arizona expense reimbursement law
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. You will receive a link to create a new password via email. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. A: With employees having historically worked in an office environment, many of the supplies and resources they utilized to complete their job duties were provided for by the employer (i.e., printer paper, pens/pencils, computers, electricity, computer monitors, internet, phones, etc.) 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. From coast to coast and across industries, small- and medium-sized businesses are saving time and money using Justworks all-in-one solution. Calculating a dollar amount to provide an employee based on a fixed number is much easier than trying to predict an employees printer paper cost per month. Our company values are reflected in our product and in our team. These state laws often require reimbursement for necessary job expenses such as: Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. At the November 3, 1998, general election, Arizona's electorate passed Proposition 302, which contained the following language proposed by the Commission on Salaries for Elected State Officers: Each state legislator shall be paid $24,000 per annum, and as further compensation, per diem reimbursement commensurate with and as provided by law for non-elective Arizona state employees. Consider drafting a plan doing so will likely save everyone time, confusion, and stress. [2] D.C. Municipal Regulation Title 7, Section 910.1. art. Minimum wage regulations apply only to employees. The commissioners were the architects of the language and intended that the salary increase be allowed to stand even if the per diem clause were invalid. d100'h` 5 reimbursement obligations employers might not have had to think about before COVID-19. This reimbursement law was challenged as being an increase in compensation in violation of the Constitution. 1986); 26 U.S.C. This can be tricky, however, as the employer must be sure to document/identify the amount of compensation attributable to the expense actually incurred. Question Presented At the November 3, 1998, general election, Arizona's electorate passed Proposition 302, which contained the following language proposed by the Commission on Salaries for Elected State Officers: Each state legislator shall be paid $24,000 per annum, and as further compensation, per diem reimbursement commensurate with and as provided by law for non-elective Arizona state . Section 39-2-701(1)). Id. ." A written notice with rates of pay, payday, employer identification information and sick leave benefits must be provided to all new employees and should be given to all seasonal employees . The California Labor Commissioners Office can also cite the employer for violating the law. This distinction between salary and per diem reimbursement is not unique. Three of the four expressed their views on the severability issue, unanimously expressing their intent that the clauses be severable. -Q3z78Zkx6 Implement an Accountable Reimbursement Plan. 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. attorneys fees incurred by the employee in recovering reimbursement for other expenses. 62 (a)(2) and (c)(2); 1.62-2(c)(4). B. Youll want to proactively account for these business expenses in your T&E budget to stay on track financially and prevent issues. Ct. 698 (2013). (a) General rule. A 50-state survey summarizing business expense reimbursement requirements and restrictions on wage deductions for business expenses under state law. . hYmo6z( $iXmA?xz9>6R./F1eQ#) F%L0Fh\"@&2"``g*BJhDiZXb Lodging expenses; meal and incidental expense reimbursement and long-term subsistence allowance; items covered by reimbursement; amount predetermined by department of administration. This form is not to be used to claim travel reimbursements or advances. Essentially, these are laws requiring companies to reimburse employees for necessary expenditures incurred on the job. Remote work is quickly becoming a staple for the modern workforce. 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. Thats where employee expense reimbursement comes in. 22 cents per mile for medical or moving work. A necessary expense is one that is helpful and appropriate for your trade or business. Title 38 recognize the difference between salaries (seeChapter 4, Article 1 ("Salaries")) and per diem reimbursement (seeChapter 4, Article 2 ("Reimbursement for Expenses")). 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. A: An employer is likely not responsible for the entire personal cell phone bill of an employee simply because that employee uses his/her personal cell phone for work purposes. When employees receive an expense reimbursement, typically they wont be required to report such payments as wages or income. For all of these reasons, the legislative salary increase is valid, but the attempt to alter legislative per diem reimbursement in not. The Tax Cut and Jobs Act eliminated this deduction for W-2 employees from 2018 through 2025. Code of Federal Regulations Title 47. 41-1104.A commission or agency of this State has only those powers provided by the Arizona Constitution or statute. J+cQR! However, a key to maintaining any accountable plan is to properly and timely substantiate expenses. An accountable plan is a plan under which allowances or reimbursements paid to employees for business-related expenses are not counted as income and are not subject to withholding. That section and A.R.S. A.R.S. Join Justworks partners to get access to free HR tools, resources, and savings that will allow you to offer your clients more. For example, employees may now (and for the foreseeable future) be incurring expenses related to printer paper, pencils, pens, cell phone expenses, home internet bills, etc. office supplies and equipment, like printers and ink. 39-2-701. 2023 LawServer Online, Inc. All rights reserved. Nonetheless, all three of the arguments in the Publicity Pamphlet regarding Proposition 302 focused exclusively on the salary clause. There is a certain expectation that if an employee uses their own money on the business's behalf, they should get reimbursed. 1130 0 obj <>stream 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. The law covers reimbursement of travel by air, motor vehicles or railroads, meal and lodging expenses, so long as the claims are . are aware that these state-level laws are unfolding. Please note: Our firm only handles criminal and DUI cases, and only in California. Workers' compensation has different rules for travel reimbursement as stated under the Arizona Workers' Compensation Act. 2894 0 obj <>stream They were so pleasant and knowledgeable when I contacted them. Learn more about our compliance support. 1= ( pO}]3 s,i25A7.c. [11] California Labor Code 2802 LAB (An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties). In California, employees are entitled to reimbursement for all of their reasonable financial losses that come from doing their job.