There has been a lot of emphasis on compliance training recently. The employees indeed enjoy the freedom of remote work, but there are so many compliance laws governing it. Employers have to follow so many laws when they allow remote work.
Reimbursable necessary expenses laws
The states have also formulated laws on expense reimbursements even if employees are working remotely and don’t incur any travel expenses.
But there are other expenses such as the internet expenses to be borne by the employees.
In that case, as per the Fair Labor Standards Act(FLSA), an employer is not supposed to provide any work-related expenses for employees who work remotely. However, when due to such expenses, an employee’s monthly income goes below $684 per week, and then the employee has to reimburse the work-related expenses of such employees.
Ten states have enacted laws that remote workers be reimbursed for their work-related expenses, including California, Illinois, Montana, Massachusetts, New Hampshire, South Dakota, Iowa, New York, Pennsylvania, and North Dakota. Apart from all these states and the District of Columbia which has also implemented, employee reimbursement laws, the FLSA is applicable everywhere.
So, Compliance training for HR becomes mandatory in these situations so that the company does not violate any law.
State laws:
California
For example, California has the most rigid rules in this context. As per Section 2802 of the Labor Code of California, employers have to reimburse employees for all pertinent work-related expenditures including a percentage of money expended on home utilities.
However, the definition of such expenses differs with the type of job. As per the interpretation of this law, employers have to reimburse employees a specific percentage of internet bills even if the employee has an unlimited data plan. However, in cases where employees are working from offices, such expenses don’t have to be paid back to them. But employees are not required to reimburse such necessary expenses incurred during remote work when the employees voluntarily choose to work from home and there is no compulsion for them to do so due to the pandemic.
The HR can know through compliance training what is considered a necessary expense so that it’s reimbursable.
Necessary expenses are those expenses that have to be done requisite to performing the job. Internet and mobile phone bills are considered necessary apart from the cost of buying IT equipment such as printers and laptops. But if an employee gets an ergonomic chair for a comfortable working position, then he won’t be reimbursed for it because it’s not necessary to carry out his duties.
The employer should send an employee a reminder when it’s time for them to provide the reimbursement requests because, in the case of non-repayment to such employees, a lawsuit can be filed against the former.
Illinois
Illinois has similar reimbursement laws and employers have to repay the internet and cell phone bills caused due to remote work. This state has the law that the employees have to submit all their reimbursement requests within a month of paying, corroborated by relevant documentation.
Paid meal breaks:
An employee can be paid for his meal periods once he has taken a twenty-minute or lesser-minute break for the same. So, it’s high time that HR employees of US states are informed about such laws.
Tax benefits for employers:
There are benefits for employers also, in reimbursing necessary expenses such as, they are tax-deductible. This is only possible when the employer can prove he is on an Accounting Plan, provided the reimbursed expenses fulfill these 3 conditions:
- The employees must have incurred such expenses while they were working
- The employees must be able to prove such expenses within 60 days of incurring them. So, they must provide the employer with a reimbursement form while asking for repayment of such expenses.
- Any expenses reimbursed over and above the allowed necessary expenses must be repaid by the employee within 120 days. These expenses are invalidated expenses for which the employee is not able to supply any proof.
All the ways, in which an employer can ensure that his remote employee’s reimbursed expenses are tax-deductible can be brought to his knowledge by the company’s HR or the Accounting department enlightened by compliance training.
When an employee is unable to corroborate his expenses with proof, they are regarded as non-reimbursable expenses, as supplemental wages, and are not tax-deductible.