Addressing the challenges your employees encounter while working remotely is crucial for maintaining a successful work-at-home environment. Your company’s home office reimbursement policy can determine whether work-from-home initiatives thrive or lead to dysfunction, dissatisfaction, and even potential legal issues.
During the abrupt transition to remote work, employees were left to manage without the usual office resources. Employees were left to spend their own money on setting up makeshift offices at home — an average of $194 per employee — according to a survey of 850 remote workers.
Besides fundamental items such as desks, chairs, and printers, many employees needed to upgrade their home internet connections to accommodate video conferencing needs. A study revealed that 43% of remote employees had to resort to using their smartphones as Wi-Fi hotspots because they have poor home internet connectivity in the area they live. Unfortunately, many companies don’t offer reimbursement of any sort for using personal smartphones as office phones or for a home Wi-Fi plan.
Employer Home Office Reimbursement Obligations
What responsibilities do employers have regarding home reimbursing employees for expenses linked to remote work, including monthly internet and phone charges, personal computer usage, and office supplies? Should a portion of employees’ utility bills be reimbursed as well?
While concerns about non-business use of these resources are valid, implementing a clear home office reimbursement policy that covers valid expenses and proportionate reimbursement for expenses that have both personal and business use can help address these concerns.
States with Employee Reimbursement Laws
Currently, 11 states plus the District of Columbia and Seattle, Washington already require employers to provide some level of reimbursement for work-related expenses. Even fewer states require reimbursement for remote work expenses. We can likely expect to see more states consider remote work and employee reimbursement laws in the future.
The chart below provides a quick reference of state and local laws related to employee reimbursement.
| State | Reimbursement Rules | Reference |
| California | Employees must be reimbursed for all necessary expenses, including those incurred at the employer’s direction. Necessary expenses include internet access and phone bills for remote workers.
According to state law, necessary expenditures include all reasonable costs. |
Labor Code Section 2802 |
| District of Columbia | Employees must be reimbursed for purchasing and maintaining all necessary tools related to their scope of employment. | D.C. Mun. Regs. tit. 7 § 910 |
| Illinois | Employees must be reimbursed for all necessary expenses or losses, including reimbursement for internet access and phone bills when used for remote work purposes.
Employers can specify what they’ll pay for each type of expense. Requests for reimbursement must be submitted by employees within 30 days of incurring the eligible expense. |
Wage Payment and Collection Act |
| Iowa | Only expenses authorized by the employer must be reimbursed. Reimbursements must be paid out within 30 days.
If an employer doesn’t pay the reimbursement request, they must provide a written notice explaining why within 30 calendar days. |
Iowa Code 91A.3(6) |
| Massachusetts | Enforces the same protections as those established by federal law: expenses may not reduce an employee’s wage below the current state minimum wage.
Employers should reimburse expenses that are “unavoidable and necessary” for employees to fulfill their job responsibilities, according to guidance by the Massachusetts Attorney General’s office. |
Massachusetts General Law Chapter 149, § 148A |
| Minnesota | Upon termination of employment, employees must be reimbursed for uniforms, purchased or rented equipment, or consumable supplies. | Minnesota Statute 177.24(4)-(5) |
| Montana | Employees must be reimbursed for all necessary expenses or losses, including those incurred by the employer’s direction or during the discharge of their normal job duties. | Montana Code 39-2-701 |
| New Hampshire | Employees must be reimbursed for expenses connected with their employment and at the employer’s request within 30 days of when proof of payment is providd to the employer by the employee. | New Hampshire Revised Statutes 275:57 |
| New York | Employees must be reimbursed for expenses if there’s an agreement, such as an employment contract, that outlines expense reimbursement. | New York Labor Law 198-C |
| North Dakota | Employees must be reimbursed for business expenses related to necessary duties or at the employer’s direction. | N.D. Cent. Code. 34-02-01 |
| Pennsylvania | Employees can claim any unreimbursed expenses as deductions on their tax returns, according to the Pennsylvania Personal Income Tax law. | 43 Pa. Stat. Ann 260.3 |
| South Dakota | Employees must be reimbursed for all necessary expenses, including those incurred by the employer’s direction. | SDCL § 60-2-1 |
| Washington | Employee reimbursements are at the employer’s discretion Unreimbursed employee expenses may be tax-deductible.
Seattle: Employers must pay employees all compensation owed to them, including any business expenses. |
Washington State Department of Labor & Industries
|
Effective Strategies for Managing Employee Reimbursement
Here are a few things you can do to create a workable situation for you and your remote workers when it comes to reimbursement:
- Offer employees a predetermined allowance to offset the cost of establishing a comfortable and productive home office environment. Companies like Google and Basecamp provide their remote workers $1,000 for their home office. Other companies offer stipends for things like standing desks, chairs, lighting.
- Create a “perk stipend” to support both remote and on-site equally. For instance, offering a $200/month stipend for “coffee shop” expenses, a $200/year stipend for technology and office supplies, and an internet reimbursement stipend can cater to diverse needs.
Benefits of Home Office Reimbursment
Reimbursing work-from-home expenses can yield advantages for both employers and employees. For employers, remote work translates to reduced costs for companies in terms of rent, utilities, cleaning services, and meals. Research by the Society for Human Resource Management found that 62% of companies offer employees a subsidy or reimbursement for at-home office or work equipment. Home office stipends and internet reimbursement have become increasingly desirable employee benefits.
Remote workers have invested resources to make their homes into functional work environments. Working for a company that has a home office reimbursement policy could entail a one-time budget to cover initial expenses, along with ongoing stipends for recurring costs or manager-approved purchases. Granting employees autonomy in managing their workspace can foster a stronger employer-employee relationship.
