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New Illinois Law Requires Employers to Reimburse Employee Expenses

By Scott Cruz / Dec 27, 2018

On August 26, 2018, Illinois amended the Illinois Wage Payment and Collection Act (IWPCA), to include the requirement that employers must reimburse their employees for all expenses within the scope of “necessary expenditures incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.” The amendment defines “necessary expenditures” as all reasonable expenditures required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.  Effective January 1, 2019, the new law (820 ILCS 115/9.5) requires the following:

  • the employer must have “authorized or required” the employee to incur the expense;
  • the expense request, along with appropriate documentation, must be submitted within 30 calendar days—unless a longer period is provided for under the employer’s expense reimbursement policy; and
  • the employee must provide a signed, written statement in lieu of a receipt when supporting documentation has been lost or does not exist.

An employer is not responsible for losses due to an employee’s own negligence, losses due to normal wear, or losses due to theft unless the theft was a result of the employer’s negligence.

Under the amendment, an employer is not liable for not reimbursing an employee so long as the an employer has “an established written expense reimbursement policy” and the employee fails to comply with that preexisting written expense reimbursement policy. Additionally, an employer that maintains a written expense reimbursement policy that contains specifications or guidelines for necessary expenditures is not liable for expenses that exceed those expenditure amounts —“so long as the employer does not institute a policy that provides for no reimbursement or de minimis reimbursement.”

The amendment could impact what employers are required to reimburse to an employee. For example, the new law arguably may require employers to reimburse an employee’s use of his/her personal cell phone for business use.  However, if employers choose to do so, the amendment allows employers to establish a written policy, specifying the requirement and amount for such expense(s).

Illinois employers should review their expense reimbursement policies to make sure they are in compliance with the new law prior to January 1, 2019.  If you have any questions regarding Illinois’ new employee reimbursement policy, please contact Scott Cruz at scruz@clarkhill.com or 312.985.5910 or another member of Clark Hill’s Labor and Employment Law practice group.