June 21, 2019). For example, California Labor Code Section 2802(a) requires an employer to “indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer….” Failing to reimburse employees can lead to class or collective actions and quickly become incredibly burdensome for employers. In plain terms, Section 2802 requires California employers to reimburse all expenses their employees incur in performing their jobs, or that an employee incurs because he or she carries out the employer’s directions. Remote work also presents other issues which are exacerbated under the current crisis. United States | Other states, including Illinois, Iowa, Montana, New Hampshire and South Dakota, have enacted laws which may require reimbursement of employee expenses, although case law in these states is not as well-developed as in California. As a result, many nonprofits need to revisit and update current reimbursement policies and communicate these changes to employees to mitigate against unexpected liability in this area. Details and instructions on how to disable those cookies are set out at, Head of Data and Information Risk, United States, Bankruptcy, financial restructuring and insolvency, Data protection, privacy and cybersecurity, Environmental, social and governance (ESG), See Norton Rose Fulbright's additional COVID-19 resources, Anti-Facilitation of Tax Evasion Statement, COVID-19: Working from home and employer reimbursement of remote-work expenses in California and beyond, Washington DC *associate office **alliance. Under newly enacted section 9.5 of the Illinois Wage Payment and Collection Act (“Act”) (effective January 1, 2019), employers are obligated to reimburse employees for all necessary expenses incurred within the scope of their employment. If they live in California, Illinois, Iowa, Montana, or D.C., yes. Other states, such as Illinois, Montana, New Hampshire, North Dakota, and South Dakota, have reimbursement laws similar to California, and the law in some states is a bit vague. Court decisions from California (interpreting language very similar to the new Illinois law) have consistently ruled that employers must reimburse employees for a pro-rated portion of their cell phone data plans, internet service, landline plans, and the like-even if the employee would have incurred these expenses regardless of employment with the employer. New York City Employee Expense Reimbursement Attorney. We use cookies to deliver our online services. Given this, when crafting a nationwide policy, sometimes it’s simplest to use California as the high water mark. Remote work expenses traditionally have not been reimbursable under California law because telecommuting and remote work opportunities are not mandated by the employer, as many companies have optional work-from-home programs that are at the employees' convenience, and such employees continue to have the option to work in their employer's office and use company equipment and supplies if they desire. The Cochran case provides guidance on how to calculate a reasonable reimbursement for the mandatory use of personal devices such as cell phones: employers must compensate their employees for a "reasonable percentage" of the employee's cell phone bill under Section 2802. Using the average MPG of 22 for most vehicles in the United States, that means that you’ll probably spend between $2,000 – $3,000+ per year on gasoline. Telehealth policy changes occurring within the COVID-19 environment have been rapidly developing on almost a daily basis. The court rejected plaintiff's contention that the superior speed and convenience of his home internet plan created an obligation to reimburse under Section 2802. Cal. 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. Massachusetts 4. If an employer pays a fixed amount in the form of a stipend, the employer's policy should allow employees to submit expenses for reimbursement if the employees believe the stipend was insufficient to cover their work-related expenses. The law states that "all necessary expenditures or losses" must be reimbursed. The purpose of this statute is "to prevent employers from passing their operating expenses on to their employees." Where the expense is necessary, reimbursement could be required regardless of whether the employee would have otherwise incurred such expenses, as the Ninth Circuit indicated in a timely opinion this March. Reimbursement policies should state the deadline for employees to submit reimbursement requests and should require necessary documentation, such as receipts, to support each expenditure. Aguilar v. Zep Inc., 2014 WL 4245988, at *17 (N.D. Cal. Trend Watch: The First Wave of COVID-Related Employment Litigation — What's on the minds of employers and litigators during COVID-19? For many companies, this requirement has already impacted how companies implement 'Bring-Your-Own-Device' (BYOD) and remote work programs. While working from home raises a myriad of issues (e.g., data privacy and security, health and safety, employee engagement, and more), this post focuses on expense reimbursements related to telecommuting. 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. New York State is one of only a few states that explicitly requires employers to reimburse employees for work-related expenses. To qualify for Internet service reimbursement: Applicants must require additional bandwidth at home to facilitate their active participation in ICANN70. Additionally, some states require that employees be paid on a specific schedule (weekly, bi-weekly, semi-monthly, or monthly). Companies may be ill-prepared with the legal implications of switching to an all-remote model. To reduce the spread of COVID-19, many employers are requiring their employees to work remotely (either voluntarily or because several states, including California and New York, have imposed social distancing restrictions). Common types of remote-work expenses include monthly minute and data plans for cell phones, home internet, and purchases of various equipment. For help crafting your expense reimbursement policy, please contact your Baker McKenzie employment lawyer. The Internet is the technological capacity required to implement for example, the store-and-forward of digital images often used in tele-dermatology, tele-radiology, tele-dentistry, etc. One participant sued Boeing under California's reimbursement law, alleging that his home office expenses were not reimbursed. Norton Rose Fulbright US LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP and Norton Rose Fulbright South Africa Inc are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. But it’ll be important to watch as courts decide how to interpret these laws and make cas… A bill, HF 2160, would require Medicaid to reimburse telemedicine services at the same rate as in-person services, and not require a face-to-face consultation prior to telemedicine services. Reimbursement for state use of personal cellular phone, smartphone, and internet services. For instance, where it is mandatory for employees to use their personal cell phones for work, generally they must be compensated for a reasonable percentage of their phone plans. Novak v. Boeing, 2011 WL 9160940 (C.D. The health care workforce is stretched to its limits in most states. Cal. Of course, the courts have not defined what “reasonable percentage” means, but the main options are: Given the practical challenges of (1) and (2) above, and the fact that many employees have cell phones that they prefer and the even greater complexity of applying this rubric to home