Expense Reimbursements to Teleworking Employees

The widespread use of teleworking and working from home appears to be here to stay.  Since the onset of the COVID-19 pandemic, many employees have been unexpectedly working from home, prompting them to purchase office equipment and supplies that they otherwise would not have purchased. Under the federal wage law — the Fair Labor Standards Act (“FLSA”) — employees cannot be required to directly pay or reimburse their employer for business related expenses (such as personal cell phone and computer usage, internet access, ink cartridges and paper) if doing so would cause the employee’s wage rate to fall below applicable minimum wage and overtime requirements. For example, if an employee who works remotely is required to purchase paper to print and mail documents on behalf of his employer, it is the employer’s responsibility to ensure that the purchase of said paper does not cause the employee’s wages to fall below the minimum wage.

Adding complexity to this, the states (as well as some counties and cities) have their own wage and hour laws. Maryland and Virginia are in line with the FLSA. In D.C., an employer MUST pay the cost of purchasing and maintaining any tools an employee is required to use in the performance of the business of the employer.

An employer is not, however, required to reimburse an employee for all expenses. The expenses must be reasonable and directly connected to the business of the employer. For instance, an employer would not be required to reimburse an employee for the employee’s full cell phone bill if the employee uses the cell phone for both business and personal matters.

We recommend employers develop and/or update their expense reimbursement policies to ensure compliance with federal and D.C. law (and local law, if applicable). Additionally, employers should ensure that employees are aware of the company’s reimbursement policies, communicate with employees to determine whether there are any claimed reimbursable expenses, and to follow up with monthly reminders.

Meredith S. Campbell Chair, Employment and Labor Group
Shulman Rogers mcampbell@shulmanrogers.com | T 301.255.0550 | F 301.230.2891