Rather than simply regurgitating the day's headlines, Resourceful Finance Pro delivers actionable insights, helping Finance execs understand what Finance trends mean to their business. Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. Q ta$DLatBi$`1 #,b 41-1904 authorized the Commission to recommend "legislative salaries" that are to be submitted to qualified electors at the next general election after each salary recommendation is made. 778.217 Reimbursement for expenses. Returning excess amounts: If any amounts the employer pays to the employee exceed the amounts the employee spent, the employee must return excess amounts to the employer within a reasonable period of time. This form is not to be used to claim travel reimbursements or advances. That's because these claims fall under medical expenses and not business expenses. But if you work in Illinois, state law now says employees can provide a signed statement if they lose a receipt. 2. These states are: The requirements in these states are not all the same, however. Ann. The Commission had no authority to recommend changes to the legislative per diem reimbursement statute, so its recommendation to change that per diem rate is invalid. This reimbursement law was challenged as being an increase in compensation in violation of the Constitution. -Q3z78Zkx6
115,9.5; Mont. Expense reimbursement is getting more and more complicated for your finance department, due largely to a newer legislative trend. 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. The cost of work-related travel, including transportation, lodging, meals, and entertainment that meet the criteria outlined in IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, are generally reimbursable expenses. Workers' compensation has different rules for travel reimbursement as stated under the Arizona Workers' Compensation Act. A: Alaska, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and Washington, DC all have enacted statutes which bear on expense reimbursement. . Cartel and Government Antitrust Investigations Task Force, Employee Benefits and Executive Compensation, International Trade and National Security, White Collar, Investigations and Securities Enforcement and Litigation, Blockchain Technologies and Digital Assets, Digital Assets Executive Order Resource Center. 7` )-4c!ftl@TZtJdD%. [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). Separation of Duties. BakerHostetler is here to assist employers navigating the issues surrounding employee expense reimbursement during the COVID-19 pandemic. 2806 0 obj
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41-1104). Section 39-2-701(1)). Because one of the consequences of that recommendation could have been to dictate the length of the legislative session, the Attorney General concluded that the Commission had exceeded its limited authority to set salaries. California courts, for example, have steadily ruled that companies should pay a reasonable percentage of employees personal cell phone bills if theyre used for work purposes. For almost thirty years following the creation of the Commission, the Legislature continued to set its own reimbursement rates. In Ariz. Att'y Gen. Op. Beginning January 1, 2020, the minimum wage in Arizona rose to $12 per hour. In 1958, the Legislature placed on the ballot, and the people approved, an amendment to the Arizona Constitution that provided for an annual legislative "salary of one thousand eight hundred dollars as compensation for services . Proposition 302 had its origins with the Commission. Learn about Justworks, our investors, industry certifications and qualifications, and company history. %PDF-1.6
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Former ARIZ. CONST. can create a stipend for the anticipated costs of remote working. If the employer does not have an accountable plan, then any reimbursements, even those that are ordinary and necessary, are taxable income. Your company required or approved the employee to make the expense. The director may change the maximum amounts from time to time and may establish a separate maximum amount for geographical areas of the United States if the director finds that the reasonable cost varies significantly in one or more areas. You already receive all suggested Justia Opinion Summary Newsletters. : SECTION V . Justworks keeps you informed on employment regulations while taking care of your employer payroll tax filings. General Instructions. -]@Gf[5z[`;!yh'ef-Xw}.W D
Know any companies that could benefit from seamless payroll, access to affordable benefits, and HR support? 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. [2] D.C. Municipal Regulation Title 7, Section 910.1. Stat. 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. This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. home utilities, like heat and air conditioning. 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. Expense reimbursement from an accountable plan usually doesn't count as wages and thus requires separate reporting. Section 2802; 820 Ill. Comp. 2. 41-1104. As mentioned, these new laws may require your department to tweak its current T&E policies and practices to align with state-specific rules. pO}]3 s,i25A7.c. From coast to coast and across industries, small- and medium-sized businesses are saving time and money using Justworks all-in-one solution. Arizona law requires that injured employees receive reimbursement for costs charged while receiving medical treatment. The director of the department of administration shall also establish policies and procedures for the claiming of 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. The FLSA, however, is implicated if an employee's unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. This site is protected by reCAPTCHA and the Google, There is a newer version An accountable plan is a plan under which allowances or reimbursements paid to employees for business-related expenses are not counted as income and are not subject to withholding. When an employer reimburses an employee pursuant to an accountable plan, the reimbursement wont count as wages or income to the employee. Are you a Justworks customer? Telecommunication 47.73.3701 Reimbursement under the Reimbursement Expansion Act Its also a good idea to make sure others involved in T&E (your A/P staffers, expense report approvers, etc.) Id. Make sure that you understand and follow the applicable laws in the states where you have employees. 41-1104). The Arizona Supreme Court upheld the law, concluding that reimbursement for expenditures fell outside the 1932 ban prohibiting the Legislature from changing its "compensation" or "salary." Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. 5, 12. 22 cents per mile for medical or moving work. For example, California allows an employee up to three years to submit a reimbursement request. LawServer is for purposes of information only and is no substitute for legal advice. at 226, 178 P.2d at 438. SeeHistorical Note, ARIZ. CONST.
