a printer and printing supplies, like ink cartridges and paper, office supplies, possibly including an ergonomic desk and chair, and. LawServer is for purposes of information only and is no substitute for legal advice. %PDF-1.6 % Learn more about IRS rules and accountable reimbursement plans. If the employer establishes a written accountable plan, and the employees submit properly documented expenses under that plan, then the reimbursements shouldnt count as taxable income. Are employee reimbursement expenses taxable income? Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. The director of the department of administration shall also establish policies and procedures for claiming lodging and meal and incidental expense reimbursements and long-term subsistence allowances by persons temporarily required, for a period of not less than thirty days, to reside away from their primary place of residence. Before you decide, ask us to send you written information about our qualifications and experience. Terms of Use Privacy Policy Security. Premier client service, as outlined in the firm's Client Pledge, is one of the firm's top priorities and a cornerstone of its core values. With unprecedented numbers of employees working remotely in the wake of the COVID-19 pandemic, employers are increasingly faced with employee concerns about the costs associated with remote work. T5`(N[pTgV 4, pt. This rate applies to both cars and trucks and fluctuates year by year. 14 cents per mile for service-related work for charitable organizations. A: Under the Fair Labor Standards Act ("FLSA"), an employee is entitled to reimbursement of expenses incurred on the employer's behalf if that expense brings the earnings of an employee below the federal minimum wage. h233Q0Pw/+Q0L)63 )I0i1P *V? U? )bdpw]o*)w1@3T l7+96CNxbjQg(@DkV`02(6CHzrd+=}eN^ eBhx.D?2:6dt{w5D&9?bDe M7`ih3lV Generally, this wont include commuting expenses between an employees home and workplace. That section and A.R.S. Where an employee incurs expenses on his employer's behalf or where he is required to expend sums by reason of action taken for the convenience of his employer, section 7 (e) (2) is applicable to reimbursement for such expenses. 41-1904(D). Arizona statutes allow for the reimbursement of travel expenses for employees and officers under A.R.S. For example: Companies usually mandate receipts. Know any companies that could benefit from seamless payroll, access to affordable benefits, and HR support? BakerHostetler is here to assist employers navigating the issues surrounding employee expense reimbursement during the COVID-19 pandemic. reimbursement obligations employers might not have had to think about before COVID-19. 41-1104. These types of reimbursable expenses tend to occur when employees travel for work, but can be associated with other activities related to their employment, including, for example, certain purchases of work-related supplies or tools. Id. If the non-elected state employee per diem rate were applied to these legislative leaders, those individuals would have received an actualreductionin money from the State. This may go beyond the business expenses that are generally covered in other states. endstream endobj 932 0 obj <>stream This form is not to be used to record allowances. Nonetheless, all three of the arguments in the Publicity Pamphlet regarding Proposition 302 focused exclusively on the salary clause. This reimbursement law was challenged as being an increase in compensation in violation of the Constitution. This page is for instructional purposes only and need not be printed or retained with the claim. As mentioned, these new laws may require your department to tweak its current T&E policies and practices to align with state-specific rules. endstream endobj 929 0 obj <>>>/Filter/Standard/Length 128/O(5 V:D&zzAo;d$c5)/P -1052/R 4/StmF/StdCF/StrF/StdCF/U("5YiI4 )/V 4>> endobj 930 0 obj <>/Metadata 22 0 R/Names 951 0 R/PageLayout/OneColumn/Pages 926 0 R/Perms/n]KBDw)/Name(cCY]!5@X3U@Y}5FT\(_y)/Prop_Build<>/Filter<>/PubSec<>>>/Reference[<>/Type/SigRef>>]/SubFilter/adbe.pkcs7.detached/Type/Sig>>>>/StructTreeRoot 34 0 R/Type/Catalog>> endobj 931 0 obj <>stream Read the latest news about Justworks, including company and product announcements, research reports, interviews, and more. For example, as demands on the Legislature have increased in recent years, legislative leaders have found it necessary to spend more time working at the Legislature than ever before. Definitely recommend! Ct. 698 (2013). Get to know our founding story and meet the Justworks Leadership Team. Expenses incurred by employees in the course of business should be costs incurred by the employer, not by its employees. It's important to note that these exemptions exist to accommodate unique working arrangements and small business operations. App. Beginning January 1, 2020, the minimum wage in Arizona rose to $12 per hour. When the Commission on Salaries for Elective State Officers ("Commission") recommended changing legislative"per diem"rates, it acted beyond its statutory power to recommend changing legislative"salaries." A trustee is entitled to be reimbursed out of the trust property, with reasonable interest, for: 1. Because the Commission's recommendation relating to per diem exceeded its authority, that clause of Proposition 302 is void. When an employee regularly receives tips during the course of the workday, the employer is permitted to pay up to $3.00 per hour less than minimum wage. As if IRS regulations werent enough to keep up with, some states are adding their own expense