Illinois Employers Face New Expense Reimbursement Requirements

By: Alexis M. Dominguez

Beginning January 1, 2019, employers in Illinois will be required to reimburse employees for “necessary expenditures” incurred during the scope of their employment.

The amendments to the Illinois Wage Payment and Collection Act (IWPCA) define “necessary expenditures” as “all reasonable expenditures or losses required of the employee in the discharge of employment duties that inure to the primary benefit of the employer.”  Necessary expenditures do not include losses due to: (1) an employee’s own negligence; (2) normal wear; and/or (3) theft not due to the employer’s negligence.

Employees are required to submit appropriate documentation for any necessary expenditures within thirty (30) days after the expense is incurred, unless otherwise provided for by an employer’s written expense reimbursement policy.  Additionally, if the employee lacks supporting documentation for the expenditure, the employee is required to provide a signed statement reflecting such expense(s).

These new expense reimbursement requirements, however, will notapply to all Illinois-based employers.  Employers with established written expense reimbursement policies are exempted from the IWPCA’s new requirements.  In particular, an employee is not entitled to expense reimbursement if his or her employer has an established expense reimbursement policy and the employee fails to comply with the terms of that policy.  For example, an employer is not liable for expenses which exceed the limits set forth in the employer’s written expense reimbursement policy, provided that the policy does not preclude reimbursement for de minimisexpenses.

The IWPCA amendments also make clear that employers will not be liable for an expenditure unless the employer authorized or required the employee to incur the expenditure, or the employer failed to comply with its own written expense reimbursement policy.

In light of the foregoing, Illinois employers that already have not implemented a written expense reimbursement policy should do so prior to the start of 2019. Employers with existing expense reimbursement policies should revisit them to ensure compliance with the IWPCA’s new requirements.

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