The FLSA, however, is implicated if an employees unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. Remote employee reimbursement rules by state In this Article Why is it important to know the rules surrounding remote employee reimbursement? Stat. Read on to learn what a work-from-home reimbursement covers, tax details, and state guidelines. Most remote workers, for example, require a computer, internet access, and a phone. Before we get started on this topic, let me disclose that I am not a lawyer. Please enable scripts and reload this page. Similarly, Massachusetts law does not expressly require work from home expenses to be reimbursed, but does prohibit an employer from shifting its business costs to its employees and thereby causing their wage rate to fall below the basic minimum wage. May 4, 2021 According to one of our recent surveys, the majority of companies have had some or all employees working from home during the pandemic. Mont. Expense Reimbursement for Employees Working Remotely Use this post to learn more about business fraud protection. 115/9.5. Montana, New Hampshire, North Dakota, and South Dakota. Covered medical expenses. providing new tools and programs to improve the productivity and well-being of their remote workforce, according to a global survey of 2,004 HR leaders by business consultancy Aon. There is a tried-and-true process for switching payroll providers, no matter what time of year it happens to be.Read More, Social media for recruiting is crucial or an effective hiring process in todays highly competitive job market.Read More, You may not know you are a victim of fraud until after it happens. When the COVID-19 pandemic forced thousands of businesses in the. This has created an unprecedented population of employees working remotely from home so their employers business operations can continue in whole or in part. Key points about expense reimbursement for remote workers: The COVID-19 pandemic led to the rapid rise of remote work. SUNY's policy will support telecommuting and flexible work, where it is reasonable to do so, based on the university's mission, operational and program needs. While COVID-19 isnt spreading as rapidly, many businesses are considering a permanent shift to remote or hybrid work. an expense claim or provide a written justification for refusing the }); if($('.container-footer').length > 1){ . The survey, conducted Aug. 17 to Aug. 25, showed that: The findings demonstratethat more companies "are actively preparing for the future of work" by focusing on improving workforce agility and making remote workeffective, said Michael Burke, chief executive officer for Aon's human capital business. If you arent ready to invest in software, make sure you have a clear expense policy. Determine, with information supplied by employees and their supervisors, the appropriate equipment needs (including hardware, software, modems, phone and data lines, and other office equipment) for each telecommuting arrangement. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. Employees do not need to submit expenses for approval or reimbursement within a reasonable amount of time. What you'll learn: What states require reimbursement for remote work? In light of a changing work environment and heightened expectations to be able to work remotely, take a serious look at your reimbursement policy. Still, employers should understand their obligations to reimburse employees for business expenses incurred while working remotely. $("span.current-site").html("SHRM MENA "); will continue working from home on a permanent basis than before the COVID-19 pandemic, according to a July survey of 283 large employers conducted by consultancy Willis Towers Watson. The actual reimbursement process can also be difficult if you dont have the right tools and technology in place. Future of Workforce, Human Resources, Trends and Best Practices, /wp-content-biz/uploads/2021/05/Update-Your-Reimbursement-Policy-to-Include-Expenses-for-Remote-Workers-Horizontal-Rectangle-iStock-1218746751.jpg, /wp-content-biz/uploads/2021/05/Update-Your-Reimbursement-Policy-to-Include-Expenses-for-Remote-Workers-Square-iStock-1218746751.jpg, /wp-content-biz/uploads/2021/05/Update-Your-Reimbursement-Policy-to-Include-Expenses-for-Remote-Workers-Vertical-Rectangle-iStock-1218746751.jpg, https://www2.salary.com/l/250572/2021-04-23/2rj5y3x. Laws related to reimbursement often state that employers need to reimburse necessary expenses. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. best practices all in one place. Employers have considerable flexibility to determine how to reimburse remote work expenses, though some options have tax consequences. All rights reserved. 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. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organizations culture, industry, and practices. Effective 05/01/2017 gifts and charitable donations have been increased to $100. Compliant, accurate, timely thats payroll with SentricHR. By Jana Bjorklund, GovDocs Senior Counsel and Director, Employment Law and Compliance State laws vary on what is required. When it comes to remote expense reimbursement, you usually do not have to pay for ordinary expenses that the employee would have incurred regardless of whether they worked remotely. Business Expense Reimbursements for Remote Workers The Legal Landscape Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. 