Effective January 1, 2019, Illinois has amended the Wage Payment and Collection Act to require all Illinois employers to reimburse their employees for expenses incurred while performing their jobs.
For an employee to qualify for reimbursement, the following must apply:
- The employer must have authorized or required the employee to incur the expense;
- the request for reimbursement must be submitted within 30 days, unless a longer period is allowed under the employer’s expense reimbursement policy; and
- the employee must provide appropriate documentation to support the expense or sign a statement that states the documentation is lost or does not exist.
Employers do not need to reimburse an employee for expenses due to the employee’s negligence, normal wear and tear, or the normal commute to work .
Employers are allowed to establish expense reimbursement policies to specify amounts and requirements for reimbursement. Employees are not entitled to reimbursement if they do not comply with the written reimbursement policy. If the policy sets limits on the amounts requirements for any reimbursement the employer is not liable if expenses that exceed that amount.
If an employer prepares a written reimbursement policy, you may not set it so low or deny reimbursement if the expense was authorized or required during the employees job performance.
If you do not currently have an expense reimbursement policy this change will force you to implement one. If you have an employee handbook you need to update it to provide for an expense reimbursement policy.
Some examples of what would be included for reimbursement would be
- work related mileage but excluding the commute from home to work,
- business use of personal cell phones and computers and
- home Internet or other home office expenses necessary for an employee to work from home.
If you do not provide for reimbursement of qualifying expenses, you can be subject to a 2% penalty for each month the expenses are not paid as well as attorney’s fees and costs incurred by the employee. In addition, there is personal liability for officers of that organization. A corporate or LLC shield will not protect you.
To comply with the new statute, we recommend the following:
Provide a written reimbursement policy as part of your employee handbook if you have one or by a simple memo or email if you don’t;
Outline specific expenses that are reimbursable and how much of the expense is reimbursable;
Listing your policy when an employee needs to submit his or her documentation;
List what type of documentation is acceptable and if the documentation is unavailable whether the employee may provide a signed written statement; where to direct questions regarding the policy and when something might be reimbursable;
Include specifics on whether an employee is authorized to use personal equipment, such as a phone or computer, in the scope of employment.
Conclusion: This law applies to all employers regardless of size and therefore you cannot ignore it. If an employee at incurs expenses in the scope of their work, you must be prepared to reimburse them. If you have questions, please call for assistance.