Most employers understand that there may be a requirement to reimburse employees for business expenses. However, as technology evolves many items “used” in the course of business by employees have become accessible via personal electronic devices such as cell phones and electronic tablets that the employees may already own and use for personal reasons. As the use of these types of employee-owned devices increases, the question becomes whether employers must reimburse employees for ongoing costs related to phone or internet service used to access these devices in the course of their employment. According to the Illinois Department of Labor (“IDOL”), for employers in Illinois, the answer likely is yes.
Pursuant to the Illinois Wage Payment and Collection Act (“IWPCA”), Illinois employers must reimburse employees for any expense that provides a “primary benefit” for their employer. To determine whether an expense must be reimbursed, IDOL has created a five-factor test:
- Does the employee have an expectation that the expense will be reimbursed;
- Is the expense required for the employee to perform their duties;
- Does the employer receive value from the expense that they would otherwise be required to pay for;
- How long does the employer benefit from the expense; and
- Is the expense required for the job.
While no single factor is determinative, IDOL instructs employers to focus on the extent to which the expense benefits the employer and the business in determining whether the employer must reimburse it.
Many employers utilize authenticator apps that require employees to use their personal cell phones to complete a multi-factor authentication process to log into their employer’s computer systems. While this provides often necessary additional security for the business, it also creates a situation where the employee cannot access their employer’s network without their personal cell phones, rendering the employee’s ownership of an active personal cell phone a requirement to perform work. According to IDOL, in this situation employees should be reimbursed for a portion of their phone bills.
Under the IWPCA, if an employer fails to properly reimburse an employee, the employer is required to provide restitution along with a penalty multiplied by the number of months that elapses between the when the expense was incurred and when the employer makes the restitution. To avoid violating the IWPCA, employers should adopt written policies on reimbursements, delineating between items that employees can “expect” to be reimbursed and those that will not be reimbursed. The IWPCA also requires employers to maintain records related to the reimbursements, including all requests for reimbursement, the answers to those requests, and documentation demonstrating the reimbursement was paid, for at least three (3) years.
DISCLAIMER: The St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters for over sixty years and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.
