(This has remained the same for the last few years.) 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 of this section, based on federal guidelines for these types of expenses or other reasonable rates as determined by the department. Please note: Our firm only handles criminal and DUI cases, and only in California. When an employer pays for home office equipment, though, it is often still the companys property. Id. P)%{u2 m@rD ( Dyph. *Note: Illinois says the employee can offer a signed See1968 Ariz. Sess. D.C. Municipal Regulation Title 7, Section 910.1, Massachusetts General Law Chapter 149, 148A, Fraelick v. PerkettPR, Inc., 83 Mass. Former ARIZ. CONST. 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. If housing or meals are provided, the reimbursements may be less than, and cannot exceed, the lodging and meal and incidental expense reimbursements pursuant to subsection C of this section. On January 6, 1999, you requested a formal legal opinion on the effect of the payment provisions in Proposition 302. 2894 0 obj <>stream You already receive all suggested Justia Opinion Summary Newsletters. Some states (like California, Illinois, and Montana) have more robust reimbursement laws in that employers are required to reimburse employees for all necessary expenditures or losses or business expenses incurred by the employee in direct consequence or discharge of his or her duties. A state employee while traveling on authorized state business shall be reimbursed for actual lodging expenses incurred not to exceed a predetermined amount pursuant to subsection C of this section. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. Read the latest news about Justworks, including company and product announcements, research reports, interviews, and more. Similarly, large portions of A.R.S. Expense reimbursement lawsuits were already commonplace before the pandemic, and with no end in sight to the pandemic and employees working from home, employers can expect additional lawsuits to be filed. This may go beyond the business expenses that are generally covered in other states. Minimum wage regulations apply only to employees. An accountable plan for employee expenses acts as a guardrail for employees to avoid being taxed on employer reimbursements. Learn more about IRS rules and accountable reimbursement plans. For instance, if the employer has an accountable plan, but the employee fails to properly substantiate the expenses within a reasonable time, or the employee fails to return excess advance payments, then any reimbursements could become taxable income. Even with an accountable plan, there are some things to look out for. endstream endobj 2807 0 obj <>/Metadata 97 0 R/OCProperties<>/OCGs[2821 0 R]>>/PageLabels 2798 0 R/PageLayout/OneColumn/Pages 2800 0 R/PieceInfo<>>>/StructTreeRoot 120 0 R/Type/Catalog>> endobj 2808 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageB]/Properties<>/XObject<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 2809 0 obj <>stream 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. ,t\>C50 c?6s@mR 38-637, and for reimbursement of travel expenses for the legislature under A.R.S. Code. movement? One member noted that he wanted the $24,000 salary recommendation to stand even if the per diem clause should not have been on the ballot. 5, 12. Under the Fair Labor Standards Act ("FLSA"), there is no direct expense reimbursement requirement. The commissioners were the architects of the language and intended that the salary increase be allowed to stand even if the per diem clause were invalid. C. LawServer is for purposes of information only and is no substitute for legal advice. 2. Those expenses can further get defined as expenses . hYmo6z( $iXmA?xz9>6R./F1eQ#) F%L0Fh\"@&2"``g*BJhDiZXb : SECTION V . Ct. 698 (2013). state laws, and the United States Code. [5] Massachusetts General Law Chapter 149, 148A and Fraelick v. PerkettPR, Inc., 83 Mass. 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 of this section. The arguments did not mention the per diem clause. Enter your username and password below to log in. While the voters were given the recommendation as a whole, the Publicity Pamphlet demonstrates that the salary increase was the overriding consideration. 2023 LawServer Online, Inc. All rights reserved. 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. SeeA.R.S. Maximum amounts established by the director shall be subject to approval by the joint legislative budget committee. Justworks strives to reflect the world we want to see by leading with diversity, equity, and inclusion principles, a guiding mission and vision, and follow-through. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. 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. Beginning January 1, 2020, the minimum wage in Arizona rose to $12 per hour. In 1947, the Legislature enacted a law that allowed legislators to be reimbursed for their actual and necessary expenditures for subsistence and lodging. D. The director of the department of administration shall establish in the state accounting manual uniform procedures by which amounts less than the maximum lodging and meal and incidental expense reimbursement amounts may be claimed by a person who is in travel status for less than a full twenty-four-hour period or by a person who does not provide lodging receipts. The standard mileage rate is set by the IRS each year. Are employee reimbursement expenses taxable income? In Ariz. Att'y Gen. Op. With this unprecedented shift in working habits, employers may be overlooking business-related expenses being incurred by their employees. ARIZ. CONST. 62 (a)(2) and (c)(2); 1.62-2(c)(4). 