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Illinois Employers Now Required to Reimburse Employee Expenses

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September 25, 2018

By Erin Fowler

In late August, Governor Rauner signed into law an amendment to the Illinois Wage Payment and Collection Act requiring employers to reimburse employees for “all necessary expenditures or losses incurred by [employees].” The law defines “necessary expenditures” as those “reasonable expenditures or losses required of the employee in the discharge of his or her employment duties and which [primarily] benefit the employer.”

The law makes clear that employers are not required to reimburse employee expenses or losses in the following circumstances: (1) where the loss or expense is due to the employee’s own negligence; (2) where the loss or expense is due to normal wear; (3) where the loss or expense is due to theft (unless the theft results from the employer’s negligence); or (4) where the employee fails to comply with the employer’s written reimbursement policy.

To be eligible for reimbursement, the following criteria must be met:

  • The expenses or losses must have been incurred in the scope of the employee’s employment and must be directly related to the services the employee performs for his or her employer.
  • The employee must submit the expense or loss to the employer with supporting documentation within 30 days after incurring the expense or experiencing the loss. If the employee’s supporting documentation is missing or nonexistent, the employee must submit a signed statement explaining the missing documentation.
  • The employee must comply with the employer’s written expense reimbursement policy.

Finally, the law contains several protections for employers. Significantly, an employer is not required to reimburse expenses that are not authorized or required by the employer. Further, if maintained in their written reimbursement policy, employers may set caps on the amount of reimbursement so long as the policy provides for more than a de minimis reimbursement. Lastly, employers may deny any request for reimbursement that does not comply with their written reimbursement policies.

The new law takes effect January 1, 2019. To prepare, employers should work with employment counsel to draft policies compliant with this new law.

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