reimbursement laws that your staffers will have to comply with, too. hbbd``b`9$ #5 "*MD${H <7' *@, KHp($W0012Y"!3(n0 p Accordingly, we offer the following guidance: A: Under the Fair Labor Standards Act (FLSA), an employee is entitled to reimbursement of expenses incurred on the employers behalf if that expense brings the earnings of an employee below the federal minimum wage. Several times in this decade legislative leaders received annual per diem amounts in excess of $9,000, the amount of the voter-approved salary increase, because of the heavy demands on their time. d100'h` 5 The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. [1] California Labor Code Section 2802 LAB. home utilities, like heat and air conditioning. Substantiation: The employee must substantiate his or her business expenses by providing the employer with evidence of the amount, time, place, and business purpose of the expense. California remote employees are entitled to reimbursement for all of their reasonable financial job-related losses. There is no federal law that requires employers to reimburse their employees for employment-related expenses, and few state laws do so, either. Generally, this wont include commuting expenses between an employees home and workplace. *Note: Illinois says the employee can offer a signed With this unprecedented shift in working habits, employers may be overlooking business-related expenses being incurred by their employees. Section 2802; 820 Ill. Comp. Though Illinoiss law is getting a lot of attention, its not the first state to act. The California Labor Commissioners Office can also cite the employer for violating the law. %PDF-1.6 % x[G_*LeV n]3U!D(n[gAU(CjOZ2e art. What are some examples of ordinary and necessary expenses that would require employer reimbursement? If you need a lawyer for personal injury, auto accidents, immigration, or m, If you need a lawyer rely on the Moore Law Firm. Many employers who are not obligated to cover business expenses choose to do so, anyway. Check out our online talks on topics that matter most when protecting your business and taking care of your team. 39-2-701. Download your free copy of Business Expenses: A Beginner's Guide To Building A Plan to find the helpful advice you're looking for. Ann. Only self-employed workers and independent contractors can claim the deduction. SeeHistorical Note, ARIZ. CONST. [5] Massachusetts General Law Chapter 149, 148A and Fraelick v. PerkettPR, Inc., 83 Mass. Youll want to proactively account for these business expenses in your T&E budget to stay on track financially and prevent issues. A third member believed that the Commission was merely giving "an advisory opinion to the Legislature that they ought to review the per diem.". 2, 22. Ann. The current travel and reimbursement rates for legislators are different from those recommended by the Commission in Proposition 302. ." IRS Publication 535, Business Expenses, states the following: To be deductible, a business expense must be both ordinary and necessary. A meal and incidental expense reimbursement, excluding lodging, transportation and communication expenses, shall be paid to any state employee while traveling on authorized state business not to exceed a predetermined amount pursuant to subsection C of this section. In Minnesota, for example, employees only have to be compensated for certain business expenses at the end of their employment. 26 U.S.C. 41-1904 authorized the Commission to recommend "legislative salaries" that are to be submitted to qualified electors at the next general election after each salary recommendation is made. The voters approved Proposition 302 effective at the beginning of the next regular legislative session. See Arizona Laws 1-215 B. Stat. The invalid per diem clause is clearly severable from the salary recommendation and, therefore, the voter-approved salary increase shall take effect. 0 3. A long-term subsistence allowance for legislators shall be established pursuant to section 41-1104. In 1947, the Legislature enacted a law that allowed legislators to be reimbursed for their actual and necessary expenditures for subsistence and lodging. Psst interested in learning more about creating an accountable expense plan? Recently, Illinois modified its Wage Payment and Collection Act to include expense reimbursement rules. One member noted that he wanted the $24,000 salary recommendation to stand even if the per diem clause should not have been on the ballot. A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. Labor Section 23-1062. . 949 0 obj <>/Encrypt 929 0 R/Filter/FlateDecode/ID[<6BDF1CF33331E94D9CD43616C7FC6BA5><61B2D104DCFA2B4EB4BD935421B87E8D>]/Index[928 203]/Info 927 0 R/Length 109/Prev 84083/Root 930 0 R/Size 1131/Type/XRef/W[1 2 1]>>stream Plus, with federal and state eyes watching, having a compliant T&E process will need to be an even higher priority than it was before. %%EOF Claims for reimbursement must be filed not later than 180 days of incurrence of the expense . Keep expense reimbursement separate from regular wages. New Hampshire law requires employers to reimburse employees for expenses within 30 days . If housing or meals are provided, the reimbursements may be less than, and cannot exceed, the lodging and meal and incidental expense reimbursements provided for pursuant to subsection C. You're all set! Other jurisdictions that already have expense reimbursement laws on the books include: Generally, your department knows what typical business expenses states will expect to be reimbursed, like transportation, lodging, meals and entertainment. This field