Covid-19 Guidelines for Reimbursing Workers

As the Covid-19 emergency continues, many employees are still working remotely, and that may mean employers have the responsibility to reimburse business expenses workers incur at home.

Depending on how these expenses impact workers’ income, both state and federal laws come into play.

In some cases, employees may not have everything they need to work from home. They may have to purchase supplies for a home office, and they may increase their telephone or Internet use.

If employees are asked to telework by their employers, companies may have to reimburse some of these costs.

According to guidelines from the Department of Labor, per the terms of the Fair Labor Standards Act (FLSA), nonexempt employees can’t be asked to cover business expenses when working from home if the costs would bring their pay below the federal minimum wage.

Although there’s more flexibility with exempt employees, their weekly pay must still pass the salary basis test of the FLSA. This might not happen if they’re consistently paying for business expenses related to using technology or maintaining a home office during the coronavirus pandemic. So employers may have to reimburse some of their expenses as well.

Five states currently have relevant laws that impact how much employers must reimburse workers for these types of business expenses: California Illinois, Massachusetts, Montana, and New Hampshire.

Even if your company doesn’t operate in these states, it’s a good idea to have a policy in place that addresses reimbursement of business expenses when teleworking—outlining parameters, guidelines and financial limits for employees.

Also remember: For the duration of the pandemic, employers can make tax-free payments to employees for certain coronavirus-related expenses.

Sec. 139 of the Internal Revenue Code allows employers to give workers payments for “qualified disaster relief” during a federal emergency. This can include the costs associated with telework required due to Covid-19.

More info: bit.ly/expenses604 and bit.ly/payments597