2021. Whether a reimbursement is taxable typically depends on what type of plan you use to reimburse employees: accountable, non-accountable, or per diem. The Generally, when it is required, states require employers to reimburse expenses that are necessary for remote workers to perform their jobs. A work-from-home reimbursement policy for network tech You may need to reimburse remote employees for home office furnishings like: These purchases are often considered company property, and you can ask remote employees to tag them as such. 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. At Salary.com, we let employees pick their own office equipment and expense it, or they can select from a list of recommended items that the company purchases including desks, chairs, standing desks, and back rests. One of the key components of the most onerous expense reimbursement laws is the requirement to reimburse for any necessary expense, which begs many a question about what types of expenses must be reimbursed. find there may be benefits to they are neither required nor encouraged to work from home) they would not be required to be reimbursed for typical office expenses since all these are provided at the office. Find answers to all of your questions here. Business Expense Reimbursement for the Remote Workforce - Worldwide ERC Youre more than your job were more than a tech company. If a worker already has a home internet connection for personal use, an employer may still be required to reimburse them even though the worker incurs no additional expense. This approach will usually cover the vast majority of expenses but it should nevertheless be coupled with a process by which employees can seek reimbursement of additional expenses that were not covered by the stipend. In the post-pandemic era, some are now considering the option of remote work as a permanent benefit. This includes living expenses like rent and mortgage. Companies that haven't done so may benefit from revising their policies toward long-term remote workers, research suggests. This content is provided for information purposes only. Manyeven had to purchase new home office setups, such as desks andchairs. $("span.current-site").html("SHRM China "); Please purchase a SHRM membership before saving bookmarks. SHRM Online, September 2020, Despite Reopenings, Many Employees Will Work Remotely into 2021 and Beyond, However, it appears that a court in Switzerland has ruled in favor of an employee arguing that the company should pay for a portion of their rent since they were required by the company to work out of their home. It should not only cover travel expenses but also work from home situations. Ann. 1. Are you required to reimburse remote workers? Legal risks are not insignificant, and claims can result in penalties and legal fees in addition to the reimbursement costs. PDF Remote Work Reimbursement Policy Template employee as a precondition of employment. When in doubt, being a little more generous now can help you avoid potential labor code violations later. Setting expectations in written policies with guidelines and procedures for advance approval of such purchases will allow the employer to define the universe of necessary expenses. If they split the bill with friends or family members, the amount you need to reimburse further decreases. Accurate and efficient time management from any device. Employers, of course, want to ensure employees working from home have a workspace that is safe and productive. Often, employers have bulk discounts or stock on hand at the office that can be shipped to an employees home at a lower cost. 1. covering 50 percent of staff members' home Internet access and a portion of their cellphone services. A number of other states have enacted statutes that require reimbursement of employees necessary business expenses: Given the sudden and rapid expansion of the remote employee workforce, and the patchwork of expense reimbursement requirements under state and federal law, employers should speak with legal counsel to develop and/or revise their expense reimbursement policies to ensure compliance with all state laws where their employees may be working remotely. Then, add those amounts to your expense policy to curb unrealistic reimbursement expectations. If your remote work policies allow employees to work anywhere, its best to learn and comply with the regulations of the state that has the most stringent and well-defined rules. For detailed information, download the full text of theBusiness Expense Reimbursements Policy (PIN required). To make decisions about the value of [Special Event] BRB: The Working World Takes a Break. It may be worthwhile to copy over that aspect of your remote work policy, if you have one. Even if you arent legally required to reimburse employees