NEW LAW – Illinois To Require Business Expense Reimbursement

Illinois Governor Bruce Rauner recently signed Senate Bill 2999, an amendment to the Illinois Wage Payment and Collection Act into law.  This amendment, which goes into effect on January 1, 2019, will require all Illinois employers to “reimburse an employee 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.”

For purposes of the new law, the term “”necessary expenditures” means all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.  The law makes it clear that employers are not required to reimburse employees for losses due to an employee’s own negligence, losses due to normal wear, or losses due to theft unless the theft was a result of the employer’s negligence.

In order to obtain reimbursement, an employee will be required to submit any necessary expenditure with appropriate supporting documentation within 30 calendar days after incurring the expense.  In the event that the employee does not have “supporting documentation” relating to the expense (i.e. the documentation is nonexistent, missing, or lost), the employee must submit a signed statement regarding any such receipts in order to be reimbursed.

The new law does not apply to an employer that has “an established written expense reimbursement policy” when an employee fails to comply with the written expense reimbursement policy.

In addition, employers who have a written expense reimbursement policy that contains specifications or guidelines for necessary expenditures are not required to reimburse employees for expenses that exceed those expenditure amounts – provided that “the employer does not institute a policy that provides for no reimbursement or de minimis reimbursement.”

It is recommended that all Illinois employers take steps to prepare for this new law and consider adopting a policy relating to business expense reimbursement.  When putting together this type of policy, don’t forget to address employees’ use of personal cell phones, laptops, tablets, and other equipment for business use, as such use could be viewed as a reimbursable expense come January 1st.