Are Illinois Employers Required to Reimburse Expenses Incurred by Employees Who Voluntarily Work Remotely?
02.20.24
The Illinois Expense Reimbursement Act (the “Act”), its regulations, and other state law provides clarification as to whether expenses, such as home internet and cell phone, incurred by employees who voluntarily work remotely must be reimbursed by their employer.
The Act requires employers to reimburse employees “for all necessary expenditures or losses incurred within the employee’s scope of employment and directly related to services performed for the employer.” 820 ILCS 115/9.5(a). “Necessary expenditures” are defined 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.” Id. (emphasis added). The Act states that employers can create policies as to expense reimbursement, but they cannot institute a policy that provides for “no reimbursement or de minimis reimbursement.” 820 ILCS 115/9.5(b).
How does an employer determine if an expense is for the “primary benefit of the employer”? The Illinois Administrative Code lists the following relevant factors:
a. Whether the employee has any expectation of reimbursement;
b. Whether the expense is required or necessary to perform the employee’s job duties;
c. Whether the employer is receiving value that it would otherwise need to pay for;
d. How long the employer is receiving the benefit; and
e. Whether the expense is required for the job.
In Novak v. Boeing Co., 2011 WL 9160940, at *2-3 (C.D.Cal. July 20, 2011), the employee was part of Boeing’s “virtual worker” program, which was a program that allowed some employees to work from home. The employee alleged that Boeing failed to reimburse him for his personal phone line and internet to perform his duties at home. The court rejected the claim for a few reasons: (1) working from home was optional; and (2) Boeing made physical workspaces with computers, phones and other necessary equipment available at its offices so that employees did not have to work remotely.
The court found “as a matter of law” that additional internet and phone expenses incurred by virtual workers in Boeing’s virtual worker program were not “necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Rather, they were optional expenses accepted by employees who (1) applied to work from home, (2) received approval, and (3) chose to work from home and potentially incur additional phone and internet expenses that would have been paid for by Boeing if the employees were working at the office.
Although Novak is not binding on an Illinois court, it could be viewed as persuasive authority to defeat a claim for expense reimbursement for home office expenses of employees who voluntarily work remotely. With that said, the issue is very fact specific and depends on, among other things, the nature of the job, whether working from home is truly voluntary, the availability of onsite work, and the employer’s expense reimbursement policy.
As to the last point ΜΆ it is important for employers to have a clearly defined expense reimbursement policy listing the expenses that will be reimbursed, any procedures for submitting expense reports or receipts, and the time by which employees must submit expenses. Not only does this information relate to factor (a) listed above, but it also minimizes future questions and disputes relating to expense reimbursement. Additionally, the Act allows employers to deny reimbursement if the employer has a written expense reimbursement policy and the employee fails to comply with that policy. Without a written policy, however, the employer may be required to reimburse the employee where it might not have otherwise had to do so.
If you have any questions about this alert or require assistance in updating and implementing an employee expense reimbursement policy for your workforce, please contact Amy M. Gibson or the Aronberg Goldgehn attorney with whom you regularly work.
