The Illinois Department of Labor (IDOL) has published amended regulations implementing a law that requires employers to reimburse employees for certain business expenditures.
The details
By way of background, Illinois employers must reimburse employees for all necessary expenditures or losses incurred within their scope of employment and directly related to services performed for the employer. The law considers necessary expenditures as expenses or losses required in the discharge of an employee's duties and those that are for the primary benefit of the employer.
The amended regulations clarify definitions and requirements under the reimbursement law.
Primary benefit of employer
Under the amended regulations, when determining if an expense is to the primary benefit of the employer, the relevant factors to be considered are:
- Whether the employee has any expectation of reimbursement;
- Whether the expense is required or necessary to perform the employee’s job duties;
- Whether the employer is receiving a value that it would otherwise need to pay for;
- How long the employer is receiving the benefit; and
- Whether the expense is required of the job.
Under this test, no single factor is dispositive. Instead, the analysis should focus on the extent to which the expense benefits the employer and its business and business model.
Denied requests
If an employer denies or fails to respond to a request for reimbursement that should have been reimbursable under the law, the employee may file a claim against the employer with the IDOL.
If an employee cannot recover expenses during the employee's employment, these expenses must be included in the final compensation owed to an employee at the end of the employee's employment.
Recordkeeping
Employers must retain the following records for at least three years:
- All policies regarding reimbursement;
- All employee requests for reimbursement;
- Documentation showing approval or denial of reimbursement; and
- Documentation showing actual reimbursement and supporting documents.
Next steps
Illinois employers should review policies and practices to ensure compliance with the expense reimbursement law and regulations.
Please contact your dedicated ADP Service Representative with any questions.