ILLINOIS EMPLOYERS NOW REQUIRED TO REIMBURSE EMPLOYEE EXPENSES

What is the New Law regarding the Illinois Wage Payment and Collection Act (“IWPCA”)?

On Aug. 26, 2018, Governor Rauner signed into law an amendment (Public Act 100-1094) to the Illinois Wage Payment and Collection Act (“IWPCA”), which will  go into effect January 1, 2019, requiring employers to reimburse employees for costs that are incurred in direct relation to their work for the employer. The amendment requires employers to reimburse employees for “all necessary expenses that are incurred by the employee within the employee’s scope of employment and that are directly related to services performed for the employer.” The law defines “necessary expenditures” as those “reasonable expenditures or losses required of the employee in the discharge of his or her employment duties and which [primarily] benefit the employer.”

What is the Purpose of the New Law regarding the Illinois Wage Payment and Collection Act (“IWPCA”) ?

The IWPCA amendments were written with an eye towards compensating employees who use personal devices or equipment for work purposes and employers’ failure to reimburse employees for the work-related costs incurred through use of personal devices. Examples of potential reimbursement claims may include:

  • personal cell phone data plans when supervisors call those phones with work-related inquiries
  • home internet bills when employees are required to get online to handle work issues
  • remote equipment, like routers and other computing necessities

What Is Not Allowed to be Reimbursed?

However, the new law makes it clear that employers are not required to reimburse employee expenses or losses in the following circumstances:

  • the loss or expense is due to the employee’s own negligence;
  • the loss or expense is due to normal wear;
  • the loss or expense is due to theft (unless the theft results from the employer’s negligence); or
  • the employee fails to comply with the employer’s written reimbursement policy.

What are the Requirements for Reimbursement?

To be eligible for reimbursement, the following criteria must be met according to the new law:

  • The expenses or losses must have been incurred in the scope of the employee’s employment and must be directly related to the services the employee performs for his or her employer.
  • The employee must submit the expense or loss to the employer with supporting documentation within 30 days after incurring the expense or experiencing the loss. If the employee’s supporting documentation is missing or nonexistent, the employee must submit a signed statement explaining the missing documentation.
  • The employee must comply with the employer’s written expense reimbursement policy.

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 until 2019 to see how courts in Illinois interpret the new law, court decisions from California provide some useful guidance as California’s expense reimbursement law has very similar language to the Illinois. In California, employees have continued to successfully argue 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. Similarly, even if an employee would have purchased the exact same data plan or equipment with or without job requirements, courts have ruled that reimbursements were necessary.

An employer is not liable under the new IWPCA unless the employer authorized or required the employee to incur the necessary expenditure or the employer fails to comply with its own policy.

What are the Damages for Violating the New IWPCA?

The new law does not amend the remedies generally outlined in the IWPCA. Therefore, the potential damages an employer might be liable for can, include damages equal to 2 percent of the underpayment per month of non-payment, in addition to the reimbursement amount.

What Can Illinois Employers Do?

Illinois employers are not obligated to reimburse expenses if there is written policy and the employee failed to comply with that policy. As such, Illinois employers should be vigilant in implementing reimbursement policies to minimize any liability that may be created through failure to comply with the IWPCA’s new reimbursement provisions. If the employer’s written expense reimbursement policy establishes specifications or guidelines for necessary expenditures, the employer is not liable under the new amended law for the portion of the expenditure amount that exceeds the specifications or guidelines of the policy so long as the employer does not institute a policy that provides for no reimbursement or de minimis reimbursement. Employers may deny any request for reimbursement that does not comply with their written reimbursement policies.

Should you have any questions about the Illinois Wage Payment and Collection Act or any other laws that may affect your business, or would like to schedule a free initial consultation, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.

Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law, Collaborative Divorce & Mediation.

This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.

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