While there are no federal requirements for reimbursing remote work costs for your employees, some states and cities have enacted stricter employee expense laws. Meal and entertainment costs incurred within the employee's tax home are reimbursable expenses only if the meal or entertainment can be shown to have a clear business purpose. [2] D.C. Municipal Regulation Title 7, Section 910.1. The, must substantiate his or her business expenses. However, because of the new normal of working from home, employers must vigilantly analyze the types of expenses their employees are incurring for business-related purposes and provide reimbursement accordingly. at 226, 178 P.2d at 438. Code of Federal Regulations Title 47. Are employee reimbursement expenses taxable income? The only time that the FLSA impacts work-from-home reimbursements is if the cost would lower the employees earnings beneath the applicable minimum wage. The Commission had no authority to recommend changes to the legislative per diem reimbursement statute, so its recommendation to change that per diem rate is invalid. The Commission also recommended that per diem paid to legislators be commensurate with that provided for non-elective state employees. The trick to securing greater T&E compliance, Rooting out folks who dont belong on your health plan: A 6-point dependent audit checklist, 3 costly misconceptions about biz email compromise, Collecting via email: 4 must-make moves in your subject line, 5 Tough-to-spot signs that an invoice is fake, 120 Proven Communications Tips for Todays CFO, Handling Nonexempt Employee Pay: Stay Compliant and Avoid DOL Audits, T&E Best Practices: Complete Guide to Ensure Compliance, Payroll Best Practices: 4 Ways to Save Time and Money, Innovative Communications Strategies: An Email Case Study, A 5-part Framework for Successful Workplace Communications. Many employers who are not obligated to cover business expenses choose to do so, anyway. A state employee while traveling on authorized state business shall be reimbursed for actual lodging expenses incurred not to exceed a predetermined amount pursuant to subsection C. All claims for reimbursement shall be accompanied by lodging expense receipts. The Tax Cut and Jobs Act eliminated this deduction for W-2 employees from 2018 through 2025. Please complete the form below and we will contact you momentarily. The cost of work-related travel is generally a reimbursable expense. endstream endobj 932 0 obj <>stream Where an employee incurs expenses on his employer's behalf or where he is required to expend sums by reason of action taken for the convenience of his employer, section 7 (e) (2) is applicable to reimbursement for such expenses. %%EOF 2894 0 obj <>stream Several times in this decade legislative leaders received annual per diem amounts in excess of $9,000, the amount of the voter-approved salary increase, because of the heavy demands on their time. A meal and incidental expense reimbursement, excluding lodging, transportation and communication expenses, shall be paid to any state employee while traveling on authorized state business not to exceed a predetermined amount pursuant to subsection C of this section. A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. Not doing so could subject an employer to potential liability. For instance, if the employer has an accountable plan, but the employee fails to properly substantiate the expenses within a reasonable time, or the employee fails to return excess advance payments, then any reimbursements could become taxable income. 25-320) and federal law (42 United States Code, 651 et seq., 45 Code of Federal Regulations, 302.56) and amendments, if any. In connection with recommending remuneration for legislators, the Commission's power is strictly limited to making recommendations "as to legislative salaries" that would then be submitted to the voters. When an employer reimburses an employee pursuant to an accountable plan, the reimbursement wont count as wages or income to the employee. Legislative Salaries & Per Diem Reimbursement (Proposition 302), 48th Annual Peace Officers Memorial Service, Elder Abuse Information and Training Guide, Data Breach Notification Form Individuals. LawServer is for purposes of information only and is no substitute for legal advice. There are a few exceptions that you should know. Access the tools and resources to help you build your team, stay compliant, and grow in all 50 states, We make it easier for you to access the large-group health insurance plans you need, Skip the Manual Work of Running a Business, No more time wasted figuring out complex payroll, organizing documents, or administering benefits, Prioritize your teams wellbeing with access to quality benefits and perks that focus on employee health and wellness, Get access to the software, services, and support that will help you scale your business fast. . Resourceful Finance Pro, part of the SuccessFuel Network, provides the latest Finance and employment law news for Finance professionals in the trenches of small-to-medium-sized businesses. (Cal. Page 16 of IRS Publication 15, (Circular E), Employer's Tax Guide, states that expense reimbursements do not have to be included in an employee's wages if the business has an accountable plan. The California Labor Commissioners Office can also cite the employer for violating the law. The arguments did not mention the per diem clause. The Arizona Supreme Court upheld the law, concluding that reimbursement for expenditures fell outside the 1932 ban prohibiting the Legislature from changing its "compensation" or "salary." The federal Fair Labor Standards Act (FLSA) generally does not require that an employee be reimbursed for expenses incurred while working from home. 39-2-701. 2-2020). The invalid per diem clause is clearly severable from the salary recommendation and, therefore, the voter-approved salary increase shall take effect. gV+(8 62 (a)(2) and (c)(2); 1.62-2(c)(4). P)%{u2 m@rD ( Dyph. at 2(b). Courts in the Golden State have also said companies should pay for similar items like Internet expenses, data plans and other computing expenses. How do you qualify? Ann. Other jurisdictions that already have expense reimbursement laws on the books include: Generally, your department knows what typical business expenses states will expect to be reimbursed, like transportation, lodging, meals and entertainment. Generally, this wont include commuting expenses between an employees home and workplace. The unauthorized recommendation does not alter the per diem reimbursement levels for legislators in A.R.S. Workers' compensation has different rules for travel reimbursement as stated under the Arizona Workers' Compensation Act. Enter your username and password below to log in. [11] California Labor Code 2802 LAB (An employer shall 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). Under Arizona law, two provisions are severable if severance is consistent with the intent of those who created the law. 38-624. legislation and in court, its important for Finance to stay vigilant and art. Most businesses reimburse such expenses, but are business expense reimbursements taxable income to the employee? : SECTION V . Under these circumstances, the invalid per diem restriction must be severed from Proposition 302, allowing the salary increase, alone, to take effect. 