is for validation purposes and should be left unchanged. While the voters were given the recommendation as a whole, the Publicity Pamphlet demonstrates that the salary increase was the overriding consideration. The only time that the FLSA impacts work-from-home reimbursements is if the cost would lower the employees earnings beneath the applicable minimum wage. Why do businesses need an accountable expense plan? 4, pt.2, 1, (2)(a). Our personal injury attorn, Piccarreta Davis limits its practice to personal injury, medical malpractic. Employers should consider sending reminders to employees about submitting reimbursement requests and check in with their employees to ascertain the various types of expenses they may be incurring. Having a business accountant and referring to employment counsel are two ways for businesses to ensure theyre deducting and reporting the right expenses. Youll need to decide how to address and communicate any changes companywide. Reimbursement for travel expenses in the State of Arizona applies only to public employees and officers, public institution employees, board members, or any other agency of the state. Authorship Credit:Carter Norfleet and Shareef Farag. SeeA.R.S. The arguments did not mention the per diem clause. How do you qualify? Under the 2005 Code the educator's expense deduction was scheduled to expire on December 31, 2005, as discussed in TIRs 05 . Other states (like Alaska and Arkansas) require reimbursement only if equipment purchased by employees for work-related purposes cannot be used during normal social activities of the employee or if the purchase/expense would bring the employees compensation below minimum wage. (8 Alaska Admin Code Section 15.165; Code of Arkansas Rules and Regs., 010-14-107(B).). 41-1103 and A.R.S. state laws, and the United States Code. Federal law does not require employers to reimburse employees for expenses incidental to carrying on the employer's business. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. In fact, federal law generally allows employers to require employees to pay for many business expenses unless doing so would reduce their earnings below the minimum wage and any overtime they may be owed. Code. This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. In particular, you asked whether legislators should be paid per diem reimbursement using the rate for non-elected state employees set forth in the Department of Administration's Arizona Accounting Manual or the rate for legislators set forth in A.R.S. Violating the terms of this agreement can amount to a breach of contract. Id. 'H"2Hd) ~ K(7e[4;'^|IMw!o*m5{wp!s( `*wM9nrXnI7}@PBYr fBw. 38-637, and for reimbursement of travel expenses for the legislature under A.R.S. (This has remained the same for the last few years.) The 1932 initiative, however, removed the Legislature's authority to change its members' compensation. 2. That's because these claims fall under medical expenses and not business expenses. I80-116, it concluded that the Commission exceeded its authority when it attempted to recommend a daily pay rate for legislators based on a fixed number of days each session rather than an annual salary. this Section. %PDF-1.4 % Id. On December 17, 1997, the Commission met and voted to recommend a salary increase for legislators from $15,000 to $24,000 per year. Lab. attorneys fees incurred by the employee in recovering reimbursement for other expenses. Employees should only have to pay income taxes on the wages they earn and certain taxable fringe benefits. You already receive all suggested Justia Opinion Summary Newsletters. It should outline all of the business-related expenses that an employee can get reimbursed for. Reimbursement of expenses A. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. online subscriptions, like a paid plan for Zoom. Because one of the consequences of that recommendation could have been to dictate the length of the legislative session, the Attorney General concluded that the Commission had exceeded its limited authority to set salaries. This site is protected by reCAPTCHA and the Google, There is a newer version %%EOF It's best to have a written employee expense reimbursement policy in your employee handbook to ensure your organization has an action plan for remote workers. 2. hb```b``>u,\AF d`xv@2! 3|T?20fgqE@I!QKDF~*vm78[r#ar The invalidity of the Commission's per diem recommendation does not negate the voters' approval of the legislative salary increase. Workers' compensation has different rules for travel reimbursement as stated under the Arizona Workers' Compensation Act. at 2(b). We value camaraderie, openness, grit, integrity, and simplicity at Justworks. : SECTION V . If housing or meals are provided, the reimbursements may be less than, and cannot exceed, the lodging and meal and incidental expense reimbursements pursuant to subsection C of this section. Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. Many employers will reimburse an employee who uses their personal vehicle for business at a standard mileage rate. With Resourceful Finance Pro arriving in your inbox, you will never miss critical stories on accounting, benefits, payroll & employment law strategies. (a) General rule. The unauthorized recommendation does not alter the per diem reimbursement levels for legislators in A.R.S. Even with an accountable plan, there are some things to look out for. When an employer reimburses an employee pursuant to an accountable plan, the reimbursement wont count as wages or income to the employee. 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