Goldberg Kohn

Illinois Law To Mandate Timely Expense Reimbursements

Beginning January 1, 2019, Illinois employers will be subject to a new form of liability under the Illinois Wage Payment and Collection Act (IWPCA) for their employees' business expenses.  The IWPCA is Illinois' wage law that governs everything from payroll deductions to final payment of wages upon separation from employment.  Illinois employers must brace themselves for changes in the law that will affect existing workplace policies and practices for the reimbursement of business expenses.

On August 26, 2018, Governor Bruce Rauner signed Public Act 100-1094, amending the IWPCA and adding Illinois to the growing list of states that require employers to reimburse employees for certain work-related expenses.  Employers may recall that a number of other states (e.g., California, Iowa, Massachusetts, Montana, New Hampshire, and the District of Columbia, just to name a few) already have legal provisions covering business expenses.

The Illinois amendment specifically requires employers to reimburse employees for all "necessary expenditures or losses incurred within the scope of employment and directly related to services performed for the employer."  The law specifically defines "necessary expenditures" 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."  Employees must be given at least 30 days to provide supporting documentation for eligible expenses, or where no supporting documentation exists, a signed statement.  Employers are not, however, required under the law to reimburse employees for losses due to an employee's own negligence, normal wear, or theft.

These additions to Illinois law mean that employers should review their existing expense reimbursement policies before the amendment takes effect in January 2019.  The amendment highlights the importance of maintaining a comprehensive and thoughtful expense reimbursement policy.  Under the law, Illinois employers will not face liability if they have an established written expense reimbursement policy and the employee fails to comply with the policy.  But an employer who authorizes or requires an employee to incur an expense will be liable to the employee for any such expense.  The new law also imposes liability on employers who fail to comply with their own written expense reimbursement policies.  Finally, if the written policy establishes specifications or guidelines for necessary expenses, the employer is not liable for any portion that exceeds the specifications or guidelines in the policy.  The policy, however, may not provide for no reimbursement or only "de minimis" reimbursement.

These changes to the law will invariably affect many types of expenses that employees regularly incur at or way from the workplace.  The prevalence of so-called "bring-your-own-device" (BYOD) policies means that many employers should consider whether their existing expense reimbursement policies or practices adequately provide reimbursement to employees who use their personal cell phones for work-related purposes.  This change should also prompt employers to consider their existing expense reimbursement policies or practices vis-à-vis other types of expenses, such as mileage incurred on a personal vehicle, as well as other expenses that may be incurred by employees who telecommute or work from home.  The Illinois Department of Labor has yet to provide any regulatory guidance as to how it plans to enforce the changes to the IWPCA.

If you have questions regarding these changes or would like assistance with preparing or reviewing your existing reimbursement policies for compliance with the IWPCA, or any other state law, please contact any of us for additional information.

Michael SullivanKristen JonesJon Klinghoffer, David Morrison,  Meredith Kirshenbaum, or Michael Chropowicz.

December 20, 2018

Questions? Please contact:

Michael Sullivan

Kristen Jones

Jon Klinghoffer

David Morrison

Meredith Kirshenbaum

Michael Chropowicz

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