Employee Expense Reimbursement - Update Your Employee Handbook ASAP

Employee Expense Reimbursement - Update Your Employee Handbook ASAP

  • Flight to Baltimore: $342.48
  • Cab to hotel: $62.00
  • Morning coffee: $2.95
  • Client lunch: $55.75

Compliance with the new amendment to the Illinois Wage Payment and Collection Act regarding employee expenses? Not quite priceless, but it will save you a great deal of monetary damages, from potential class action lawsuits to attorneys’ fees—both yours and your employees’!

Flights, cabs, parking, mileage, mobile phones, and meals...the list of expenses for which employers often provide reimbursement is endless. And the Illinois legislature has some new guidelines on how and when those expenses get re-paid to workers.

A new amendment to the Illinois Wage Payment and Collection Act (ILWPCA) governing employee expense reimbursement went into effect on January 1, 2019. (You can read the full amendment here.)

This new amendment requires employers to reimburse all “necessary expenditures...incurred by the employee within the employee’s scope of employment and directly related to the services performed by the employer.” It goes on to define “necessary expenditures” as those the employee must incur (i.e., that are required) during the course of his or her duties, and which are primarily beneficial to the employer.

The Act states that employees are not entitled to repayment of expenses if the employee seeking reimbursement fails to comply with the employer’s written reimbursement policy. It is important to note, however, that under the new ILWPCA amendment, an employer’s expense policies cannot exclusively require receipts as evidence of expenses for the purpose of reimbursement. If an employee has lost the documentation of the expense, for example, the employer must accept the employee’s “signed statement” attesting to the expenses and reimburse accordingly.

The amendment also provides significant tools to employees who are regularly required to incur expenses in the course of their employment duties without reimbursement—and a warning to employers. The Act affirms that employee expense reimbursements are indeed “wages” to the employee. That means the significant penalties offered by the ILWPCA, such as liquidated damages and attorneys’ fees, are now available to an employee in what would have otherwise been a run-of-the-mill breach of contract claim against an employer. In doing so, Illinois has now joined a number of states that already have such legislation, such as California, New York, and Massachusetts.

It is always best to have a knowledgeable employment attorney review your handbook to ensure your business is in compliance with the new amendment, or to help you recover your unpaid employee reimbursements. If you have such concerns, contact us today so we can help you navigate how this new law might apply to you.

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