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Illinois Employers Should Update Their Expense Reimbursement Policies

Senior businessman showing a document

Illinois employers must now reimburse employee expenses because of an amendment to the Wage Payment and Collection Act that went into effect on January 1, 2019. The amended Act now requires Illinois employers to reimburse employees for all necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer. The following will help answer some of the most frequently asked questions:

Qnswer: A reasonable expenditure or loss is one required of the employee in the discharge of employment duties that inure to the primary benefit of the employer.

Yes. The Act states that employers are not liable for expenditures that exceed the guidelines of the employer’s written reimbursement policy as long as the policy doesn’t prohibit all reimbursement or only provides for “de minimis” reimbursement. This does mean that employers are not necessarily obligated to reimburse the full amount of an employee’s expenditure. Unfortunately, the Act does not define “de minimis.” Employers are also not obligated to reimburse for loss or expense due to the employee’s own negligence.

Employees must submit requests for reimbursement and all supporting documentation within 30 calendars days after incurring the expense. Employers are free to provide for more time under their written reimbursement policies. If an employee has lost a receipt or other documentation, the employer must accept the employee’s “signed statement” as proof of the expenditure.

If employees do not comply with the written expense reimbursement policy or the employer did not authorize or require the employee to incur the expenditure, then the employer is not obligated to reimburse the employee.

The employer is liable for the amount of the unpaid expense reimbursement along with damages equal to two percent of the unpaid amount, per month (calculated from the date of the underpayment) for each month during which payment is unpaid, plus attorney’s fees. Damages are payable to the employee and continue to accrue, without limitation, until the amount owed is paid.

The Illinois Act is modeled on a similar law in California. California courts have construed their reimbursement law as obligating employers to reimburse employees when employees are required to use their personal cell phones for work. The more specific issue is what happens if the employee cannot show what percentage he or she uses a cell phone for work versus personal calls. California courts have said that the employer must reimburse the employee for a “reasonable percentage” of the personal cell phone bill. Strangely, this is true even when the employee has an unlimited data and phone plan It’s not clear how Illinois courts will resolve this specific issue.

Along these same lines, if an employer requires its employees to use their own laptop computers or tablets for work, employers should establish a policy for how much they will reimburse employees for those expenses. Employers will likely need to reimburse employees for at least some portion of personal cell phone use for work duties and home internet expenses if the employee is required to work online at home. Again, employers can limit the amount of any such reimbursement but still must reimburse beyond a de minimis amount.

1) Determine which employees and job titles currently incur reimbursable expenses, especially employees who may be using personal cells phones for work purposes. Review your written job descriptions to see if some of them expressly or impliedly require the employee to incur reimbursement expenses. Revise job descriptions if necessary.

2) Decide what expenses you wish to authorize and at what amount. This could include a decision to not authorize employees to incur certain expenses.

3) Once you decide on policies and guidelines, put them in a written policy that you give to your employees.

If you have additional questions you would like answered in regard to the amended Illinois Wage Payment and Collection Act, contact Partner Troy Haggestad at 815-987-8977 or thaggestad@wilmac.com. Troy concentrates his practice in employment/labor law matters and commercial litigation.