Effective January 1, 2019 employers are now required to reimburse employees for costs incurred in connection with their employment.

A new amendment to The Illinois Wage Payment and Collection Act (IWPCA) now requires employers to reimburse employees for “all necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.”

The new law requires the following:

  • The employer must have “authorized or required” the employee to incur the expense
  • The expense request, along with appropriate documentation, must be submitted within 30 calendar days, unless a longer is provided for under the employer’s expense reimbursement policy
  • Where supporting documentation is nonexistent, missing, or lost, the employee shall submit a signed statement regarding such receipts.

Previously, the IWPCA did not address employee reimbursement, so organizations implemented their own policies for reimbursement. While it’s unclear how courts will interpret the amendment some states have interpreted similar laws to include items such as cell phone usage, automobile mileage, internet bills, computing expenses, etc.

The amendment does permit employers to place certain limitations on reimbursement expenses when a written policy has been established. This ensures employers are not liable for expenditure amounts that exceed the guidelines provided in the reimbursement policy, so long as the employer does not institute policies that provide no reimbursement.

Nonprofits and other organizations need to evaluate their expense reimbursement policies and make the necessary updates. If you have any questions or want to ensure your nonprofit is in compliance, reach out to one of our compliance experts.