Reimbursing Employees for Work-From-Home Expenses

Ever since the start of the pandemic, more and more employees are still working from home  as many employers continue to provide fully remote or hybrid employment models. While these employment models can be beneficial for both the employee and employer, it’s essential for employers to understand when an employee’s home office costs need to be reimbursed.

Under federal law, the Fair Labor Standards Act (FLSA) does not, typically, require employers to reimburse expenses incurred by employees while working from home. However, if home office expenses would cause the employee’s pay to fall below the minimum wage, employers must reimburse their expenses. Employers are strongly advised to monitor the expenses and costs associated with working from home incurred by lower-wage employees to avoid inadvertently violating the FLSA.

While federal law generally does not require employers to reimburse costs associated with working from home, some states and localities do require reimbursement for  certain necessary expenses.

These states include but are not limited to:

• California

• Illinois

• Iowa

• Massachusetts

• Minnesota

• Montana

• New Hampshire

• New York

• Pennsylvania 

• South Dakota

• Washington DC  

The requirements of these laws vary between jurisdictions, but common reimbursable expenses include internet costs, cell phone bills, online subscriptions, office supplies, and a work computer.

Employers with remote workers should ensure that they are familiar with the state and local laws where their employees perform their job duties regarding any requirements for reimbursement of work-from-home expenses. Employers should develop written policies addressing reimbursement for work-from-home expenses, and additionally, employers may need to supplement those policies to comply with the requirements of specific states or localities on a case-by-case, per-employee basis. 

A knowledgeable business attorney can assist with the creation of appropriate policies and ensure compliance with the applicable laws.