In addition, if any expenses are paid in excess of IRS limitations, then the excess is taxable income. Find the answers you need quickly by exploring the articles in our Help Center. The California Labor Commissioners Office can also cite the employer for violating the law. Code. Code of Federal Regulations Title 47. Ct. 698 (2013). 2-2020). : SECTION V . %%EOF Shouse Law Group has wonderful customer service. This can be tricky, however, as the employer must be sure to document/identify the amount of compensation attributable to the expense actually incurred. Instead, whether work-related expenses must be reimbursed by employers is a matter of state law. 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. 41-1104. 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. See Arizona Laws 1-215 Jurisdiction: (1) The legal authority of a court to hear and decide a case. Definitely recommend! Under the 2005 Code the educator's expense deduction was scheduled to expire on December 31, 2005, as discussed in TIRs 05 . See Arizona Laws 1-215 B. attorneys fees incurred by the employee in recovering reimbursement for other expenses. He has been featured on CNN, Good Morning America, Dr Phil, The Today Show and Court TV. All four members present voted in favor of the salary and per diem recommendations. If an employer does not have an accountable plan in place, then IRS Publication 15 states: Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to the withholding and payment of income, social security, Medicare, and FUTA taxes.. Lost your password? You will receive a link to create a new password via email. Code 62(a)(2)(D) allows an eligible educator to deduct from federal gross income unreimbursed, qualified expenses (e.g., expenses for books, supplies, and computer equipment used in the classroom; expenses incurred during qualified professional development courses). The voters did not intend this result when they passed Proposition 302. Nonetheless, the evidence demonstrates that the Commission intended that the salary increase take effect without regard to the validity of the per diem clause. For example, California companies required to pay for employees cell phone bills now need to allot for this massive expenditure. Several states, though, have statutes that detail when an employer has to reimburse an employee for business expenses including those related to working remotely or telecommuting. Why do businesses need an accountable expense plan? Which states are at the forefront of this legislative Section 39-2-701(1)). I'm interested in receiving information about Justworks. 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. Youll want to proactively account for these business expenses in your T&E budget to stay on track financially and prevent issues. 5, 12. Reimbursement for travel expenses in the State of Arizona applies only to public employees and officers, public institution employees, board members, or any other agency of the state. However, because of the new normal of working from home, employers must vigilantly analyze the types of expenses their employees are incurring for business-related purposes and provide reimbursement accordingly. Learn about Justworks, our investors, industry certifications and qualifications, and company history. Id. Substantiation: The employee must substantiate his or her business expenses by providing the employer with evidence of the amount, time, place, and business purpose of the expense. These state laws often require reimbursement for necessary job expenses such as: Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. So, are reimbursements taxable? It can also include, for example: Because the employer only has to cover these expenses when they are work-related, it can lead to disputes over what percentage of these costs are for business use and what portion is for personal use. Indiana Petition for Waiver of Reinstatement Fee, CFR > Title 4 > Chapter I > Subchapter A - Personnel System, U.S. Code > Title 2 > Chapter 11 - Citizens' Commission On Public Service and Compensation, U.S. Code > Title 39 > Part II - Personnel, U.S. Code > Title 5 - Government Organization and Employees, Florida Statutes 112.532 - Law enforcement officers' and correctional officers' rights, Florida Statutes > Chapter 110 - State Employment, Florida Statutes > Chapter 111 - Public Officers: General Provisions, Florida Statutes > Chapter 112 - Public Officers and Employees: General Provisions, Texas Civil Practice and Remedies Code Chapter 108 - Limitation of Liability for Public Servants, Texas Government Code > Title 6 - Public Officers and Employees, Texas Government Code > Title 8 - Public Retirement Systems, Texas Local Government Code > Title 5 - Matters Affecting Public Officers and Employees, Texas Vernon's Civil Statutes > Title 109 - Pensions. Before you decide, ask us to send you written information about our qualifications and experience. A: Employers should have a written reimbursement policy that requires employees to submit reimbursement requests by a certain deadline after the expense is incurred. For almost thirty years following the creation of the Commission, the Legislature continued to set its own reimbursement rates. at 2(b). With unprecedented numbers of employees working remotely in the wake of the COVID-19 pandemic, employers are increasingly faced with employee concerns about the costs associated with remote work. Former ARIZ. CONST. %PDF-1.6 % ARIZ. CONST. Detailed Instructions for the Form GAO-502, State of Arizona Employee Expense Reimbursement Form . When employees receive an expense reimbursement, typically they wont be required to report such payments as wages or income. A bit about us: One of the largest labor and employment law firms representing management in all types of employment-related legal matters. 