for remote work expenses, you may still want to consider doing so. In California, for example, businesses must pay a reasonable percentage of mixed-use expenses. N.H. Rev. reimbursement within the same time period. As such, all employers who are requiring employees to work remotely should think about the types of expenses their remote employees are incurring and issue them a reasonable amount of expense reimbursement to cover those expenses. Make aremote work policy that identifies what remote work expenses your business will or will not reimburse as well as the process to get those expenses reimbursed. Review Expense Reimbursement Policies for Relevance to Remote Work What are the federal requirements for remote work reimbursements. These cookies will be stored in your browser only with your consent. Accountable plans meet the following three requirements: Reimbursements under accountable plans are not considered wages, and therefore are not taxed. It pays for treatment and hospitalization in places where . With the remote work, many questions have emerged about reimbursable expenses for remote work. And, find out how to set up your work-from-home reimbursement policy. California courts have interpreted "necessary expenses" to include a reasonable percentage of an employee's monthly internet bill for work-related uses, even when the cost of the employee's internet plan is fixed. The policy should clearly articulate the employers expectations for the tools and equipment that are necessary to do the job from home, and establish guardrails for when and how employees can purchase equipment with the expectation that the company will foot the bill. There are signs employers are adjusting to the new normal of remote work. However, if the employees bill also includes television and other services, you may not need to reimburse them that much. 4th 1137 (2014)), a California court of appeal . Schedule a free consult with our experienced consultants. Read However, the one exception is that employers must pay for their remote employees' expenses if said expenses will either . Are expense reimbursements tax deductible? 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. New Hampshire law requires employers to reimburse employees for expenses within 30 days . Some states, like California, are more generous. Some employers require remote workers to substantiate all reimbursable expenses with documentation, usually a receipt. cover what the issue is when (subscription required). Post-pandemic, if your company is not offering a work from home option, employees would use office equipment and supplies to perform their work. Lawyers in the firms 21 offices are ready to assist quickly on questions involving healthcare, labor and employment, education, real estate and more. In light of this, as many as 11 US states, and Washington D.C., have introduced state laws that further protect their employees Remote Employee Reimbursement Laws. In Illinois, although there is similar statutory language requiring reimbursement of necessary expenditures there is additional helpful language in the law that allows employers to set parameters on how much they will contribute toward such expenses (so long as it is not de minimus). As a layman, Im passing on what Ive learned from my research. var currentLocation = getCookie("SHRM_Core_CurrentUser_LocationID"); If a business operates in D.C. or one of the 11 states that requires reimbursement of remote work expenses, the stipend must minimally cover the expenses required by law. operate in this new environment almost overnight. Trends: Compensation & Workforce 42 percent have already enhanced, or are actively considering enhancing, allowances and reimbursement policies for remote employees in response to the pandemic. PDF Addressing the impact of COVID-19 Remote Workforce Expenses - Deloitte US Internet service and cell phone data are the most commonly considered, but what about printers and paper? McGuireWoods has established aCOVID-19 Response Teamto help clients navigate urgent and evolving legal and business issues arising from the novel coronavirus pandemic. Those mandates remain securely in place. If you have additional questions about reimbursing expenses for your workers, reach out to a Rocket Lawyer network attorney to get answers. Offer a monthly massage allowance to your remote workers as well. But several states have additional requirements. But they must also be mindful that the more requirements they put in place for minimum home office standardssuch as minimum WiFi bandwidth, a room with a door to ensure confidentiality of calls, locking filing cabinetsthe more likely an expense incurred in complying with those standards is to be considered necessary. Directly from the policy . The responding companies employ 4.4 million workers. on the circumstance. This is particularly true in certain states with respect to mixed use items that an employee uses for both business and personal reasons, such as a cell phone data plan or home internet.
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remote work expense reimbursement policy