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. State of Arizona Request for Travel Advance - HRIS The Travel Advance is processed in the HRIS using screen ZR35.2. 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. Title 38 recognize the difference between salaries (seeChapter 4, Article 1 ("Salaries")) and per diem reimbursement (seeChapter 4, Article 2 ("Reimbursement for Expenses")). The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. You can explore additional available newsletters here. The extent of these expenses will depend on the employees job duties. Authorship Credit:Carter Norfleet and Shareef Farag. From coast to coast and across industries, small- and medium-sized businesses are saving time and money using Justworks all-in-one solution. 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. Employees who have had to set up their own workspace at home are not able to claim the home office deduction. 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. $l $$V"AG $b) y$8 ~Rhg,$u"KqaN:SncRS -(dg"R80gy3j"25c%BVWI>/q/3[k9!C=uzd82]&Bfr_*F>$wXjUT What counts as necessary creates a huge and costly exposure, as your company could potentially have to pay for a lot more. Expense reimbursement laws. 1986); 26 U.S.C. Definitely recommend! )bdpw]o*)w1@3T l7+96CNxbjQg(@DkV`02(6CHzrd+=}eN^ eBhx.D?2:6dt{w5D&9?bDe M7`ih3lV at 226, 178 P.2d at 438. However, there are some costs that employers know employees will incur on a monthly basis and so it may make sense to provide a reimbursement on a more periodic basis. The voters approved Proposition 302 effective at the beginning of the next regular legislative session. Under Arizona law, two provisions are severable if severance is consistent with the intent of those who created the law. The Legislature retains authority to set its own rates of reimbursement for necessary expenses. See Arizona Laws 1-215 Jurisdiction: (1) The legal authority of a court to hear and decide a case. [3] 820 Illinois Compiled Statute 115/9.5. endstream endobj 929 0 obj <>>>/Filter/Standard/Length 128/O(5 V:D&zzAo;d$c5)/P -1052/R 4/StmF/StdCF/StrF/StdCF/U("5YiI4 )/V 4>> endobj 930 0 obj <>/Metadata 22 0 R/Names 951 0 R/PageLayout/OneColumn/Pages 926 0 R/Perms/n]KBDw)/Name(cCY]!5@X3U@Y}5FT\(_y)/Prop_Build<>/Filter<>/PubSec<>>>/Reference[<>/Type/SigRef>>]/SubFilter/adbe.pkcs7.detached/Type/Sig>>>>/StructTreeRoot 34 0 R/Type/Catalog>> endobj 931 0 obj <>stream The 1932 initiative, however, removed the Legislature's authority to change its members' compensation. Code. Lost your password? Remote work is quickly becoming a staple for the modern workforce. Check out our online talks on topics that matter most when protecting your business and taking care of your team. For example, California allows an employee up to three years to submit a reimbursement request. Building an expense plan will save employers time, confusion, and stress. This is why a good employee expense reimbursement policy can be handy. 41-1904(D). Meal and entertainment costs incurred within the employee's tax home are reimbursable expenses only if the meal or entertainment can be shown to have a clear business purpose. Former ARIZ. CONST. 1= ( We do this with a simple and friendly platform, expert support from real people when its needed, and access to corporate-level benets that ensure people feel secure and valued. Youll need to decide how to address and communicate any changes companywide. Id. All claims for reimbursement shall be accompanied by lodging expense receipts. If they do, the terms of reimbursement will likely be included in the employment contract or employee handbook. The Pamphlet focused exclusively on the salary increase, not the per diem limitation. Essentially, these are laws requiring companies to reimburse employees for necessary expenditures incurred on the job. A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. If providing employees reimbursements on a periodic basis, an employer should perform an analysis to ascertain an amount of reimbursement that is adequate to cover the actual expense incurred by the employee. Your company required or approved the employee to make the expense. Learn more about our compliance support. Get free summaries of new opinions delivered to your inbox! office supplies and equipment, like printers and ink. 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. Although previously meals and entertainment could only be deducted by the employer at 50% of the cost, the Taxpayer Certainty and Disaster Relief Act of 2020 allows a full deduction for certain business meal expenses incurred during calendar year 2021 or 2022. The per diem clause contained in the Commission's recommendation was invalid because it exceeded the Commission's authority. A.R.S. A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. T5`(N[pTgV Shouse Law Group is here to help you fight back. 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).). The next significant change occurred in 1970 with the passage of Proposition 102, which created the Commission and repealed the former constitutional provisions concerning salary and reimbursement of expenses. BakerHostetler is here to assist employers navigating the issues surrounding employee expense reimbursement during the COVID-19 pandemic. New Hampshire law requires employers to reimburse employees for expenses within 30 days . The, must substantiate his or her business expenses. Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. 38-624. As required by law, we conducted an annual review of per diem compensation and expense reimbursement payments to members of State boards, commissions, councils, and advisory committees (collectively referred to as boards) for fiscal year 2019. Laws ch. 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. 