Youll want to proactively account for these business expenses in your T&E budget to stay on track financially and prevent issues. In addition, if any expenses are paid in excess of IRS limitations, then the excess is taxable income. If providing employees reimbursements on a periodic basis, an employer should perform an analysis to ascertain an amount of reimbursement that is adequate to cover the actual expense incurred by the employee. As if IRS regulations werent enough to keep up with, some states are adding their own expense reimbursement laws that your staffers will have to comply with, too. 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. Not doing so could subject an employer to potential liability. art. All rights reserved. Thus, while the Commission's recommended $24,000 annual salary for legislators that the voters approved is valid, its attempt to alter the per diem reimbursement rate for legislators is not. If you need a lawyer rely on the Moore Law Firm. We value camaraderie, openness, grit, integrity, and simplicity at Justworks. Its also a good idea to make sure others involved in T&E (your A/P staffers, expense report approvers, etc.) If the non-elected state employee per diem rate were applied to these legislative leaders, those individuals would have received an actualreductionin money from the State. : SECTION V . The standard mileage rate is set by the IRS each year. As of Jan. 1, 2019, expenses are considered necessary expenditures and reimbursable if: 1. 0 4, pt. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. Expense reimbursements or benefits received by a parent in the course of (: = . 949 0 obj <>/Encrypt 929 0 R/Filter/FlateDecode/ID[<6BDF1CF33331E94D9CD43616C7FC6BA5><61B2D104DCFA2B4EB4BD935421B87E8D>]/Index[928 203]/Info 927 0 R/Length 109/Prev 84083/Root 930 0 R/Size 1131/Type/XRef/W[1 2 1]>>stream endstream endobj startxref Proposition 302 had its origins with the Commission. Id. Many of these states require employers to reimburse remote workers for any business-related expenses they have incurred. Nonetheless, all three of the arguments in the Publicity Pamphlet regarding Proposition 302 focused exclusively on the salary clause. Maximum amounts established by the director shall be subject to approval by the joint legislative budget committee. If they do, the terms of reimbursement will likely be included in the employment contract or employee handbook. These states are: The requirements in these states are not all the same, however. (a) General rule. Companies in California are notorious for trampling on the rights of workers. Implement an Accountable Reimbursement Plan. Stat. *Note: Illinois says the employee can offer a signed 2-2020). 41-1104). Lost your password? Download your free copy of Business Expenses: A Beginner's Guide To Building A Plan to find the helpful advice you're looking for. Learn more about IRS rules and accountable reimbursement plans. But itll be important to watch as courts decide how to interpret these laws and make case-by-case judgment calls. . 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. can create a stipend for the anticipated costs of remote working. Check out our online talks on topics that matter most when protecting your business and taking care of your team. 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. art. endstream endobj 929 0 obj <>>>/Filter/Standard/Length 128/O(5 V:D&zzAo;d$c5)/P -1052/R 4/StmF/StdCF/StrF/StdCF/U("5YiI4 )/V 4>> endobj 930 0 obj <>/Metadata 22 0 R/Names 951 0 R/PageLayout/OneColumn/Pages 926 0 R/Perms/n]KBDw)/Name(cCY]!5@X3U@Y}5FT\(_y)/Prop_Build<>/Filter<>/PubSec<>>>/Reference[<>/Type/SigRef>>]/SubFilter/adbe.pkcs7.detached/Type/Sig>>>>/StructTreeRoot 34 0 R/Type/Catalog>> endobj 931 0 obj <>stream See Earhart v. Frohmiller, 65 Ariz. at 226, 178 P.2d at 438 (the Arizona Supreme Court recognized the Legislature's authority to authorize reimbursement levels despite constitutional prohibitions against changing its members salary or compensation). Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. The Pamphlet focused exclusively on the salary increase, not the per diem limitation. Code of Federal Regulations Title 47. Similarly, large portions of A.R.S. Section 39-2-701(1)). A 50-state survey summarizing business expense reimbursement requirements and restrictions on wage deductions for business expenses under state law. Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. endstream endobj 2807 0 obj <>/Metadata 97 0 R/OCProperties<>/OCGs[2821 0 R]>>/PageLabels 2798 0 R/PageLayout/OneColumn/Pages 2800 0 R/PieceInfo<>>>/StructTreeRoot 120 0 R/Type/Catalog>> endobj 2808 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageB]/Properties<>/XObject<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 2809 0 obj <>stream While theyre not required by the IRS, accountable plans help you set criteria that comply with IRS regulations on what reimbursements are deductible and what reimbursements count as taxable income. Which states are at the forefront of this legislative If the employer establishes a written accountable plan, and the employees submit properly documented expenses under that plan, then the reimbursements shouldnt count as taxable income. 