Employers should have reimbursement policies reviewed by counsel to ensure compliance with Labor Code section 2802. Which states are at the forefront of this legislativemovement? 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. For more information on the new law, check with Epstein Becker Green. 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. For years I have been, but it just recently changed. My plan is a flat $150 and comes with three free lines. 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. Many employees regularly use their personal cell phones for work-related calls. Reimbursement may also be necessary under California law even when an employee does not incur additional out of pocket costs. Most probably don’t realize that when they do, part of their cell phone costs may become reimbursable—even if they have plans with unlimited minutes. Be sure to list the percentage of the bill that is reasonable to reimburse. Your email address will not be published. Except for alimited number of positions, the university will notown cell phones for the use of individual employees after January 1, 2017. Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee's cell phone … Illinois was the newest addition this year. Schwan’s Home Service, Inc., 228 Cal.App.4th 1137 (2014) (“Cochran”), the California Court of Appeal held that employers must reimburse employees for required work-related use of personal cell phones—regardless of whether they incur any additional out-of-pocket expense from that work-related use. by Jennifer Azara. Can my employer require me to use my personal cell phone and require me to add a messaging app for work? Or do you want to provide company phones? The employee submitted the expense for reimbursement with proper supporting documentation* (i.e., a receipt) within 30 calendar days of when it was incurred. I am eligible for reimbursement from my employer for my cell phone. If you decide to reimburse employees for their cell phone use, should you do so under an accountable or non-accountable plan? Written policies should make clear that listing a cellphone number as a point of contact is optional and that employees who incur additional cellphone costs for work use may submit such additional costs for reimbursement. Of course, the employer may require the employee to repay the company for those charges. ELIGIBILITY. In those instances, California courts have required employers to reimburse a reasonable percentage of the employees’ phone bills. The policy will state the following: Question: Is there a salary cap on this guidance => “However, some states have their own laws surrounding expense reimbursement. Presumably, items like paper, pens, and printer cartridges would be included. Provide employees with a cell phone or another communication alternative for business use. These include California, Illinois, Iowa, Massachusetts, Montana, New Hampshire, New York, Pennsylvania, and the District of Columbia. Another way to avoid excess reimbursement is to require the employee to submit the cell phone bill as part of the expense, the way you’d require a receipt for a client meal expense. There is no federal requirement to reimburse employees for business-related expenses. Less than 30 days is not acceptable according to the new law but 30 days or more is fine. 2. Mobile management overhead 3. The method used to submit expenses for reimbursement. However, some states have their own laws surrounding expense reimbursement. However, some states have their own laws surrounding expense reimbursement. Here are the best practices for expense reimbursement. The time it takes to compute the reimbursement to each employee. This figure varies depending on the company and the agreed-upon policy. California’s Labor Code Section 2802(a) states that:. and then tell you they won’t pay you for it. Phones are no different. In Cochran v. Schwan’s Home Service, Inc., 228 Cal.App.4th 1137 (2014) (“Cochran”), the California Court of Appeal held that employers must reimburse employees for required work-related use of personal cell phones—regardless of whether they incur any additional out-of-pocket expense from that work-related use. The answer is that reimbursement is always required. One of the most common job-related costs employees have is the cost of a personal cellular telephone or “smart phone.” Reimbursement Obligations. and then tell you they won’t pay you for it. We have no objection to WAPA reimbursing employees for government use of personal cell phones; however, without specific statutory authority, WAPA may not reimburse employees at a flat rate instead of reimbursing for actual expenses. Check your state law to ensure compliance. Schwan’s Home Service, Inc., 228 Cal.App.4th 1137 (2014) (“Cochran”), the California Court of Appeal held that employers must reimburse employees for required work-related use of personal cell phones—regardless of whether they incur any additional out-of … If an employer requires its employees to use a cell phone, computer, or tablet away from its premises, there should be a clear policy in place regarding reimbursement of any related expenses. California’s expense-reimbursement statute has been particularly troublesome for employers. A "necessary” expense is defined in section 9.5 as all reasonable expenses that: (a) are required by the employer in the discharge of the employees’ duties; and (b) are primarily for the benefit … personal cell phone data plans when supervisors call those phones with work-related inquiries; home internet bills when employees are required to get online to handle work issues ; remote equipment, like routers and other computing necessities; What Is Not Allowed to be Reimbursed? Am I eligible to seek reimbursement for the entire $150? Illinois was the newest addition this year.”