internet use, many employers are looking for a simpler approach. Last updated: January 2016. Make sure that you understand and follow the applicable laws in the states … As technology advances, psychologists increasingly have the opportunity to engage with patients or other users of psychological services via less traditional methods. Due to the coronavirus (COVID-19) pandemic, millions of employees who ordinarily work at an office or other workplace provided by their employers are now working at home.While you can no longer get a tax deduction for work at home expenses, here are some other ways you can get reimbursed for these costs, including as qualified disaster relief payments. Click this map of DSMES coverage by state external icon to learn which states have laws that require such coverage for both private insurance plans and Medicaid, and to find information on legal requirements for when DSMES coverage is triggered, what specific activities are covered, and the standards that DSMES must meet. And now that many employees are using their home internet, the business portion of their internet bill is reimbursable, even if they would have had a home internet plan before. Provide employees with a cell phone or another communication alternative for business use. Employers in California and similar jurisdictions should determine which of their employees are required to work remotely, what expenses employees may incur as a result of working from home, and determine if and how much of their remote work expenses must be reimbursed. Maintenance: According to AAA, the average annual maintenance cost for a car is about $1,200. For example, in Novak, Defendant Boeing offered its employees the option of voluntarily participating in a virtual worker program. When creating or revising reimbursement policies, you must be mindful of the “de minimis” threshold and ensure that reimbursements reasonably compensate the employee for the expenditure. In some cases, this will require a monthly stipend. The new year brings new employee reimbursement obligations for Illinois employers. However, several states (including California, the District of Columbia, Illinois, Iowa, Massachusetts, Montana and New York) have specific state law requirements applicable to employee expense reimbursements. Effective January 1, 2019, Illinois will join the handful of jurisdictions around the country that require employers to reimburse employees for expenses incurred in connection with employment. Other states, such as Illinois, Montana, New Hampshire, North Dakota, and South Dakota, have reimbursement laws similar to California, and the law in some states is a bit vague. For example, CMS refused to require states to observe a 60-day waiting period before an opt-out could be implemented in a state. Where the practice is widespread (or just alleged to be) the claims can be brought on a class-wide basis. As COVID-19 continues to spread across the United States, it is anticipated that a large portion of the workforce will be asked to work from home for their own protection and for the protection of others. Kristin Tauras - December 10, 2018. Washington, DC. 2011). Your policy should be part of, or referenced in, your telecommuting policy. To curb the rapid spread of COVID-19, over half of U.S. states and numerous local governments have adopted shelter-in-place orders, most of which require residents to … See Norton Rose Fulbright's additional COVID-19 resources. The Novak court explained that the additional internet and phone expenses incurred by Boeing's virtual workers was because the virtual workers "choose to work from home and potentially incur additional phone and internet expenses that would have been paid for by Boeing if the employees were working at Boeing's offices." The purpose of this communication is to provide general information of a legal nature. Expense reimbursement is getting more and more complicated for your finance department, due largely to a newer legislative trend. Unlike California, Illinois’s new expense reimbursement law allows employers to establish written expense reimbursement policies specifying the amounts and requirements for any such reimbursements. However, it will be new for some employees and may strain the resources of a company during the COVID-19 outbreak. Under the mitigation plan of COVID-19, many states are relying upon existing state parity laws to recoup reimbursement for eligible expenses, especially considering the Medicare waivers. With approximately 700 lawyers globally, Baker McKenzie’s Employment & Compensation group is the largest in the world and the only one to be ranked Band 1 by Chambers Global in 2020. Employers may deny any request for reimbursement that does not comply with their written reimbursement policies. The United States (“U.S.”) accounts for the largest share of drug spending and innovation in the world, and its drug pricing regime is the most complex given its multi-payer model and unique overlay of market access requirements that collectively impact drug pricing and reimbursement decisions in the U.S. Illinois recently joined the growing state trend, requiring employers to reimburse expenses incurred by employees within the scope of their employment. CCHP helps you stay informed about telehealth-related laws, regulations and Medicaid programs. Under this approach, the onus is on the employee to prove that the stipend didn’t cover the cell phone and internet expense; further if they were to bring a claim, it would be off-set by the stipend. Assuming courts continue to follow the logic of Cochran and employers continue to require remote work but fail to fully reimburse employees for it, we will see many more class actions seeking reimbursement under Labor Code § 2802. Illinois Expense Reimbursement Law Despite programs operated by state, federal and local governments aimed at recruiting and retaining primary care professionals to rural and underserved areas, the need outpaces the supply in many communities. Given these requirements, reimbursement of expenses is yet another factor that employers must consider when determining whether to allow, strongly encourage, or require their employees to work from home as the country seeks to curtail the spread of COVID-19. December 16, 2020. Other states, including Illinois, Iowa, Montana, New Hampshire and South Dakota, have enacted laws which may require reimbursement of employee expenses, although case law in these states is not as well-developed as in California. A: Under the FLSA, if the cost would reduce the employee’s pay below the minimum wage or cut into overtime, the reimbursement must be made no later than the next regular payday. A health care insurer that offers, issues for delivery, or renews in the state a health care insurance plan in the group or individual market shall provide coverage for benefits provided through telehealth by a health care provider licensed in this state and may not require that prior in-person contact between a health care provider and a patient before payment is made for covered services. Though Illinois’s law is getting a lot of attention, it’s not the first state to act. Applicants must have a valid personal bank account for ICANN org to wire the reimbursement funds. Alaska, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and Washington, DC all have enacted statutes which bear on expense reimbursement. Expect more litigation about when an expense triggers the employer’s statutory reimbursement obligation. 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