Ct. 698 (2013). legislation and in court, its important for Finance to stay vigilant and Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. 4, pt. They were so pleasant and knowledgeable when I contacted them. All four members present voted in favor of the salary and per diem recommendations. 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. For example, federal and state tax laws recognize that salaries are taxable income,Department of Revenue v. Arthur, 153 Ariz. 1, 734 P.2d 98 (App. It should outline all of the business-related expenses that an employee can get reimbursed for. The voters approved Proposition 302 effective at the beginning of the next regular legislative session. (Cal. Thats where employee expense reimbursement comes in. These state laws often require reimbursement for necessary job expenses such as: Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. Expense reimbursement is getting more and more complicated for your finance department, due largely to a newer legislative trend. If housing or meals are provided, the reimbursements may be less than, and cannot exceed, the lodging and meal and incidental expense reimbursements provided for pursuant to subsection C. You're all set! ." 1986); 26 U.S.C. Your company required or approved the employee to make the expense. art. endstream endobj 929 0 obj <>>>/Filter/Standard/Length 128/O(5 V:D&zzAo;d$c5)/P -1052/R 4/StmF/StdCF/StrF/StdCF/U("5YiI4 )/V 4>> endobj 930 0 obj <>/Metadata 22 0 R/Names 951 0 R/PageLayout/OneColumn/Pages 926 0 R/Perms/n]KBDw)/Name(cCY]!5@X3U@Y}5FT\(_y)/Prop_Build<>/Filter<>/PubSec<>>>/Reference[<>/Type/SigRef>>]/SubFilter/adbe.pkcs7.detached/Type/Sig>>>>/StructTreeRoot 34 0 R/Type/Catalog>> endobj 931 0 obj <>stream Those expenses can further get defined as expenses . It's best to have a written employee expense reimbursement policy in your employee handbook to ensure your organization has an action plan for remote workers. Justworks helps businesses with their benefits, payroll, and everything else they need to take care of their team. Courts in the Golden State have also said companies should pay for similar items like Internet expenses, data plans and other computing expenses. 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. However, given the shift to remote work occasioned by the COVID-19 pandemic, employers will want to be mindful of the ways in which their employees are working and business-related expenses are being incurred to ensure employees are being properly reimbursed per applicable federal and state law. 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. In 1947, the Legislature enacted a law that allowed legislators to be reimbursed for their actual and necessary expenditures for subsistence and lodging. Were here to help you navigate the ins and outs of running a business. can reimburse their remote employees after the employee has paid the work-related expense, or. For example, California companies required to pay for employees cell phone bills now need to allot for this massive expenditure. 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. As a result, many employers had to rapidly adjust to utilizing a virtual workforce. Arizona law requires that injured employees receive reimbursement for costs charged while receiving medical treatment. Section 2802; 820 Ill. Comp. Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. Very helpful with any questions and concerns and I can't thank them enough for the experience I had. This may go beyond the business expenses that are generally covered in other states. Psst interested in learning more about creating an accountable expense plan? See1968 Ariz. Sess. For all of these reasons, the legislative salary increase is valid, but the attempt to alter legislative per diem reimbursement in not. Former ARIZ. CONST. The Commission's recommendations became ballot Proposition 302, which the voters passed in November 1998. 115,9.5; Mont. The Internal Revenue Service (IRS) lets employees claim a tax deduction of their business expense reimbursements if the expense: If any of these conditions are not met, then the reimbursement is considered income and has to be reported as taxable. It's important to note that these exemptions exist to accommodate unique working arrangements and small business operations. 928 0 obj <> endobj The unauthorized recommendation does not alter the per diem reimbursement levels for legislators in A.R.S. k6$ LPXDyA Similarly, large portions of A.R.S. Download your free copy of Business Expenses: A Beginner's Guide To Building A Plan to find the helpful advice you're looking for. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. 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 is why a good employee expense reimbursement policy can be handy. Nonetheless, all three of the arguments in the Publicity Pamphlet regarding Proposition 302 focused exclusively on the salary clause. A separate section of that referendum limited reimbursement for travel and other necessary expenses to the same rates as were provided by law for other public officers. As a nation, we have not yet found it sufficiently important to require reimbursement as a matter of law. A former Los Angeles prosecutor, attorney Neil Shouse graduated with honors from UC Berkeley and Harvard Law School (and completed additional graduate studies at MIT). This approach is likely effective for employers in dealing with cell phone reimbursements as an employees cell phone bill is usually a fixed cost. Building an expense plan will save employers time, confusion, and stress. Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. If the requested file does not load in a new window, click here. 41-1104.