Employee Reimbursement FAQs - American Society of Employers - Linda Olejniczak

Employee Reimbursement FAQs

FAQsA reimbursement or expense policy should clearly outline how your business deals with company related expenses and offer a detailed explanation on how employees are able to get reimbursed.  Most include the following key elements:

  • A clearly defined list of all expense categories that can be claimed.
  • A step-by-step guide on how to claim expenses.
  • What happens in the event of a dispute concerning expenses?

Reimbursement FAQs

Do many states have laws that govern expense reimbursements?

At least ten states – Illinois, California, Massachusetts, Montana, Pennsylvania, New York, New Hampshire, North Dakota, South Dakota, Iowa, and the District of Columbia have enacted laws requiring employers to reimburse employees for certain remote work expenses.  California and Illinois have the most robust and expansive business expense reimbursement laws.

Are reimbursable expenses considered “wages”? 

The Federal Labor Standards Act (FLSA) definition of “wages” does not include business expense reimbursements.  However, beware the minimum wage requirement.  Withholding an expense reimbursement can give rise to a minimum wage violation under the theory of an indirect wage deduction if the employee’s earnings are reduced below the required minimum wage. 

Are employers responsible for expenses incurred due to providing an employee remote work for an ADA accommodation? 

The requirements of the Americans with Disabilities Act (ADA) may also alter employer reimbursement obligations. In some instances, telework may be provided to qualified individuals with disabilities as a reasonable accommodation under the ADA. In those cases, the Department of Labor (DOL) has instructed that the employer may not require employees to pay or reimburse their employers for remote work costs such as internet access, a computer, additional phone line, and increased use of electricity.

Are employers obligated to cover expenses incurred by remote workers?

Under FLSA employers are not required to reimburse employees for work-related expenses incurred working remotely. However, an important caveat to that rule is that an employer may not require employees to pay or reimburse their employer for work-related expenses if it would cause the employee's pay rate to fall below the required minimum wage. Since so few states have enacted laws requiring reimbursement for remote work expenses, the general rule under the FLSA will apply in most cases.

For more information on employee reimbursement or sample policies, ASE members can call the ASE HR Hotline at 248-223-8027 or email lolejniczak@aseonline.org.

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