Beginning January 1, 2019, employers in Illinois will have new requirements for reimbursing employee expenses. An amendment to the Illinois Wage Payment and Collection Act (IWPCA) is the first Illinois law regulating employer reimbursement for employees’ business-related expenditures.
Previously, the IWPCA did not address employee reimbursement, so employers were free to implement their own rules and procedures for reimbursing employees for business expenses. Under the IWPCA amendment, employers must reimburse employees for “all reasonable expenditures or losses required of the employee in the discharge of employment duties” for the primary benefit of the employer and authorized or required by the employer. An employer is not required to reimburse an employee for losses caused by the employee’s negligence, losses due to normal wear, or losses due to theft (unless the theft was the result of the employer’s negligence).
To initiate the reimbursement process, an employee must submit the expenditure, with supporting documentation, to the employer within 30 days of incurring the expense. If the employee lost a receipt or never received one, the employer must accept the employee’s signed statement as documentation for the expense.
The new law permits employers to place certain limitations on reimbursement by implementing a written expense reimbursement policy. If an employee fails to comply with the written policy, the employer will not be required to reimburse the employee. Additionally, if such a policy establishes specifications or guidelines for expenditures, the employer will not be required to pay any portion of the expenditure that exceeds the specifications. However, the written policy may not provide for no reimbursement or “de minimis” reimbursement and may not shorten the 30-day period for submitting expenditures.
To avoid any penalties associated with this IWPCA amendment, which include potential liquidated damages and attorneys’ fees, employers should review the law, 820 ILCS 115/9.5, to ensure compliance. Employers are also advised to contact their legal counsel with any questions regarding the new law or to create a written expense reimbursement policy in compliance with the IWPCA.
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This post was written by Zachary J. Weber of Dinsmore & Shohl LLP.