. Employee benefit plans may also define reimbursable expenses such as adoption assistance, or tuition reimbursement. California law requires your employer to reimburse you for all “necessary” expenses you incur because of your job. Accordingly, employers may be required to … For example, if an employee used 1,000 cell phone minutes in a month and 250 of those minutes were to make calls for their employer and the other 750 were personal, then the employer would be required to reimburse 25% of the total cell phone bill … Employers don’t require you to go to an office supply store to buy your own pens, paperclips, printer, computer, etc. Several other states have similar labor laws, including Illinois, Massachusetts, Iowa, New Hampshire, and South Dakota, so it is important for employers to know what the law requires in the jurisdictions where their employees live. If employees are not paid at least minimum wage, free and clear, the employer is in violation of the FLSA. In Illinois, unlike California, employees need to submit the expenses they wish to be reimbursed within 30 days of incurring the expense. The general answer is yes – and this is true even if your plan is unlimited, so long as it is necessary in performing your duties. The appellate court ruled that “reimbursement is always required,” and the employer must pay “some reasonable percentage” of the employee’s cell phone bill to comply with the Labor Code. The plaintiffs in Cochran claimed that while they didn’t incur an extra charge on their personal cell phone bill when they used their phones for work-related purposes, reimbursement for some part of their personal cost was still required. The maximum allowable amount for travel expenses. Expense reimbursement: In a typical reimbursement policy, employees purchase a cell phone (from a list of company-approved devices) along with the service plan. Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee. The command staff (non-exempt) are required to have phones and must be available in case of an emergency. Those states include: Illinois, California, Massachusetts, Montana, Pennsylvania, New York, Iowa, and the District of Columbia. How much should you reimburse each employee? Redirects responsibility for providing proof of work-related phone usage so that employees can be compensated for cost of such usage, to the extent the actual cost can be determined. 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. In California, for example, employers are obligated to reimburse employees for all “necessary expenditures or losses” the employees incur in carrying out their job duties. As of Jan. 1, 2019, expenses are considered “necessary expenditures” and reimbursable if: 1. Let’s take these three decisions in order. Class-action litigation premised on failure to reimburse certain expenses (such as home internet service for telecommuters and smartphone expenses) has been brought based … While these standards don't apply in every state or country, employers should be aware of the standards currently being enforced in California, because history tells us that most U.S. states that favor the employee will be following suit. Your company required or approved the employee to make the expense. Your email address will not be published. This list would include phones, phone service, internet service, computers and/or tablets, and any communications or home … Employees who travel may fall under a meal reimbursement policy while those who work remotely may require a smart phone or laptop to access their email and work files. by Matt D'Abusco | Aug 8, 2016 | Blog | 0 comments. In 2019, Illinois passed new law regarding reimbursement by employers. I work for a small animal hospital in Texas. Your nonprofit's employees or volunteers are likely to have business-related expenses that they pay out-of-pocket. Those states include: Illinois, California, Massachusetts, Montana, Pennsylvania, New York, Iowa, and the District of Columbia. The type of technology-related expense, such as phone and internet, that are reimbursable. 1.1. Nationally, the U.S. Labor Department has not placed any strict reimbursement requirements on employers when they tell employees to work remotely. Cell Phone Stipend Policy . The Cochran case of course raises a number of interesting issues with respect to other business expenses incurred. No law requires employers to allow employees to make or receive personal phone calls during working hours. Employers don’t require you to go to an office supply store to buy your own pens, paperclips, printer, computer, etc. Under these policies, many employers are paying anywhere from $30 to $50 per month toward employee cell phone bills. 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. Website by Search Owls. If your cell phone acts as both your business and personal phone, you are only allowed to deduct the portion used for business. The trickiest areas are cell phones and internet given that employees are now working from home because they cannot go into the office, as opposed to perhaps at their convenience. I. Option 5: Require employees to submit expense reports to justify phone usage. The company then reimburses the initial cost of the cell phone and the service plan fees each month on receiving the associated receipts. Another regularly reimbursable expense is training and education. There are two primary patterns for allowing government employees to utilize cellular phones. Cell Phones and Other Electronic Devices. Employers must also be mindful of state-specific expense reimbursement laws, which may impose additional