Chicago Business Attorney Blog
Employee expense reimbursement is now required by law in Illinois, at least under certain circumstances, making the Land of Lincoln the ninth U.S. jurisdiction to statutorily impose such a requirement. In doing so, Illinois joins the company of other states with similar rules. Employers of all shapes and sizes should get up to speed on the new law, an amendment to the Illinois Wage Payment Collection Act that took effect on January 1, which requires employers to reimburse all “necessary expenditures” directly related to the employer’s services.
The new law (820 ILCS 115/9.5) defines “necessary” as “all reasonable expenditures … required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.” This means that the employer must have either “authorized or required” the employee to purchase the product or service and must receive appropriate documentation within 30 days—unless the employer allows for a longer time frame.
Employers should have written expense reimbursement policies that lay out what they pay for and how much, along with what’s requested in terms of documentation; although if an employee cannot produce this documentation, such as a receipt, the employer must accept a “signed statement” from the employee instead. This written policy can set caps for different categories of expenses and the employer does not need to reimburse more than the capped amount, provided the caps amount to more than “de minimis” reimbursement—a term the amendment does not define. In other words, the best guideline one can follow is: be reasonable, based on costs in your area.