Keep expense reimbursement separate from regular wages. 38-621 through A.R.S. h233Q0Pw/+Q0L)63 )I0i1P *V? U? Shouse Law Group is here to help you fight back. When employees receive an expense reimbursement, typically they wont be required to report such payments as wages or income. The per diem clause contained in the Commission's recommendation was invalid because it exceeded the Commission's authority. Magma Copper Co. v. Arizona State Tax Comm'n, 67 Ariz. 77, 86-87, 191 P.2d 169, 175 (1948). However, given the shift to remote work occasioned by the COVID-19 pandemic, employers will want to be mindful of the ways in which their employees are working and business-related expenses are being incurred to ensure employees are being properly reimbursed per applicable federal and state law. However, a key to maintaining any accountable plan is to properly and timely substantiate expenses. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. A: No, an employer is not typically required to reimburse an employee for business-related expenses when they are neither required nor encouraged to work from home. The director may change the maximum amounts from time to time and may establish a separate maximum amount for geographical areas of the United States if the director finds that the reasonable cost varies significantly in one or more areas. Ct. 698 (2013). of 180, 2 (currently codified at A.R.S. 4, pt. For more information about the legal concepts addressed . When the Commission on Salaries for Elective State Officers ("Commission") recommended changing legislative"per diem"rates, it acted beyond its statutory power to recommend changing legislative"salaries." Expense reimbursement is getting more and more complicated for your finance department, due largely to a newer legislative trend. 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. [3] 820 Illinois Compiled Statute 115/9.5. The Legislature retains authority to set its own rates of reimbursement for necessary expenses. . Expense reimbursement lawsuits were already commonplace before the pandemic, and with no end in sight to the pandemic and employees working from home, employers can expect additional lawsuits to be filed. The most common are work-related supplies, travel, meals, and entertainment. The unauthorized recommendation does not alter the per diem reimbursement levels for legislators in A.R.S. J+cQR! 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. The cost of work-related travel is generally a reimbursable expense. 1= ( hd0 _A;iR!l x6 ,x23CfI6t&4;I{0Ohj0_S30S5&q9 I80-116, it concluded that the Commission exceeded its authority when it attempted to recommend a daily pay rate for legislators based on a fixed number of days each session rather than an annual salary. Many employers will reimburse an employee who uses their personal vehicle for business at a standard mileage rate. The employee submitted the expense for reimbursement with proper supporting documentation* (i.e., a receipt) within 30 calendar days of when it was incurred. What may be reasonable in one instance might not be in another. If you need a lawyer rely on the Moore Law Firm. 41-1104.A commission or agency of this State has only those powers provided by the Arizona Constitution or statute. Enter your username and password below to log in. 62 (a)(2) and (c)(2); 1.62-2(c)(4). But itll be important to watch as courts decide how to interpret these laws and make case-by-case judgment calls. 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. 1. The FLSA, however, is implicated if an employee's unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Former ARIZ. CONST. Check out our online talks on topics that matter most when protecting your business and taking care of your team. As states continue to address expense reimbursement in There is no federal law that requires employers to reimburse their employees for employment-related expenses, and few state laws do so, either. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. Section 39-2-701(1)). All rights reserved. Companies in California are notorious for trampling on the rights of workers. Ariz. Rev. . To comply with state law (Arizona Revised Statutes (A.R.S. Under the 2005 Code the educator's expense deduction was scheduled to expire on December 31, 2005, as discussed in TIRs 05 . online subscriptions, like a paid plan for Zoom. See Ruiz v. Hull, 191 Ariz. 441, 459, 957 P.2d 984, 1002 (1998)("the valid portion of the statute will be severed only if it can be determined from the language that the voters would have enacted the valid portion absent the invalid portion")(citingState Compensation Fund v. Symington, 174 Ariz. 188, 195, 848 P.2d 273, 280 (1993)). B. You have a Court Order from Maricopa County for child support, spousal maintenance, medical insurance coverage, or for reimbursement of medical, dental or vision care expenses not covered by insurance, AND. How do you qualify? [13] See IRS Publication 5137 (Rev. [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). 2894 0 obj <>stream Consider drafting a plan doing so will likely save everyone time, confusion, and stress. Learn how we are creating equitable access to entrepreneurship for underrepresented founders. ~Rhg,$u"KqaN:SncRS -(dg"R80gy3j"25c%BVWI>/q/3[k9!C=uzd82]&Bfr_*F>$wXjUT Get to know our founding story and meet the Justworks Leadership Team. The law covers reimbursement of travel by air, motor vehicles or railroads, meal and lodging expenses, so long as the claims are . Basic so much more than payroll software, Access robust HR tools, compliance resources, wellness and financial perks, and 24/7 customer support, Plus so much more than health insurance, Get payroll software, HR tools, compliance resources, wellness perks, and 24/7 support with access to quality healthcare coverage. are aware that these state-level laws are unfolding. %PDF-1.6 % By the time the Commission was created in 1970, Arizona courts had distinguished between "salary" or "compensation" and "reimbursement." Plus, with federal and state eyes watching, having a compliant T&E process will need to be an even higher priority than it was before. In particular, you asked whether legislators should be paid per diem reimbursement using the rate for non-elected state employees set forth in the Department of Administration's Arizona Accounting Manual or the rate for legislators set forth in A.R.S. Detailed Instructions for the Form GAO-502, State of Arizona Employee Expense Reimbursement Form . Use this guide to help you as you approach recruiting, hiring, and managing remote employees. 