requirements. Advantages The cellular phone equipment allowance includes all related accessories such as batteries, cases, covers, chargers, etc. It is well known that employers must reimburse California employees for cell phone use when employees are required to use their personal cell phones for business purposes. The kicker: That $5.4 million settlement could’ve been much worse. Those states include: Illinois, California, Massachusetts, Montana, Pennsylvania, New York, Iowa, and the District of Columbia. Illinois was the newest addition this year. Can you explain further as to what you mean by “Salary cap”? Eligible e mployees (below) may receive a cell phone stipend from the U niversity for business - related costs incurred when using their personal cell phones. The use of the personal cell phone must be directed or approved by the employer. But over time, the cost of employee cell phone reimbursement can dwarf that of the new phones you purchase. Absolutely criminal that any employer can require an employee to use their own personal phone without any reimbursement. One unforeseen consequence of requiring employees to work from home is some jurisdictions mandate that employers reimburse their employees for certain expenses incurred as a result of their employment. In states that require reimbursement for business expenses, most require the reimbursement within 30 days. 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. In the event an employment contract contains expense reimbursement, an employer is responsible for expense payments. Arguably, such expenses are also reimbursable under Section 2802. To support a tax-free reimbursement program, employers should leverage data that accounts for each individual’s regionally-specific costs. One option is for the government to purchase cellular phones and then allow its employees to make business related calls as outlined in a policy on use of cellular phones. a. If you believe you have incurred any business expenses that have not been reimbursed, contact one of our attorneys to discuss your situation. In the case of a vehicle, that’s easily measured by mileage, with the IRS providing a standard figure. If the first option is followed and the government purchases and owns the phones, then the city or county should adopt some usage policies… In the U.S., you must follow certain reimbursement procedures or include the payments in reportable compensation. Is reimbursement right for your business? Therefore, regardless of whether an employee has a limited or unlimited cell phone plan, the employer’s obligation is the same: “The reimbursement owed is a reasonable percentage of [the employees’] cell phone bills.” Employers have a duty to determine what that reasonable percentage is, and to reimburse their employees accordingly. Carrier fees 2. Expense reimbursement: In a typical reimbursement policy, employees purchase a cell phone (from a list of company-approved devices) along with the service plan. The $5.4M cell phone reimbursement mistake this company made. In an effort to prevent the spread of Covid-19, many employers are permitting, and in some cases requiring, employees to work from home. In states that require reimbursement for business expenses, most require the reimbursement within 30 days. This mean, “all reasonable expenditures … required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.”. © 2020 Ares Law Group. They are now requiring the staff members to use their personal cell phones while they are at work by using whats app (messaging app) as a business communication tool. cell phones to complete government-related calls, instead of a government-issued telephone or pager, and receive a tiered flat rate reimbursement. 2. CCHP helps you stay informed about telehealth-related laws, regulations and Medicaid programs. Employer may regulate use or possession of such devices in the workplace; reasonable limitations are common. Conversely, if an employer provides a cell phone as a benefit (specifically intended for … An employee may not decide on their own to use a personal cell phone without informing their employer and then demand reimbursement. A: Some states expressly require employers to reimburse employees for business trips and other business-related expenses. The following memo was just released by the IRS and is addressed to IRS auditors on cell phone usage and reimbursement by employers of employee personal cell phone for business usage and the employer paid cell phone used for some personal usage by the employee. The appellate court disagreed and held that reimbursement is always required, and that to comply with section 2802 the employer must pay a “reasonable percentage” of the employee’s cell phone bill. Call center features are withheld from your employees under a BYOD cell phone policy. 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. The court agreed and determined employers must reimburse employees “some reasonable percentage of the employee’s cell phone bill.” Travel: In lieu of department-issued cell phones, the fire chief has proposed a $50-per-month flat cell phone reimbursement for members of the command staff. Understanding reimbursement and compliance guidelines. The Illinois Wage Payment and Collection Act has been amended to require reimbursement of employees expenses, which may include higher ticket items like cellular phones, cellular data service fees, home computers and internet provider fees for employees who are expected to work remotely and more travel expenses. The new law in Illinois states that employers must reimburse all “necessary expenditures”. 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. 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