The maximum allowable amount for travel expenses. The expenses must be reasonable. Answered by: Loretta M. Tubiello-Harr, CPA, is a principal with Tubiello-Harr & Associates LLC in Coopersburg, Pa. Read the latest from the Pennsylvania CPA Journal online or via the mobile app and digital edition. Founded in 1949, Baker McKenzie advises many of the world’s most dynamic and successful business organizations through more than 4,100 locally qualified lawyers and 6,000 professional staff in 77 offices in 47 countries. “We hold that when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. When you look at the laws applicable to your jurisdiction, check specifics on when your employees must be reimbursed. Cell phone usage; Uniforms; Materials; Equipment and tools; License and permit fees; If you have questions about expense reimbursement, consult our knowledgeable employment law attorneys. What can employers do to ensure they meet reimbursement requirements to steer clear of expense reimbursement class action lawsuits in the US? In addition, by putting the onus on employees to submit a request for reimbursement for any amounts above the stipend, employers are throwing a possible wrench in a putative class’s typicality argument, because each employee’s request for any additional reimbursement will have to be evaluated on an individual basis. In comparison with reviewing each employee’s supporting documents to prove a reasonable percentage every month, this method will likely be less of an administrative nightmare–even if several employees do seek reimbursement of additional costs. BYOD, or bring your own device, policies are becoming more common in work environments. 43 Pa. Stat. COMMONWEALTH OF PENNSYLVANIA Pennsylvania Labor Relations Board CHAMBERSBURG POLICE OFFICERS ASSOCIATION : : ... choose his own cell phone and plan. Contact Our NYC Wage Theft Attorneys. The leading case on cell phone expense reimbursement in California is Cochran v. Schwan’s Home Service (2014) 228 Cal.App.4th 1137. An employee claiming he or she was not properly reimbursed would have to characterize it as a breach-of-contract claim. Iowa requires employers to reimburse employees for expenses within 30 days after the employee submits an expense claim or provide a written justification within the same time period for refusing the reimbursement. Not every jurisdiction (including California) requires a specific number of days by which employee expenses must be submitted, but giving employees a deadline will make it easier for you to track reimbursements for cost purposes (for instance, to see whether it would be more cost effective for the company to purchase and provide the equipment); for tax purposes; and, more importantly, to be assured that you are properly reimbursing employees to avoid a class action or other lawsuit. In some states employers are required by state law to reimburse their employees for their necessary job expenses. Independent contractors are not covered. If your cell phone is exclusively used for business, then you can be reasonably assured that you could get a reimbursement for the entire $150 from your employer, as long as your employer has an employee reimbursement policy for such expenses. The Employer Report provides legal updates and practical insights about the latest labor and employment issues affecting US multinationals, at both the domestic and global level. Subscribe to PICPA's personalized tit. Stat. If your reimbursement policy does not yet address working from home, update it, and then communicate it. Under these policies, many employers are paying anywhere from $30 to $50 per month toward employee cell phone bills. In addition, the policy will guide supervisors and managers, who are often in charge of initially approving reimbursements. Where state or local minimum wages are higher (such as Chicago’s $14 per hour or California’s $12 per hour), making it more likely that an employee’s payment of business-related expenses would cause their wages to dip below the minimum wage. Employers in the US are more than a little fearful of COVID-19 related class and collective action lawsuits coming their way, and with good reason. Whether the employees have cell phones with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills. Therefore, under an accountable plan with your employer, I would suspect that you would have to give an itemized list of business calls and personal calls from each month’s bill to your employer, and would only get reimbursed for that portion each month used for business. *Note: Illinoi… (N.T. Thus, the court held that to be in compliance with Labor Code section 2802, “the employer must pay some reasonable percentage of the employee’s cell phone bill” if the employee uses a personal cell phone for work purposes. § … Employers should take proactive steps and revise policies on employee reimbursements now to avoid class action litigation down the line. UNIVERSITY PARK, Pa. – Cellphone allowances for Penn State employees will be eliminated effective March 31, the University announced today. The type of technology-related expense, such as phone and internet, that are reimbursable. These payments are referred to as mobile stipends. Trend Watch: The First Wave of COVID-Related Employment Litigation — What's on the minds of employers and litigators during COVID-19? Employers who get expense reimbursements wrong may end up having to compensate workers for unreimbursed expenses, plus interest, penalties, and attorneys’ fees. Generally, an employer must provide employees with equipment and resources necessary for employees to perform their jobs, without passing on the employer’s operating costs to employees. The same goes for a wireless mouse (if a corded one will work) or a newer cell phone. All rights reserved. As of Jan. 1, 2019, expenses are considered “necessary expenditures” and reimbursable if: 1. Electronic supplies (such as a mouse, a headset, and additional cables). Presumably, items like paper, pens, and printer cartridges would be included. Instead, some employers are providing a monthly stipend to employees and communicating in writing that employees can submit requests for reimbursement if the stipend doesn’t cover their business expenses. Generally, expenses that may qualify for an itemized deduction include: Travel and mileage; Certain mobile phone uses; Uniforms (required by the employer that are not suitable for street wear.) When Should Employers Reimburse Expenses for Remote Workers? The “inure to the primary benefit of the employer” language in the law could reasonably be interpreted to allow an employer to refuse to reimburse – outright or partially – expenditures for cell phones, data plans or home Internet service that an employee already has for personal use, such that the employee is not incurring any reimbursable expenses by teleworking. The question: Is the employer or the employee on the hook for expenses incurred while working from home? Lab. If you have operations in several jurisdictions, make sure that you know and follow each applicable jurisdiction’s rules. One quick way to a lawsuit is to set employee expectations higher than your follow-through. To keep workers safe from contracting the virus at work, many employers have allowed employees to continue to work from home indefinitely, which likely decreases the odds that an employer will be sued in class action litigation for failing to provide appropriate PPE in the workplace. Reimburse for the actual voice and/or data fees incurred for business purposes, which requires employees to submit expense reports itemizing the costs of calls made for work purposes and the costs of data used for work supported with cell phone bills or other evidence of the costs (this is a time intensive process for employees); N… No credit card required. If your cell phone is exclusively used for business, then you can be reasonably assured that you could get a reimbursement for the entire $150 from your employer, as long as your employer has an employee reimbursement policy for such expenses. Read More. This figure varies depending on the company and the agreed-upon policy. If your cell phone acts as both your business and personal phone, you are only allowed to deduct the portion used for business. Though the FLSA does not require employers to reimburse their employees, under the FLSA “kickback” rule, employees cannot be required to directly pay business-related expenses or reimburse their employer for such expenses if doing so would cause the employee’s wage rate to fall below the required minimum wage or overtime compensation thresholds. Ann. 7, § 910.1. And in the District of Columbia, employers must pay the cost of purchasing and maintaining any tools that the employer requires to perform the employer’s business. Small tools; Office supplies; Professional license fees; Some moving expenses; Certain educational costs; Union dues, agency fees or initiation fees v. ABM Industries, Inc., a class action involving a California class of over 3,000 cleaning employees who claim that they were not reimbursed under Labor Code section 2802 for the expense of required use of their personal cellphones. What “reasonable percentage” means has not been defined, leaving employers with a few options. Therefore, employers can more easily run afoul of the FLSA in these scenarios, especially if the business-related expenses paid in any given workweek happen to be hefty. For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator. Your company required or approved the employee to make the expense. For guidance on your employee expense reimbursements, contact your Baker McKenzie employment attorney. If an employer requires an employee to work from home and an employee needs a laptop to do so, the employer must reimburse the employee for the cost of the laptop if the employer doesn’t provide one. 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