Substantiation: The employee must substantiate his or her business expenses by providing the employer with evidence of the amount, time, place, and business purpose of the expense. 928 0 obj
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39-2-701. ARIZ. CONST. Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. Generally, this wont include commuting expenses between an employees home and workplace. x[G_*LeV n]3U!D(n[gAU(CjOZ2e Reimbursement of expenses A. What Counts as Employee Business Expenses? art. Workers are protected from retaliation if they file a claim. SeeA.R.S. Streamline and simplify time tracking for you and your workforce. Most businesses reimburse such expenses, but are business expense reimbursements taxable income to the employee? 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. Get to know our founding story and meet the Justworks Leadership Team. If the employer fails to pay these reimbursements, the employee can file a wage and hour lawsuit. In Mid-March, much of the nations workforce began working from home due to the COVID-19 pandemic. hb```b``>u,\AF d`xv@2!
3|T?20fgqE@I!QKDF~*vm78[r#ar J+cQR! 41-1104. D.C. Municipal Regulation Title 7, Section 910.1, Massachusetts General Law Chapter 149, 148A, Fraelick v. PerkettPR, Inc., 83 Mass. Your company required or approved the employee to make the expense. Having a business accountant and referring to employment counsel are two ways for businesses to ensure theyre deducting and reporting the right expenses. 1= (
Essentially, these are laws requiring companies to reimburse employees for necessary expenditures incurred on the job. The standard mileage rate is set by the IRS each year. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. Not doing so could subject an employer to potential liability. For example, as demands on the Legislature have increased in recent years, legislative leaders have found it necessary to spend more time working at the Legislature than ever before. 62 (a)(2) and (c)(2); 1.62-2(c)(4). For example, if an employer reimburses an employee for mileage at more than the standard mileage rate, then the excess is taxable income. %%EOF
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. Stat. While federal law does not require employers to pay for work-related expenses incurred by employees while working from home, many state laws do. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. When employees receive an expense reimbursement, typically they wont be required to report such payments as wages or income. The commissioners were the architects of the language and intended that the salary increase be allowed to stand even if the per diem clause were invalid. endstream
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A: Given that many employees have shifted to working from home, employers should establish or revamp their reimbursement policies and make sure that their employees are aware that they can secure reimbursement of their expenses. A necessary expense is one that is helpful and appropriate for your trade or business. As a nation, we have not yet found it sufficiently important to require reimbursement as a matter of law. There is no federal law that requires employers to reimburse their employees for employment-related expenses, and few state laws do so, either. What are some examples of ordinary and necessary expenses that would require employer reimbursement? . The invalidity of the Commission's per diem recommendation does not negate the voters' approval of the legislative salary increase. So, are reimbursements taxable? 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. C. hd0 _A;iR!l x6
,x23CfI6t&4;I{0Ohj0_S30S5&q9 This can be tricky, however, as the employer must be sure to document/identify the amount of compensation attributable to the expense actually incurred. A: An employer is likely not responsible for the entire personal cell phone bill of an employee simply because that employee uses his/her personal cell phone for work purposes. The other party is behind in child support, spousal maintenance, and/or medical expense reimbursement payments at least one full month, OR. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. 4, pt. 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. Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. 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