Reimbursement Considerations for Remote Work Arrangements

With an increasing number of Illinois employees working from home for the foreseeable future as a result of COVID-19 and Governor Pritzker’s recent Executive Order imposing shelter-in-place restrictions from March 21 until April 7, employers are understandably seeking clarity regarding whether they have a legal obligation to reimburse employees for their telework-related expenses, including for cell phones, data plans, home Internet service, and home office equipment. Unfortunately, Illinois law is unclear on this issue, and the Illinois Department of Labor (“IDOL”) has yet to provide any guidance to employers.

In January 2019, the Illinois Wage Payment and Collection Act was amended to require employers to reimburse employees for “all necessary expenditures or losses incurred within the employee’s scope of employment and directly related to the services performed for the employer.” The law defines “necessary expenditures” as “all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.” Prior to the amendment, Illinois law did not require employers to reimburse employees for business expenses, although many employers did so voluntarily for at least some expenses.

The IDOL has not yet issued any guidance regarding employers’ reimbursement obligations, and no Illinois court has confronted the issue of reimbursement of telework-related expenses. The “inure to the primary benefit of the employer” language in the law could reasonably be interpreted to allow an employer to refuse to reimburse – outright or partially – expenditures for cell phones, data plans or home Internet service that an employee already has for personal use, such that the employee is not incurring any reimbursable expenses by teleworking. For example, many employees have unlimited talk and data plans on their personal cell phones, and they are not incurring any additional costs as a result of using their home Internet service for work purposes.

Some Illinois employers have questioned whether they should look to California for guidance because California has long had a similar reimbursement law, which has been interpreted to require employers to reimburse employees for telework-related expenses. However, it is important to note that the California and Illinois laws are not identical. The differences between the two laws could result in a different interpretation of Illinois employers’ reimbursement obligations, by either the IDOL or an Illinois court. Most notably, California law does not require that an expenditure “inure to the primary benefit of the employer” for it to reimbursable. Instead, California law more broadly requires employers to reimburse employees “for all necessary expenditures incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” 

Employers need to assess this expense reimbursement issue closely in light of both applicable law and the employer’s own existing practices and policies.  There is not a “one size fits all” answer with respect to all potentially-claimed expenses.  Unique corporate business operations, employee engagement methods, required expenditures, and other practices and facts must be taken into account when considering the expense-reimbursement planning for any given company.  Each employer should consider its practices and ensure that it has a thoughtful plan in place.  Questions on the specifics of that plan should be addressed to counsel, who can walk through the particularized circumstances to provide pointed advice.

If you have any questions regarding remote work expense reimbursement or other Labor and Employment issues, please do not hesitate to contact David Weldon or your Neal Gerber Eisenberg attorney.

The content above is based on information current at the time of its publication and may not reflect the most recent developments or guidance. Neal Gerber Eisenberg LLP provides this content for general informational purposes only. It does not constitute legal advice, and does not create an attorney-client relationship. You should seek advice from professional advisers with respect to your particular circumstances.