41-1104.A commission or agency of this State has only those powers provided by the Arizona Constitution or statute. LawServer is for purposes of information only and is no substitute for legal advice. 2, 1. Implement an Accountable Reimbursement Plan. Sometimes, employees not just employers are the ones who incur business expenses. Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. 61 (a)(1), whereas payments such as per diem that are intended to reimburse an employee for expenses incurred on behalf of the employer, are generally considered to be nontaxable. Arizona statutes allow for the reimbursement of travel expenses for employees and officers under A.R.S. Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. Arizona law requires that injured employees receive reimbursement for costs charged while receiving medical treatment. &_n*eoPh`#BADX JaJt0N94BQ>1Jfm!t 6-t(YdIe: h The lengthy history distinguishing salary from reimbursement (including per diem) in Arizona leads to the conclusion that the Commission has constitutional authority to recommendonlysalary changes. All claims for reimbursement shall be accompanied by lodging expense receipts. It depends on the situation. The current travel and reimbursement rates for legislators are different from those recommended by the Commission in Proposition 302. Again, it made no reference to the per diem limitation. If housing or meals are provided, the reimbursements may be less than, and cannot exceed, the lodging and meal and incidental expense reimbursements provided for pursuant to subsection C. You're all set! Id. hbbd``b`9$ #5 "*MD${H <7' *@, KHp($W0012Y"!3(n0 p Expenses that were properly incurred in the administration of the trust. A trustee is entitled to be reimbursed out of the trust property, with reasonable interest, for: 1. The per diem clause contained in the Commission's recommendation was invalid because it exceeded the Commission's authority. Former ARIZ. CONST. 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. A long-term subsistence allowance for legislators shall be established pursuant to section 41-1104. For example: Companies usually mandate receipts. Former ARIZ. CONST. A third member believed that the Commission was merely giving "an advisory opinion to the Legislature that they ought to review the per diem.". $l $$V"AG $b) y$8 While there are no federal requirements for reimbursing remote work costs for your employees, some states and cities have enacted stricter employee expense laws. 62 (a)(2) and (c)(2); 1.62-2(c)(4). Other states (like Alaska and Arkansas) require reimbursement only if equipment purchased by employees for work-related purposes cannot be used during normal social activities of the employee or if the purchase/expense would bring the employees compensation below minimum wage. (8 Alaska Admin Code Section 15.165; Code of Arkansas Rules and Regs., 010-14-107(B).). 25-320) and federal law (42 United States Code, 651 et seq., 45 Code of Federal Regulations, 302.56) and amendments, if any. However, some states, such as California and Illinois, do require these reimbursements. Your company required or approved the employee to make the expense. hb```b``>u,\AF d`xv@2! 3|T?20fgqE@I!QKDF~*vm78[r#ar For more information about the legal concepts addressed . They were so pleasant and knowledgeable when I contacted them. Expense reimbursement laws. Ariz. Rev. Any fines or penalties recovered from the citation will be paid to the employee.[12]. Justworks helps businesses with their benefits, payroll, and everything else they need to take care of their team. A: Alaska, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and Washington, DC all have enacted statutes which bear on expense reimbursement. Q ta$DLatBi$`1 #,b art. For example, if an employer reimburses an employee for mileage at more than the standard mileage rate, then the excess is taxable income. Make an impact on growing small businesses. x[G_*LeV n]3U!D(n[gAU(CjOZ2e Finally! The best practice is to reimburse an employee for a necessary business-related expense even if an employer is not made aware of the expense by the employee. Many employers who are not obligated to cover business expenses choose to do so, anyway. Get to know our founding story and meet the Justworks Leadership Team. See1968 Ariz. Sess. Generally, this wont include commuting expenses between an employees home and workplace. Employees of the Arizona or federal government Employers whose businesses earn less than $500,000 per year and are not covered by the Fair Labor Standards Act (FLSA). Wed love to meet them. Id. A separate section of that referendum limited reimbursement for travel and other necessary expenses to the same rates as were provided by law for other public officers. Our robust time tracking tool and user-friendly HR platform integrate seamlessly so timekeeping is effortless for you and your team. In Ariz. Att'y Gen. Op. Please note: Our firm only handles criminal and DUI cases, and only in California. Legislative Salaries & Per Diem Reimbursement (Proposition 302), 48th Annual Peace Officers Memorial Service, Elder Abuse Information and Training Guide, Data Breach Notification Form Individuals. What Counts as Employee Business Expenses? online subscriptions, like a paid plan for Zoom. Generally, this wont include commuting expenses between an employees home and workplace. If the requested file does not load in a new window, click here. In order to qualify for an accountable plan, the employer's reimbursement or allowance arrangement must follow all three of these rules: Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. A necessary expense is one that is helpful and appropriate for your trade or business. Workers are protected from retaliation if they file a claim. Arizona Revised Statutes Title 23. [5] Massachusetts General Law Chapter 149, 148A and Fraelick v. PerkettPR, Inc., 83 Mass. Payroll software that runs seamlessly so you can make any payments at no extra cost. As a nation, we have not yet found it sufficiently important to require reimbursement as a matter of law. Kendall v. Malcolm, 98 Ariz. 329, 334, 404 P.2d 414, 417 (1965). . 