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. Generally, this wont include commuting expenses between an employees home and workplace. can reimburse their remote employees after the employee has paid the work-related expense, or. The director of the department of administration shall also establish policies and procedures for the claiming of lodging and meal and incidental expense reimbursements and long-term subsistence allowances by persons temporarily required, for a period of not less than thirty days, to reside away from their primary place of residence. California remote employees are entitled to reimbursement for all of their reasonable financial job-related losses. art. All claims for reimbursement shall be accompanied by lodging expense receipts. What are some examples of ordinary and necessary expenses that would require employer reimbursement? SeeA.R.S. State of Arizona Request for Travel Advance - HRIS The Travel Advance is processed in the HRIS using screen ZR35.2. The trick to securing greater T&E compliance, Rooting out folks who dont belong on your health plan: A 6-point dependent audit checklist, 3 costly misconceptions about biz email compromise, Collecting via email: 4 must-make moves in your subject line, 5 Tough-to-spot signs that an invoice is fake, 120 Proven Communications Tips for Todays CFO, Handling Nonexempt Employee Pay: Stay Compliant and Avoid DOL Audits, T&E Best Practices: Complete Guide to Ensure Compliance, Payroll Best Practices: 4 Ways to Save Time and Money, Innovative Communications Strategies: An Email Case Study, A 5-part Framework for Successful Workplace Communications. Resourceful Finance Pro, part of the SuccessFuel Network, provides the latest Finance and employment law news for Finance professionals in the trenches of small-to-medium-sized businesses. Learn more about Justworks careers here. Since so many people are working remotely . Review SAAM . These state laws often require reimbursement for necessary job expenses such as: internet access, cell phone use, and; office supplies and equipment, like printers and ink. 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. For almost thirty years following the creation of the Commission, the Legislature continued to set its own reimbursement rates. If an agency takes an action that is beyond its authority, the action is void. A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. 2023 LawServer Online, Inc. All rights reserved. 38-624. Ct. 698 (2013). The employee also must submit business expenses within a reasonable period of time after they occurred. legislation and in court, its important for Finance to stay vigilant and There are a few exceptions that you should know. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor. Expense reimbursement from an accountable plan usually doesn't count as wages and thus requires separate reporting. The extent of these expenses will depend on the employees job duties. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. 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. 778.217 Reimbursement for expenses. Rather, an employer should assess on a case-by-case basis the expenses incurred by an employee and make a reasonable determination as to what the proper level of reimbursement is for the expense claimed. Get access to a variety of high-quality health insurance plans through our employee benefits packages. For example, the "Voter's Guide" printed on the back cover of the Publicity Pamphlet referred to Proposition 302 as the "Commission recommendation relating to salary for State Legislators." 4, pt. 41-1103 and A.R.S. The Tax Cut and Jobs Act eliminated this deduction for W-2 employees from 2018 through 2025. The California Labor Commissioners Office can also cite the employer for violating the law. App. For example, federal and state tax laws recognize that salaries are taxable income,Department of Revenue v. Arthur, 153 Ariz. 1, 734 P.2d 98 (App. Further, Arizona statutes k6$ LPXDyA For example: Companies usually mandate receipts. 3. Having a business accountant and referring to employment counsel are two ways for businesses to ensure theyre deducting and reporting the right expenses. 2, 1, (2)(a) and (2)(b). Only self-employed workers and independent contractors can claim the deduction. General Instructions. A trustee is entitled to be reimbursed out of the trust property, with reasonable interest, for: 1. Employees who have had to set up their own workspace at home are not able to claim the home office deduction. Instead, whether work-related expenses must be reimbursed by employers is a matter of state law. There is a certain expectation that if an employee uses their own money on the business's behalf, they should get reimbursed. Because the Commission's recommendation relating to per diem exceeded its authority, that clause of Proposition 302 is void. 8sX~&o. Code of Federal Regulations Title 47. However, there are some costs that employers know employees will incur on a monthly basis and so it may make sense to provide a reimbursement on a more periodic basis. When an employer reimburses an employee pursuant to an accountable plan, the reimbursement wont count as wages or income to the employee. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. Streamline and simplify time tracking for you and your workforce. ARIZ. CONST. Courts in the Golden State have also said companies should pay for similar items like Internet expenses, data plans and other computing expenses. A. Expense reimbursement laws. In Ariz. Att'y Gen. Op. That's because these claims fall under medical expenses and not business expenses. Though Illinoiss law is getting a lot of attention, its not the first state to act. Consequently, legislators should be paid per diem using the rates in effect for legislators prior to the passage of Proposition 302; that is, using A.R.S. 949 0 obj <>/Encrypt 929 0 R/Filter/FlateDecode/ID[<6BDF1CF33331E94D9CD43616C7FC6BA5><61B2D104DCFA2B4EB4BD935421B87E8D>]/Index[928 203]/Info 927 0 R/Length 109/Prev 84083/Root 930 0 R/Size 1131/Type/XRef/W[1 2 1]>>stream These states are: The requirements in these states are not all the same, however. hbbd``b`9$ #5 "*MD${H <7' *@, KHp($W0012Y"!3(n0 p Get free summaries of new opinions delivered to your inbox! See Earhart v. Frohmiller, 65 Ariz. 221, 178 P.2d 436 (1947). Lost your password? Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. 2, 22. Proposition 302 had its origins with the Commission. Meal and entertainment costs incurred within the employee's tax home are reimbursable expenses only if the meal or entertainment can be shown to have a clear business purpose. Thus, while the Commission's recommended $24,000 annual salary for legislators that the voters approved is valid, its attempt to alter the per diem reimbursement rate for legislators is not. 41-1104). Implement an Accountable Reimbursement Plan. 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. Legal advice, arizona expense reimbursement law stress 's authority expenses must be reimbursed out of the Commission 's recommendation invalid. In A.R.S might not be in another this deduction for W-2 employees from through. 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