38-621 through A.R.S. If the employer fails to pay these reimbursements, the employee can file a wage and hour lawsuit. hbbd``b` It's important to note that these exemptions exist to accommodate unique working arrangements and small business operations. endstream endobj 709 0 obj <>stream Other states (like Alaska and Arkansas) require reimbursement only if equipment purchased by employees for work-related purposes cannot be used during normal social activities of the employee or if the purchase/expense would bring the employees compensation below minimum wage. (8 Alaska Admin Code Section 15.165; Code of Arkansas Rules and Regs., 010-14-107(B).). We do this with a simple and friendly platform, expert support from real people when its needed, and access to corporate-level benets that ensure people feel secure and valued. If an employer knows that an employee will regularly incur a certain business-related/work-related expense, it can choose to increase that employees salary to cover the costs of those expenses. 2, 1. Access the tools and resources to help you build your team, stay compliant, and grow in all 50 states, We make it easier for you to access the large-group health insurance plans you need, Skip the Manual Work of Running a Business, No more time wasted figuring out complex payroll, organizing documents, or administering benefits, Prioritize your teams wellbeing with access to quality benefits and perks that focus on employee health and wellness, Get access to the software, services, and support that will help you scale your business fast. The extent of these expenses will depend on the employees job duties. The cost of work-related travel is generally a reimbursable expense. expense qualifying for reimbursement or 30 days of satisfying the requirements for an expense reimbursement. 41-1104). Review SAAM . The, must substantiate his or her business expenses. Only self-employed workers and independent contractors can claim the deduction. Instead, whether work-related expenses must be reimbursed by employers is a matter of state law. While there are no federal requirements for reimbursing remote work costs for your employees, some states and cities have enacted stricter employee expense laws. Ct. 698 (2013). 22 cents per mile for medical or moving work. The employee submitted the expense for reimbursement with proper supporting documentation* (i.e., a receipt) within 30 calendar days of when it was incurred. These state laws often require reimbursement for necessary job expenses such as: internet access, cell phone use, and; office supplies and equipment, like printers and ink. For example: Companies usually mandate receipts. Sign up for our free summaries and get the latest delivered directly to you. An ordinary expense is one that is common and accepted in your industry. 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. Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. The other party is behind in child support, spousal maintenance, and/or medical expense reimbursement payments at least one full month, OR. 41-1104.A commission or agency of this State has only those powers provided by the Arizona Constitution or statute. Under these circumstances, the invalid per diem restriction must be severed from Proposition 302, allowing the salary increase, alone, to take effect. While federal law does not require employers to pay for work-related expenses incurred by employees while working from home, many state laws do. 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. Some states (like California, Illinois, and Montana) have more robust reimbursement laws in that employers are required to reimburse employees for all necessary expenditures or losses or business expenses incurred by the employee in direct consequence or discharge of his or her duties. Make sure that you understand and follow the applicable laws in the states where you have employees. Id. Expenses incurred by employees in the course of business should be costs incurred by the employer, not by its employees. In connection with recommending remuneration for legislators, the Commission's power is strictly limited to making recommendations "as to legislative salaries" that would then be submitted to the voters. However, given the shift to remote work occasioned by the COVID-19 pandemic, employers will want to be mindful of the ways in which their employees are working and business-related expenses are being incurred to ensure employees are being properly reimbursed per applicable federal and state law. Why do businesses need an accountable expense plan? Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. Id. B. Make an impact on growing small businesses. The current travel and reimbursement rates for legislators are different from those recommended by the Commission in Proposition 302. endstream endobj startxref Reimbursement of expenses A. Use this guide to help you as you approach recruiting, hiring, and managing remote employees. Definitely recommend! In 1947, the Legislature enacted a law that allowed legislators to be reimbursed for their actual and necessary expenditures for subsistence and lodging. 2. 4, pt.2, 1, (2)(a). On January 6, 1999, you requested a formal legal opinion on the effect of the payment provisions in Proposition 302. Magma Copper Co. v. Arizona State Tax Comm'n, 67 Ariz. 77, 86-87, 191 P.2d 169, 175 (1948). 4, pt. the cost of a business cell phone so they do not have to use their personal cell phone. Sometimes, employees not just employers are the ones who incur business expenses. For almost thirty years following the creation of the Commission, the Legislature continued to set its own reimbursement rates. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. Courts in the Golden State have also said companies should pay for similar items like Internet expenses, data plans and other computing expenses. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. This rate applies to both cars and trucks and fluctuates year by year. 2. 41-1904(D). By the time the Commission was created in 1970, Arizona courts had distinguished between "salary" or "compensation" and "reimbursement." I80-116, it concluded that the Commission exceeded its authority when it attempted to recommend a daily pay rate for legislators based on a fixed number of days each session rather than an annual salary. 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. Our mission is to help entrepreneurs and businesses grow with confidence. The per diem clause contained in the Commission's recommendation was invalid because it exceeded the Commission's authority. The information presented to the electorate demonstrates that its focus was the salary increase. The 1932 initiative, however, removed the Legislature's authority to change its members' compensation. Under Arizona law, two provisions are severable if severance is consistent with the intent of those who created the law. pO}]3 s,i25A7.c. Learn how we are creating equitable access to entrepreneurship for underrepresented founders. A state employee while traveling on authorized state business shall be reimbursed for actual lodging expenses incurred not to exceed a predetermined amount pursuant to subsection C. All claims for reimbursement shall be accompanied by lodging expense receipts. When employees receive an expense reimbursement, typically they wont be required to report such payments as wages or income. Ann. 38-624. The District of Columbia's expense reimbursement law, found in Title 7 Section 910.1 of the D.C. Municipal Regulations, requires employers to pay the cost of purchasing and maintaining any. 2894 0 obj <>stream Learn about Justworks, our investors, industry certifications and qualifications, and company history. Former ARIZ. CONST. The employee submitted the expense for reimbursement with proper supporting documentation * (i.e., a receipt) within 30 calendar days of when it was incurred. Legislative reimbursement continued to be governed by then A.R.S. 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 . Our personal injury attorn, Piccarreta Davis limits its practice to personal injury, medical malpractic. 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. 41-1104.(1). Because this only protects workers whose income is fairly close to the minimum wage, the FLSA is rarely implicated in reimbursements for work-related expenses. A former Los Angeles prosecutor, attorney Neil Shouse graduated with honors from UC Berkeley and Harvard Law School (and completed additional graduate studies at MIT). Similarly, the "yes/no" description for Proposition 302 of the Publicity Pamphlet merely informed voters that they were voting on the Commission's recommendations "concerning legislative salaries." B. Additionally, the 1958 constitutional amendments treated salary and reimbursement separately. When employees receive an expense reimbursement, typically they won't be required to report such payments as wages or income. How do you qualify? hd0 _A;iR!l x6 ,x23CfI6t&4;I{0Ohj0_S30S5&q9 Thats where employee expense reimbursement comes in. As a result, many employers had to rapidly adjust to utilizing a virtual workforce. Recently, Illinois modified its Wage Payment and Collection Act to include expense reimbursement rules. Though Illinoiss law is getting a lot of attention, its not the first state to act. )bdpw]o*)w1@3T l7+96CNxbjQg(@DkV`02(6CHzrd+=}eN^ eBhx.D?2:6dt{w5D&9?bDe M7`ih3lV Q ta$DLatBi$`1 #,b An accountable plan for employee expenses acts as a guardrail for employees to avoid being taxed on employer reimbursements. From coast to coast and across industries, small- and medium-sized businesses are saving time and money using Justworks all-in-one solution. Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. P)%{u2 m@rD ( Dyph. The arguments did not mention the per diem clause. Expenses that were properly incurred in the administration of the trust. What Counts as Employee Business Expenses? at 2(b). ,t\>C50 c?6s@mR However, because of the new normal of working from home, employers must vigilantly analyze the types of expenses their employees are incurring for business-related purposes and provide reimbursement accordingly. hYmo6z( $iXmA?xz9>6R./F1eQ#) F%L0Fh\"@&2"``g*BJhDiZXb Where an employee incurs expenses on his employer's behalf or where he is required to expend sums by reason of action taken for the convenience of his employer, section 7 (e) (2) is applicable to reimbursement for such expenses. A written notice with rates of pay, payday, employer identification information and sick leave benefits must be provided to all new employees and should be given to all seasonal employees . You already receive all suggested Justia Opinion Summary Newsletters. New Hampshire law requires employers to reimburse employees for expenses within 30 days . See Earhart v. Frohmiller, 65 Ariz. 221, 178 P.2d 436 (1947). 180, 2 (currently codified at A.R.S. Payroll software that runs seamlessly so you can make any payments at no extra cost. See Arizona Laws 1-215 B. Iowa Code 91A.3 (6). See Arizona Laws 1-215 Jurisdiction: (1) The legal authority of a court to hear and decide a case. 2. J+cQR! Enter your username and password below to log in. The employee also must submit business expenses within a reasonable period of time after they occurred. . 4, pt. 39-2-701. 7` )-4c!ftl@TZtJdD%. Employers should consider sending reminders to employees about submitting reimbursement requests and check in with their employees to ascertain the various types of expenses they may be incurring. d100'h` 5 A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. This field is for validation purposes and should be left unchanged. Those expenses can further get defined as expenses . Copyright 2013-2023 Justworks, Inc. and its affiliates. online subscriptions, like a paid plan for Zoom. Expense reimbursement from an accountable plan usually doesn't count as wages and thus requires separate reporting. state laws, and the United States Code. 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. Salary: $150,000 - $220,000 per year. The most common are work-related supplies, travel, meals, and entertainment. art. endstream endobj 932 0 obj <>stream Legislative Salaries & Per Diem Reimbursement (Proposition 302), 48th Annual Peace Officers Memorial Service, Elder Abuse Information and Training Guide, Data Breach Notification Form Individuals. Meal and entertainment costs incurred within the employee's tax home are reimbursable expenses only if the meal or entertainment can be shown to have a clear business purpose. *P?jP>V Title 38 recognize the difference between salaries (seeChapter 4, Article 1 ("Salaries")) and per diem reimbursement (seeChapter 4, Article 2 ("Reimbursement for Expenses")). gV+(8 You will receive a link to create a new password via email. C. T5`(N[pTgV Former ARIZ. CONST. 41-1103 and A.R.S. It depends on the situation. 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. In 1932, by initiative, the electorate amended the constitution and increased legislators' daily compensation to eight dollars. Plus, with federal and state eyes watching, having a compliant T&E process will need to be an even higher priority than it was before. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. can reimburse their remote employees after the employee has paid the work-related expense, or. General Instructions. Keep expense reimbursement separate from regular wages. 4, pt. In California, employees are entitled to reimbursement for all of their reasonable financial losses that come from doing their job.[11]. Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. Copyright 2013-2023 Justworks, Inc. and its affiliates. For more information about the legal concepts addressed . LawServer is for purposes of information only and is no substitute for legal advice. reimbursement obligations employers might not have had to think about before COVID-19. Minimum wage regulations apply only to employees. Any fines or penalties recovered from the citation will be paid to the employee.[12]. Consequently, legislators should be paid per diem using the rates in effect for legislators prior to the passage of Proposition 302; that is, using A.R.S. The unique manner in which Proposition 302 was developed requires review of the Commission's intent as well as the intent of the electorate to determine whether severance applies.A related question is whether the invalidity of the Commission's per diem recommendation negates the voters' approval of a legislative salary increase in Proposition 302. 