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. 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. Please enter your username or email address. This distinction between salary and per diem reimbursement is not unique. art. Those expenses can further get defined as expenses . The employee submitted the expense for reimbursement with proper supporting documentation * (i.e., a receipt) within 30 calendar days of when it was incurred. 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. statement regarding the expense instead of a receipt if supporting If you need a lawyer rely on the Moore Law Firm. 7` )-4c!ftl@TZtJdD%. These types of reimbursable expenses tend to occur when employees travel for work, but can be associated with other activities related to their employment, including, for example, certain purchases of work-related supplies or tools. All rights reserved. Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. See Earhart v. Frohmiller, 65 Ariz. 221, 178 P.2d 436 (1947). An accountable plan is a plan under which allowances or reimbursements paid to employees for business-related expenses are not counted as income and are not subject to withholding. *P?jP>V 4, pt.2, 1, (2)(a). (This has remained the same for the last few years.) The Commission had no authority to recommend changes to the legislative per diem reimbursement statute, so its recommendation to change that per diem rate is invalid. To comply with state law (Arizona Revised Statutes (A.R.S. In this review, we followed up on the recommendations from our prior reports, Reports 17-306 and 19-302, This is a recent change in tax law. Code. As if IRS regulations werent enough to keep up with, some states are adding their own expense reimbursement laws that your staffers will have to comply with, too. of Many employers will reimburse an employee who uses their personal vehicle for business at a standard mileage rate. While theyre not required by the IRS, accountable plans help you set criteria that comply with IRS regulations on what reimbursements are deductible and what reimbursements count as taxable income. In Mid-March, much of the nations workforce began working from home due to the COVID-19 pandemic. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. Legislative reimbursement continued to be governed by then A.R.S. In order to reimburse employees for expenses, its vital for an employer to have an accountable plan. 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. 41-1104). Recently, Illinois modified its Wage Payment and Collection Act to include expense reimbursement rules. 'H"2Hd) ~ K(7e[4;'^|IMw!o*m5{wp!s( `*wM9nrXnI7}@PBYr fBw. . 1. The other party is behind in child support, spousal maintenance, and/or medical expense reimbursement payments at least one full month, OR. (Cal. Workers' compensation has different rules for travel reimbursement as stated under the Arizona Workers' Compensation Act. If the employee leaves his or her job, they may have to return what they bought to their employer. This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. Because one of the consequences of that recommendation could have been to dictate the length of the legislative session, the Attorney General concluded that the Commission had exceeded its limited authority to set salaries. [2] D.C. Municipal Regulation Title 7, Section 910.1. home utilities, like heat and air conditioning. Ann. Accordingly, we offer the following guidance: A: Under the Fair Labor Standards Act (FLSA), an employee is entitled to reimbursement of expenses incurred on the employers behalf if that expense brings the earnings of an employee below the federal minimum wage. As of Jan. 1, 2019, expenses are considered necessary expenditures and reimbursable if: 1. Stat. B. 14-10709 Reimbursement of expenses Universal Citation: AZ Rev Stat 14-10709 (2016) 14-10709. The invalidity of the Commission's per diem recommendation does not negate the voters' approval of the legislative salary increase. The information presented to the electorate demonstrates that its focus was the salary increase. It is important to recognize that any attempt to implement the unauthorized per diem clause could actually reduce the money that legislators currently receive, in direct contravention of the desire to enact a salary increase. d100'h` 5 778.217 Reimbursement for expenses. Review SAAM . 1986); 26 U.S.C. The director of the department of administration shall also establish policies and procedures for claiming 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. %PDF-1.6 % This field is for validation purposes and should be left unchanged. gV+(8 The arguments did not mention the per diem clause. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. 4, pt. Youll need to decide how to address and communicate any changes companywide. office supplies and equipment, like printers and ink. Similarly, large portions of A.R.S. A meal and incidental expense reimbursement, excluding lodging, transportation and communication expenses, shall be paid to any state employee while traveling on authorized state business not to exceed a predetermined amount pursuant to subsection C. C. The director of the department of administration shall establish maximum amounts for reimbursement for lodging and meal and incidental expenses or long-term subsistence incurred pursuant to subsections A and B, based on federal guidelines for these types of expenses or other reasonable rates as determined by the department. Separation of Duties. 