708 0 obj <>stream 22 cents per mile for medical or moving work. Your company required or approved the employee to make the expense. SeeA.R.S. If the employer does not have an accountable plan, then any reimbursements, even those that are ordinary and necessary, are taxable income. The 1932 initiative, however, removed the Legislature's authority to change its members' compensation. Id. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. Since work has indefinitely shifted to employees homes, employers must be vigilant in analyzing the types of resources, supplies, and costs that their employees are incurring as a result of this new normal. Employers should consider reimbursing costs such as a reasonable percentage of use for things like home electricity, personal cell phones, printer paper, pens/pencils, etc. This site is protected by reCAPTCHA and the Google, There is a newer version documentation doesnt exist, is missing or is lost. Laws ch. A: 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. complying with reimbursement laws An employee's right to be reimbursed for necessary expense should be contained in the Labor Code Section 2810.5 notice. Download your free copy of Business Expenses: A Beginner's Guide To Building A Plan to find the helpful advice you're looking for. Get to know our founding story and meet the Justworks Leadership Team. hbbd``b` D. The director of the department of administration shall establish in the state accounting manual uniform procedures by which amounts less than the maximum lodging and meal and incidental expense reimbursement amounts may be claimed by a person who is in travel status for less than a full twenty-four-hour period or by a person who does not provide lodging receipts. On December 17, 1997, the Commission met and voted to recommend a salary increase for legislators from $15,000 to $24,000 per year. In addition, if any expenses are paid in excess of IRS limitations, then the excess is taxable income. 2023 LawServer Online, Inc. All rights reserved. Similarly, large portions of A.R.S. Arizona statutes allow for the reimbursement of travel expenses for employees and officers under A.R.S. endstream endobj startxref You have a Court Order from Maricopa County for child support, spousal maintenance, medical insurance coverage, or for reimbursement of medical, dental or vision care expenses not covered by insurance, AND. Ct. 698 (2013). Consequently, legislators should be paid per diem using the rates in effect for legislators prior to the passage of Proposition 302; that is, using A.R.S. {KmT8(PI[I_,WH#R 'H"2Hd) ~ K(7e[4;'^|IMw!o*m5{wp!s( `*wM9nrXnI7}@PBYr fBw. C. Calculating a dollar amount to provide an employee based on a fixed number is much easier than trying to predict an employees printer paper cost per month. All rights reserved. state laws, and the United States Code. Supplies that an employee purchases for business purposes can be reimbursed at cost, provided that they are reimbursed pursuant to an accountable plan. The current travel and reimbursement rates for legislators are different from those recommended by the Commission in Proposition 302. This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. 928 0 obj <> endobj Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. It depends on the situation. . 5, 12. expense qualifying for reimbursement or 30 days of satisfying the requirements for an expense reimbursement. What are some examples of ordinary and necessary expenses that would require employer reimbursement? Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. D. The director of the department of administration shall establish in the state accounting manual uniform procedures by which amounts less than the maximum lodging and meal and incidental expense reimbursement amounts may be claimed by a person who is in travel status for less than a full twenty-four hour period or by a person who does not provide lodging receipts. Copyright 2023 Shouse Law Group, A.P.C. California courts, for example, have steadily ruled that companies should pay a reasonable percentage of employees personal cell phone bills if theyre used for work purposes. Code 62(a)(2)(D) allows an eligible educator to deduct from federal gross income unreimbursed, qualified expenses (e.g., expenses for books, supplies, and computer equipment used in the classroom; expenses incurred during qualified professional development courses). Very helpful with any questions and concerns and I can't thank them enough for the experience I had. All claims for reimbursement shall be accompanied by lodging expense receipts. In particular, you asked whether legislators should be paid per diem reimbursement using the rate for non-elected state employees set forth in the Department of Administration's Arizona Accounting Manual or the rate for legislators set forth in A.R.S. Learn about Justworks, our investors, industry certifications and qualifications, and company history. ARIZ. CONST. App. Consider drafting a plan doing so will likely save everyone time, confusion, and stress. endstream endobj startxref Monthly tips on running a business in your inbox. 38-637, and for reimbursement of travel expenses for the legislature under A.R.S. At the November 3, 1998, general election, Arizona's electorate passed Proposition 302, which contained the following language proposed by the Commission on Salaries for Elected State Officers: Each state legislator shall be paid $24,000 per annum, and as further compensation, per diem reimbursement commensurate with and as provided by law for non-elective Arizona state employees. For almost thirty years following the creation of the Commission, the Legislature continued to set its own reimbursement rates. Ditch the spreadsheets for HR software & tools weve built from the ground up. Separation of Duties. 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