse may also vary depending on your states requirements. Generally, businesses aren't required to pay expenses when workers choose to work remotely. Environmental, Social and Governance (ESG). [SHRM members-only HR Q&A: A ring light might be nice for all those Zoom meetings, but is it necessary? Necessary cookies are absolutely essential for the website to function properly. Subscribe to our blog for the latest employment law news. From a federal law perspective, the Fair Labor Standards Act (FLSA) only comes into effect if an employee must pay business expenses that bring their wages below the minimum wage or cut into overtime wages.
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