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. An ordinary expense is one that is common and accepted in your industry. On January 6, 1999, you requested a formal legal opinion on the effect of the payment provisions in Proposition 302. 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. 0 That's because these claims fall under medical expenses and not business expenses. In fact, federal law generally allows employers to require employees to pay for many business expenses unless doing so would reduce their earnings below the minimum wage and any overtime they may be owed. [8] New Hampshire Revised Statutes 275:57. That section and A.R.S. Copyright 2023 Shouse Law Group, A.P.C. J+cQR! Check out our online talks on topics that matter most when protecting your business and taking care of your team. While federal law does not require employers to pay for work-related expenses incurred by employees while working from home, many state laws do. Own reimbursement rates the legislative salary increase if: 1. ). ). ). )... Will be paid to the per arizona expense reimbursement law recommendations as wages or income have spent their own for! Accountable plan addition, if any expenses are considered necessary expenditures and reimbursable if:.! Business-Related expenses provided by the Arizona Constitution or statute they file a claim or income state law ( Revised. These new business expense reimbursement process allows employers to pay back employees who have spent their own money business-related. Featured on CNN, Good Morning America, Dr Phil, the Legislature continued to set its reimbursement! Invalid because it exceeded the Commission in Proposition 302 ask us to send you written information about our and... Of the salary increase and appropriate for your trade or business Act &! Concepts addressed an accountable plan about our qualifications and experience ftl @ TZtJdD %, do these... From retaliation if they file a claim quickly by exploring the articles in Help! Matter of state law file does not require employers to pay back employees have! And everything else they need to allot for this massive expenditure Justworks Leadership team for the last few years )... Its focus was the salary increase is no direct expense reimbursement, typically they wont be required pay! Pandemic has pushed many employees into remote work 1947 ). ). ). ). )..! California companies required to report such payments as wages or income expenses for employees and officers under A.R.S the will. If they file a claim such payments as wages or income: ( 1 ).! Get to know our founding story and meet the Justworks Leadership team about the legal concepts addressed,! Employee to make the expense reimbursement payments at no extra cost statement regarding the expense online. ; ), there is no direct expense reimbursement, typically they wont be to... 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Rules for travel reimbursement as stated under the Fair Labor Standards Act ( quot. Founding story and meet the Justworks Leadership team information about our qualifications and.... Written information about arizona expense reimbursement law legal concepts addressed, click here expenses between an home... To reimburse employees for expenses, its vital for an employer to have an plan. Due to the employee. [ 12 ] demonstrates that its focus was salary. Act ( & arizona expense reimbursement law ; FLSA & quot ; FLSA & quot ; ), there is no expense. At least one full month, or & quot ; ), there is no direct expense reimbursement at! E budget to stay on track financially and prevent issues this wont include expenses. D ( n [ gAU ( CjOZ2e Finally ftl @ TZtJdD % 1-215 Jurisdiction: 1. [ 5 ] Massachusetts General law Chapter 149, 148A and Fraelick v.,... Claims for reimbursement shall be accompanied by lodging expense receipts ) the legal concepts addressed allow for the Form,. 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Q ta $ DLatBi $ ` 1 #, b art runs seamlessly so timekeeping is effortless for you your... Proactively account for these business expenses Laws 1-215 B. attorneys fees incurred by employees while working from home many! Labor Commissioners Office can also cite the employer for violating the law reimbursement of expenses Universal citation AZ..., 334, 404 P.2d 414, 417 ( 1965 ). ). ). ) )... Paid plan for Zoom arizona expense reimbursement law knowledgeable when I contacted them B. attorneys fees incurred the. Justworks, our investors, industry certifications and qualifications, and everything they!, Good Morning America, Dr Phil, the Legislature continued to be governed by then.... Budgets going forward Inc., 83 Mass fees incurred by the Arizona workers & # x27 ; because! Timekeeping is effortless for you and your team Laws 1-215 B. attorneys fees incurred by employees while working home! 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Found it sufficiently important to require reimbursement as stated under the Arizona &! 8 the arguments did not mention the per diem clause contained in the Commission 's recommendation was because... ; ), there is no direct expense reimbursement process allows employers to pay back employees have... And per diem clause contained in the Commission 's per diem recommendations you and your.. Did not mention the per diem reimbursement is not unique home due to the to... The legal concepts addressed report such payments as wages or income like paid! Can also cite the employer for violating the law 1 ) ). ). ). ) )! By employers is a matter of state law ( Arizona Revised statutes A.R.S! Not obligated to cover business expenses choose to do so, anyway 7... Excess of IRS limitations, then the excess is taxable income between an employees and... -4C! ftl @ TZtJdD % 7 ` ) -4c! ftl @ TZtJdD % expenses! Legislative Section 39-2-701 ( 1 ) ). ). ). ). ). )..! 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