The digital age and the rise of a remote workforce have presented many unique challenges and considerations for employers. As technology advances and security protections change to accommodate these developments, employers may be faced with questions previously unanswered: what reimbursement is required for personal device usage and remote work arrangements?
Expense Reimbursement Background
Federal law does not address reimbursement for expenses other than reimbursement for work-related expenses that drop an employee’s earnings below minimum wage. Therefore, it is necessary to look at states on an individual basis. Many states have statutes requiring expense reimbursement. Illinois’ expense reimbursement statute, which is found in the Illinois Wage Payment and Collection Act, requires reimbursement for “necessary expenditures…incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer. “Necessary expenditures” are those “required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.” California also has a robust expense reimbursement statute. Several other states maintain similar reimbursement policies to varying degrees, including Iowa, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, and South Dakota, among others. These wage laws require employers to pay for expenses their employees incur in connection with their services performed, which can include the use of personal technology for work purposes. As described below, the scope of “work purposes,” is broad and ever-changing.
Multi-Factor Authentication
Some expense reimbursement requirements may be obvious, such as cell phone use by employees who are not given company phones, but whose job duties require the use of cell phones, such as outside salespersons or drivers. This is true even when the employee’s personal cell phone plan provides unlimited minutes. One area that can be easily overlooked, however, is multi-factor authentication, particularly for employees who are not remote and who do not otherwise need to use their personal cell phones for work. Increasingly, employers are requiring employees use their personal devices for multi-factor authentication access, whether through text message, email, a phone call, or an authenticator app. Employers may not be aware of expense reimbursement statutes in general, or they may not even think of the need to reimburse solely for multi-factor authentication, or they may believe that the use is de minimis and does not require reimbursement. Unfortunately, the states with expense reimbursement statutes (including Illinois) have not taken any specific position on what a “de minimis” expense is, such as the need to receive one text per workday. Some platforms provide authentication methods that do not require personal cellphone use (i.e., “back up codes”). The safest practice for employers would be to seek to use such alternative methods. If those methods are not available, however, then a best practice would be to reimburse employees in the form of a monthly stipend. Unfortunately, none of the state statutes provide a mathematical formula or definition that would help employers calculate how much to reimburse.
Other Expenses Possibly Requiring Reimbursement
Other potential expense reimbursement pitfalls in states requiring expense reimbursement may include use of time clock software on a phone for clocking in and out (especially for remote employees). Some employers track employees (for instance delivery drivers) to make sure that they are using their time clock software in locations where they are supposed to be ready to work, rather than clocking in from home and then driving to another location to work. Employers should also be mindful of scenarios in which they require exempt employees to remain accessible outside usual business hours by requiring them to access email and/or instant messaging platforms on their cellphones or other personal devices.
In many states with reimbursement statutes, employees who work in remote-only positions must also be reimbursed for expenses such as home internet and equipment that the company does not otherwise provide. This could include:
- Computers (including necessary software such as anti-virus or security)
- Printers (including printer ink or toner)
- Paper
- Remote work meeting equipment (e.g. headphones, webcam, microphone)
- Equipment needed as an ADA accommodation (e.g. ergonomic items, noise-cancelling headphones, a special mouse or keyboard, an ergonomic chair, etc.)
Because none of the states’ expense reimbursement statutes are specific, employers are left to guess or estimate appropriate amounts, such as a percentage of employees’ home internet or cell phone expenses or a flat rate across the board for each type of expense incurred.
Voluntary Remote Work
What about employees who voluntarily choose to work remotely but who have full access to an employer-provided office with all the equipment they need in their geographical area? Do employers need to reimburse those individuals’ remote work expenses? While this likely varies from state to state, employers have a strong argument that when employees voluntarily work remotely and otherwise have a work location in which all of their equipment would be provided at no additional cost, they are not incurring those remote work expenses for the benefit of the employer. For instance, the Illinois Administrative Code, 300.540(a) provides some guidance for Illinois employers in that it states that some relevant factors to determine if an expense requires reimbursement include whether the expense is required or necessary to perform the employee’s job duties and whether the expense is required of the job, among several other factors. Thus, an Illinois employer can argue that the remote work expenses for employees who otherwise have an office from where they can work are not required or necessary for those employees to perform their jobs.