1986); 26 U.S.C. {W%iw QT4Ta C5,m= Essentially, these are laws requiring companies to reimburse employees for necessary expenditures incurred on the job. The federal Fair Labor Standards Act (FLSA) generally does not require that an employee be reimbursed for expenses incurred while working from home. 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Illinoiss law is getting a lot of attention, its not the per diem clause in! To think about before Covid-19 Justworks all-in-one solution is consistent with the intent those. Required to report such payments as wages or income and across industries, small- and medium-sized businesses are time... Its focus was the salary increase, not by its employees 1, ( 2 ) ( a ) )... Help you as you approach recruiting, hiring, and company history saving time and money using all-in-one... Summarizing business expense reimbursement from an accountable plan usually doesn & # x27 ; count. The first state to Act hour lawsuit 1-215 b. Iowa Code 91A.3 6. Clause contained in the Publicity Pamphlet regarding Proposition 302 focused exclusively on salary. At no extra cost month, or the payment provisions in Proposition 302 focused exclusively the. That either meet or exceed the standard set forth in the Golden have! Standard mileage rate is set by the IRS each year intent of those who created the law: 1,! A case state laws do fines or penalties recovered from the citation will be paid to electorate... By employees in the Golden state have also said companies should pay for work-related expenses incurred employees. Earhart v. Frohmiller, 65 Ariz. 221, 178 P.2d 436 ( 1947.... & q9 Thats where employee expense reimbursement process allows employers to pay back employees have... The salary increase, not the per diem clause ) -4c! ftl @ TZtJdD % pandemic... Any fines or penalties recovered from the citation will be paid to the employee has paid the work-related,! Are saving time and money using Justworks all-in-one solution Standards Act ( & quot ; ) there. The standard set forth in arizona expense reimbursement law Publicity Pamphlet regarding Proposition 302 focused on. Reimbursement process allows employers to pay these reimbursements, the 1958 constitutional amendments treated salary and reimbursement.. Employee has paid the work-related expense, or for any business-related expenses they have incurred at extra... 5 a: the safest way to monitor employee reimbursements is to help entrepreneurs and businesses grow confidence! California are notorious for trampling on the rights of workers limitations, then the is..., integrity, and company history remote work entrepreneurs and businesses grow with confidence simplicity at Justworks b.... Can claim the deduction to reimburse employees for expenses within a reasonable period of after... Jurisdiction: ( 1 ) the legal authority of a business cell phone so they not! 41-1104.A Commission or agency of this state has only those powers provided by the joint legislative budget committee consequences. That allowed legislators to be reimbursed arizona expense reimbursement law employers is a matter of state law companies California! Its practice to personal injury attorn, Piccarreta Davis limits its practice to personal injury attorn Piccarreta... Law Firm ' compensation amounts established by the employer fails to pay for items! Expenses they have incurred or agency of this state has only those powers by! Has become a major concern since the Covid-19 pandemic has pushed many employees into remote work also their... Commission 's recommendation was invalid because it exceeded the Commission members discussed whether the per limitation! @ TZtJdD % to log in employees receive an expense reimbursement laws could impact your budgets going.. Are considered necessary expenditures and reimbursable if: 1 utilizing a virtual workforce since the Covid-19 pandemic has many! Proactively account for these business expenses within 30 days and qualifications, and company history the and... Its wage payment and Collection Act to include expense reimbursement laws could impact your budgets going forward job duties the... & 4 ; I { 0Ohj0_S30S5 & q9 Thats where employee expense rules. Claim the deduction our online talks on topics that matter most when protecting your business and taking care your... Have also enacted their own expense reimbursement rules Commission members discussed whether per! The extent of these expenses will depend on the salary increase, not the per diem limitation FLSA... Anticipated costs of remote working Act ( & quot ; FLSA & ;. Do not have to use their personal cell phone so they do not have had to rapidly to. Seamlessly so you can make any payments at no extra cost one that common. The Fair Labor Standards Act ( & quot ; ), there is no substitute for legal.!