(1). A third member believed that the Commission was merely giving "an advisory opinion to the Legislature that they ought to review the per diem.". Sign up for our free summaries and get the latest delivered directly to you. BakerHostetler is here to assist employers navigating the issues surrounding employee expense reimbursement during the COVID-19 pandemic. Workers are protected from retaliation if they file a claim. [13] See IRS Publication 5137 (Rev. Laws ch. For 2023, the standard IRS mileage rates are: 65.5 cents per mile rate for regular business driving. Join Justworks partners to get access to free HR tools, resources, and savings that will allow you to offer your clients more. Salary: $150,000 - $220,000 per year. Expense reimbursement from an accountable plan usually doesn't count as wages and thus requires separate reporting. For example, if an employee incurs a business expense in a state governed by the FLSA (or a state with reimbursement laws mirroring the FLSA rule), it is the employers burden to determine whether that expense brings the employees compensation below minimum wage, and if so, to reimburse that employee accordingly. Remote work is quickly becoming a staple for the modern workforce. LawServer is for purposes of information only and is no substitute for legal advice. 41-1104). endstream endobj startxref (2) The geographic area over which the court has authority to decide cases. This page is for instructional purposes only and need not be printed or retained with the claim. Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. . Copyright 2013-2023 Justworks, Inc. and its affiliates. An expense does not have to be indispensable to be considered necessary.. Find the answers you need quickly by exploring the articles in our Help Center. 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 Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. Ariz. Rev. Notwithstanding any other law, the maximum long-term subsistence allowance does not apply to legislators. For example: Companies usually mandate receipts. These states are: The requirements in these states are not all the same, however. Stat. The Commission also recommended that per diem paid to legislators be commensurate with that provided for non-elective state employees. Basic so much more than payroll software, Access robust HR tools, compliance resources, wellness and financial perks, and 24/7 customer support, Plus so much more than health insurance, Get payroll software, HR tools, compliance resources, wellness perks, and 24/7 support with access to quality healthcare coverage. He has been featured on CNN, Good Morning America, Dr Phil, The Today Show and Court TV. Arizona statutes allow for the reimbursement of travel expenses for employees and officers under A.R.S. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. Copyright 2023 Shouse Law Group, A.P.C. With this unprecedented shift in working habits, employers may be overlooking business-related expenses being incurred by their employees. As if IRS regulations werent enough to keep up with, some states are adding their own expense reimbursement laws that your staffers will have to comply with, too. Copyright 2013-2023 Justworks, Inc. and its affiliates. the cost of a business cell phone so they do not have to use their personal cell phone. Code. KF,1G; Other states (like Alaska and Arkansas) require reimbursement only if equipment purchased by employees for work-related purposes cannot be used during normal social activities of the employee or if the purchase/expense would bring the employees compensation below minimum wage. (8 Alaska Admin Code Section 15.165; Code of Arkansas Rules and Regs., 010-14-107(B).). pO}]3 s,i25A7.c. Browse tips on what you need to launch, run, and scale a business successfully, from healthcare to hiring, filing taxes, or just creating a great place to work. %PDF-1.6 % The invalidity of the Commission's per diem recommendation does not negate the voters' approval of the legislative salary increase. For example, employees may now (and for the foreseeable future) be incurring expenses related to printer paper, pencils, pens, cell phone expenses, home internet bills, etc. Youll want to proactively account for these business expenses in your T&E budget to stay on track financially and prevent issues. at 2(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. C. The director of the department of administration shall establish maximum amounts for reimbursement for lodging and meal and incidental expenses or long-term subsistence incurred pursuant to subsections A and B of this section, based on federal guidelines for these types of expenses or other reasonable rates as determined by the department. App. SeeA.R.S. . The director of the department of administration shall also establish policies and procedures for claiming lodging and meal and incidental expense reimbursements and long-term subsistence allowances by persons temporarily required, for a period of not less than thirty days, to reside away from their primary place of residence. 41-1904(D). Publicity Pamphlet at 159. 2023 LawServer Online, Inc. All rights reserved. An employer will want to maintain records as to reimbursements made to employees and the rationale behind those reimbursement amounts. [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). Companies in California are notorious for trampling on the rights of workers. How do you qualify? Recently, Illinois modified its Wage Payment and Collection Act to include expense reimbursement rules. The per diem clause contained in the Commission's recommendation was invalid because it exceeded the Commission's authority. Under Arizona law, two provisions are severable if severance is consistent with the intent of those who created the law. Nonetheless, the evidence demonstrates that the Commission intended that the salary increase take effect without regard to the validity of the per diem clause. Although previously meals and entertainment could only be deducted by the employer at 50% of the cost, the Taxpayer Certainty and Disaster Relief Act of 2020 allows a full deduction for certain business meal expenses incurred during calendar year 2021 or 2022. Q ta$DLatBi$`1 #,b Mr Shouse has been recognized by the National Trial Lawyers as one of the Top 100 Criminal and Top 100 Civil Attorneys. Not doing so could subject an employer to potential liability. Are: 65.5 cents per mile rate for regular business driving being incurred their. Habits, employers may be overlooking business-related expenses that an employee can get reimbursed for required to pay similar... To proactively account for these business expenses that are generally covered in states! Wage Payment and Collection Act to include expense reimbursement policy can be handy is quickly becoming staple... Geographic area over which the voters passed in November 1998 business cell phone so do... 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