Federal Law
Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee’s earnings below minimum wage. Since so many people are working remotely now, employers will need to ensure that employees earning near minimum wage are not spending so much on expenses that their paycheck falls too low.
State Law
Eleven states (plus the District of Columbia and Seattle, Washington) have current laws requiring employers to reimburse employees for certain remote work expenses. Below is a chart listing states with remote employee reimbursement laws and what expenses must be reimbursed.
| STATE | SUMMARY | REFERENCE |
| California | Employers must reimburse employees for all necessary expenses, including those incurred at the employer’s direction. | California Labor Code Section 2802 |
| Washington D.C. | Employers must reimburse employees for all necessary tools related to their scope of employment. | D.C. Municipal Register Title 7 Section 910 |
| Illinois | Employers must reimburse employees for all necessary expenses or losses. This includes reimbursement for internet access and phone bills when used for remote work purposes. Employers can specify what they will pay for each type of expense. Employees must also submit requests for reimbursement within 30 days of incurring the eligible expense. | Illinois Wage Payment and Collection Act, Section 9.5: Reimbursement of employee expenses |
| Iowa | Only authorized expenses by the employer must be reimbursed. Reimbursements must be paid out within 30 days. If an employer does not pay the reimbursement request, they must provide a written notice explaining why within 30 calendar days. | Iowa Code 2022, Section 91A.3 |
| Massachusetts | Enforces the same protections as federal law: expenses may not reduce an employee’s wage below the current state minimum wage. While not required, the Massachusetts Attorney General’s Office recommends reimbursing employees for all expenses that are unavoidable and necessary. | Massachusetts General Laws Part I, Title XXI, Chapter 149, Section 148 |
| Minnesota | Employers must reimburse employees for uniforms, purchased, or rented equipment, or consumable supplies upon their termination of employment. | Minnesota Statute 177.24 |
| Montana | Employers must reimburse all necessary expenses, including those incurred by the employer’s direction or during the discharge of their normal job duties. | Montana Code 39-2-701 |
| New Hampshire | Employers must reimburse employees for expenses connected with their employment and at the employer’s request within 30 days of when the employee presents proof of payment to the employer. | New Hampshire Revised Statutes Title 23 Section 275:57 |
| New York | Employers must provide reimbursements to employees for expenses if there is an agreement, such as an employment contract., that outlines expense reimbursement. | New York Labor Law Section 198-C |
| North Dakota | Employers must reimburse employees for business expenses related to necessary duties or at the employer’s direction. | North Dakota Century Code Section 34-02-01 |
| Pennsylvania | Employee reimbursements are at the employer’s discretion. Unreimbursed employee expenses may be tax deductible. | 43 Pa. Stat. Ann 260.3 |
| South Dakota | Employers must reimburse all necessary expenses, including those incurred by the employer’s direction. | South Dakota Statute Codified Law 60-2-1 |
| Washington | Employee reimbursements are at the employer’s discretion. Unreimbursed employee expenses may be tax deductible. Seattle: Employers must pay employees all compensation owed to them, including any business expenses. | Washington State Department of Labor & Industries Seattle Wage Theft Law |
What Counts As Necessary Cost?
Employee Voluntarily works remote: Generally, businesses are not required to pay expenses when workers choose to work remotely. Choosing to work remotely means a company has opened back up its office and employees are encouraged to return to working in the office. However, the company has allowed employees to make a voluntary decision to work 100% from the office, a hybrid or remote schedule. The decision to work remote is 100% the employee’s choice.
Company mandates remote work: If remote work is mandated a variety of different costs may need to be reimbursed. Over the last few years, many companies reduced their office leases and reduced the size of their square footage in their office. When companies opened back up, some companies opted for workspace sharing and required its employees to select hybrid work schedules.
Definition of Necessary Expense: A necessary expense is an expense that generally occurs when someone performs their standard duties. While these expenses greatly depend on the type of work performed, reasonable expenses, generally, include Internet services, mobile data usage and cell phone equipment. Additionally, if an employee needs to purchase furniture or a lock and fireproof cabinet, this expense may be reimbursable by the company.
Unsure if your company’s Remote Work Policy is accurate? Contact us today at admin@mccloskeypartners.com or 215-716-3035 x 700.