Reimbursing Employee Expenditures

by Michael R. Lied, Howard & Howard Attorneys PLLC,

Effective January 1, 2019, the Illinois Wage Payment and Collection Act requires employers to reimburse employees for certain business-related expenses. It remains to be seen how the law is interpreted—but Illinois employers may want to review or create reimbursement policies to ensure compliance.

More specifically, an employer must reimburse an employee for all necessary expenditures or losses they incur within their scope of employment and directly related to services performed for the employer. “Necessary expenditures” means 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. However, 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.

An employee must submit any necessary expenditure with appropriate supporting documentation within 30 calendar days after incurring the expense. An employer may provide additional time for submitting requests for reimbursement in a written expense reimbursement policy. Where supporting documentation is non-existent, missing or lost, the employee must submit a signed statement regarding any such receipts.

An employee is not entitled to reimbursement if the employer has an established written expense reimbursement policy and the employee fails to comply with the policy. Where the employer has a written expense reimbursement policy, the employer is not liable unless the employer authorized or required the employee to incur the necessary expenditure or if the employer failed to comply with its own policy. If the written policy establishes specifications or guidelines for necessary expenditures, the employer is not liable for the portion of the expenditure amount that exceeds the specifications or guidelines of the policy so long as the employer does not institute a policy that provides for no reimbursement or de minimis reimbursement. iBi