Business Expense Reimbursement Requirements by State and Municipality
Author: XpertHR Editorial Team
Federal law does not require employers to reimburse employees for expenses incidental to carrying on the employer's business. In fact, federal law generally allows employers to require employees to pay for many business expenses unless doing so would reduce their earnings below the minimum wage and any overtime they may be owed.
However, some state and local laws may require employers to bear the cost of business expenses. Sometimes, this requirement is explicit; other times, the law can be interpreted to require the reimbursement of business expenses.
The following chart summarizes state and local requirements regarding general indemnification for employees' business expenses.
Chart cells for which there are no requirements regarding business expense indemnification are marked N/A.
Related issues are covered elsewhere, including:
- The definition of wages, including whether reimbursement for expenses is considered a wage and/or a benefit (see Definition of Wages by State);
- Pay deductions (see Permitted and Prohibited Pay Deductions by State); and
- Employment laws such as the Americans with Disabilities Act (ADA), which may require employers to reimburse employees for certain expenses if they are a reasonable accommodation (see Disabilities (ADA): Federal).
When employees work remotely, an employer may wish to use a Telecommuting Policy to establish expectations around the reimbursement of certain business-related expenses such as phone calls, shipping costs, etc. that are reasonably incurred in accordance with job responsibilities.