Illinois Employers Face New Expense Reimbursement Requirements
On August 26, 2018, Illinois amended the Wage Payment and Collection Act (IWPCA) to include the requirement that employers reimburse employees for all expenses within the scope of their employment that are “directly related to services performed for [their] employer[s].” Effective January 1, 2019, the new law (820 ILCS 115/9.5) requires the following:
- the employer must have “authorized or required” the employee to incur the expense;
- the expense request, along with appropriate documentation, must be submitted within 30 calendar days—unless a longer period is provided for under the employer’s expense reimbursement policy; and
- the employee must provide a signed, written statement in lieu of a receipt when supporting documentation has been lost or does not exist.
An employer is not, however, responsible for losses due to an employee's own negligence, losses due to normal wear, or losses due to theft unless the theft was a result of the employer's negligence.
The amendment does not apply to an employer that has “an established written expense reimbursement policy” when an employee fails to comply with the written expense reimbursement policy. Additionally, an employer that maintains a written expense reimbursement policy that contains specifications or guidelines for necessary expenditures is not liable for expenses that exceed those expenditure amounts—“so long as the employer does not institute a policy that provides for no reimbursement or de minimis reimbursement.”
With the passage of the IWPCA amendment, Illinois becomes the ninth U.S. jurisdiction to statutorily impose expense reimbursement requirements on employers. The other eight jurisdictions are California, the District of Columbia, Iowa, Massachusetts, Montana, New Hampshire, North Dakota, and South Dakota. Given the proliferation of “bring your own device” (BYOD) policies and employee use of personal cell phones, laptops, tablets, and other equipment for business use, employers in these jurisdictions must determine when and if the use of such devices constitutes a reimbursable business expense.
Although Illinois employers will have to wait and see how courts in Illinois interpret the new law, court decisions from California interpreting nearly identical language provide some useful guidance. Notably, California courts consistently find that employers must reimburse employees for expenses such as data plans, Internet bills, and other computing expenses regardless of the marginal cost to employees. For example, courts have found that employers must reimburse employees who use their cell phones for work-related calls, even if those employees have unlimited phone/data plans and incur no additional expenses as a result of the calls. In those instances, California courts have required employers to reimburse a reasonable percentage of the employees’ phone bills.
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. Therefore, employers may wish to review their expense reimbursement policies in advance of the law’s January 1, 2019, effective date.