[11]. Returning excess amounts: If any amounts the employer pays to the employee exceed the amounts the employee spent, the employee must return excess amounts to the employer within a reasonable period of time. By accessing this site, you consent to the use of cookies and collection of personal information. gV+(8 Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. Under Arizona law, two provisions are severable if severance is consistent with the intent of those who created the law. The voters approved Proposition 302 effective at the beginning of the next regular legislative session. Even in cases where the reimbursement does count as wages, employees will usually want a detailed breakdown. Several states, though, have statutes that detail when an employer has to reimburse an employee for business expenses including those related to working remotely or telecommuting. 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. As mentioned, these new laws may require your department to tweak its current T&E policies and practices to align with state-specific 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. Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. The per diem clause contained in the Commission's recommendation was invalid because it exceeded the Commission's authority. The employee submitted the expense for reimbursement with proper supporting documentation * (i.e., a receipt) within 30 calendar days of when it was incurred. Former ARIZ. CONST. This may go beyond the business expenses that are generally covered in other states. The most common are work-related supplies, travel, meals, and entertainment. 4, pt. The extent of these expenses will depend on the employees job duties. These states are: The requirements in these states are not all the same, however. An expense does not have to be indispensable to be considered necessary.. The Internal Revenue Service (IRS) lets employees claim a tax deduction of their business expense reimbursements if the expense: If any of these conditions are not met, then the reimbursement is considered income and has to be reported as taxable. In order to qualify for an accountable plan, the employer's reimbursement or allowance arrangement must follow all three of these rules: Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. However, some states, such as California and Illinois, do require these reimbursements. It did not mention the per diem clause. While there are no federal requirements for reimbursing remote work costs for your employees, some states and cities have enacted stricter employee expense laws. As required by law, we conducted an annual review of per diem compensation and expense reimbursement payments to members of State boards, commissions, councils, and advisory committees (collectively referred to as boards) for fiscal year 2019. See Earhart v. Frohmiller, 65 Ariz. at 226, 178 P.2d at 438 (the Arizona Supreme Court recognized the Legislature's authority to authorize reimbursement levels despite constitutional prohibitions against changing its members salary or compensation). The only evidence of the electorate's intent is the language of the 1998 Publicity Pamphlet prepared by the Secretary of State. The cost of work-related travel, including transportation, lodging, meals, and entertainment that meet the criteria outlined in IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, are generally reimbursable expenses. )bdpw]o*)w1@3T l7+96CNxbjQg(@DkV`02(6CHzrd+=}eN^ eBhx.D?2:6dt{w5D&9?bDe M7`ih3lV Most businesses reimburse such expenses, but are business expense reimbursements taxable income to the employee? 41-1103 and A.R.S. If the employer fails to pay these reimbursements, the employee can file a wage and hour lawsuit. 7` )-4c!ftl@TZtJdD%. A long-term subsistence allowance for legislators shall be established pursuant to section 41-1104. Justworks keeps you informed on employment regulations while taking care of your employer payroll tax filings. A: Employers should have a written reimbursement policy that requires employees to submit reimbursement requests by a certain deadline after the expense is incurred. Under these circumstances, the invalid per diem restriction must be severed from Proposition 302, allowing the salary increase, alone, to take effect. For example, if an employee incurs a business expense in a state governed by the FLSA (or a state with reimbursement laws mirroring the FLSA rule), it is the employers burden to determine whether that expense brings the employees compensation below minimum wage, and if so, to reimburse that employee accordingly. This rate applies to both cars and trucks and fluctuates year by year. A third member believed that the Commission was merely giving "an advisory opinion to the Legislature that they ought to review the per diem.". Your company required or approved the employee to make the expense. We do not handle any of the following cases: And we do not handle any cases outside of California. If an agency takes an action that is beyond its authority, the action is void. endstream endobj 709 0 obj <>stream It is important to recognize that any attempt to implement the unauthorized per diem clause could actually reduce the money that legislators currently receive, in direct contravention of the desire to enact a salary increase. Shouse Law Group has wonderful customer service. 115,9.5; Mont. endstream endobj 932 0 obj <>stream If the employer does not have an accountable plan, then any reimbursements, even those that are ordinary and necessary, are taxable income. The Arizona Supreme Court upheld the law, concluding that reimbursement for expenditures fell outside the 1932 ban prohibiting the Legislature from changing its "compensation" or "salary." Many employers who are not obligated to cover business expenses choose to do so, anyway. Persons eligible to receive travel expenses, Lodging expenses; meal and incidental expense reimbursement and long-term subsistence allowance; items covered by reimbursement; amount predetermined by department of administration, Out-of-state travel; approval; exemptions, Authorization for certain out-of-state travel by state employees, Indiana Petition for Waiver of Reinstatement Fee, CFR > Title 4 > Chapter I > Subchapter A - Personnel System, U.S. Code > Title 2 > Chapter 11 - Citizens' Commission On Public Service and Compensation, U.S. Code > Title 39 > Part II - Personnel, U.S. Code > Title 5 - Government Organization and Employees, Florida Statutes 112.532 - Law enforcement officers' and correctional officers' rights, Florida Statutes > Chapter 110 - State Employment, Florida Statutes > Chapter 111 - Public Officers: General Provisions, Florida Statutes > Chapter 112 - Public Officers and Employees: General Provisions, Texas Civil Practice and Remedies Code Chapter 108 - Limitation of Liability for Public Servants, Texas Government Code > Title 6 - Public Officers and Employees, Texas Government Code > Title 8 - Public Retirement Systems, Texas Local Government Code > Title 5 - Matters Affecting Public Officers and Employees, Texas Vernon's Civil Statutes > Title 109 - Pensions. 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