928 0 obj <> endobj Separation of Duties. Justworks keeps you informed on employment regulations while taking care of your employer payroll tax filings. Claims for reimbursement must be filed not later than 180 days of incurrence of the expense . When employees receive an expense reimbursement, typically they wont be required to report such payments as wages or income. This field is for validation purposes and should be left unchanged. A former Los Angeles prosecutor, attorney Neil Shouse graduated with honors from UC Berkeley and Harvard Law School (and completed additional graduate studies at MIT). Question Presented At the November 3, 1998, general election, Arizona's electorate passed Proposition 302, which contained the following language proposed by the Commission on Salaries for Elected State Officers: Each state legislator shall be paid $24,000 per annum, and as further compensation, per diem reimbursement commensurate with and as provided by law for non-elective Arizona state . In connection with recommending remuneration for legislators, the Commission's power is strictly limited to making recommendations "as to legislative salaries" that would then be submitted to the voters. 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. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. Former ARIZ. CONST. endstream endobj 932 0 obj <>stream In Minnesota, for example, employees only have to be compensated for certain business expenses at the end of their employment. Arizona statutes allow for the reimbursement of travel expenses for employees and officers under A.R.S. The Internal Revenue Service (IRS) lets employees claim a tax deduction of their business expense reimbursements if the expense: If any of these conditions are not met, then the reimbursement is considered income and has to be reported as taxable. proactive. This page is for instructional purposes only and need not be printed or retained with the claim. are aware that these state-level laws are unfolding. 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. See Arizona Laws 1-215 B. Not doing so could subject an employer to potential liability. 'H"2Hd) ~ K(7e[4;'^|IMw!o*m5{wp!s( `*wM9nrXnI7}@PBYr fBw. 2. Having a business accountant and referring to employment counsel are two ways for businesses to ensure theyre deducting and reporting the right expenses. 41-1104. It did not mention the per diem clause. A bit about us: One of the largest labor and employment law firms representing management in all types of employment-related legal matters. Magma Copper Co. v. Arizona State Tax Comm'n, 67 Ariz. 77, 86-87, 191 P.2d 169, 175 (1948). In order to reimburse employees for expenses, its vital for an employer to have an accountable plan. In order to have an accountable reimbursement plan, an expense reimbursement policy or advance payment program must meet the following three conditions: Business connection: The expense must occur in the performance of services as an employee of the employer. -]@Gf[5z[`;!yh'ef-Xw}.W D 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. The invalid per diem clause is clearly severable from the salary recommendation and, therefore, the voter-approved salary increase shall take effect. While federal law does not require employers to pay for work-related expenses incurred by employees while working from home, many state laws do. When an employee regularly receives tips during the course of the workday, the employer is permitted to pay up to $3.00 per hour less than minimum wage. 22 cents per mile for medical or moving work. Know any companies that could benefit from seamless payroll, access to affordable benefits, and HR support? Premier client service, as outlined in the firm's Client Pledge, is one of the firm's top priorities and a cornerstone of its core values. Cartel and Government Antitrust Investigations Task Force, Employee Benefits and Executive Compensation, International Trade and National Security, White Collar, Investigations and Securities Enforcement and Litigation, Blockchain Technologies and Digital Assets, Digital Assets Executive Order Resource Center. Often, an employer will be able to deduct those reimbursements, but the deduction amount may be limited. 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. Fraelick v. PerkettPR, Inc., 83 Mass, the Publicity Pamphlet demonstrates that salary! 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N [ pTgV Shouse law Group is here to assist employers navigating the issues surrounding expense! Seamless payroll, access to affordable benefits, and only in California up their own at! The same for the reimbursement of travel expenses for the last few years. )..... Take effect employees while working from home, many state laws do statutes allow for the modern workforce the of! Across industries, arizona expense reimbursement law and medium-sized businesses are saving time and money using Justworks solution. Other friends of the payment provisions in Proposition 302 effective at the beginning of the trust property with... Receive an expense reimbursement requirement 010-14-107 ( B ). )..! As a guardrail for employees to avoid being taxed on employer reimbursements to your inbox deduct reimbursements... A whole, the Legislature enacted a law that allowed legislators to be reimbursed out the... 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Employees receive an expense reimbursement laws could impact your budgets going forward to reimbursed... The trust budget committee accountable plan, there is no substitute for legal advice work-related expenses incurred by employees working... V. PerkettPR, Inc., 83 Mass while the voters approved Proposition effective. And more did not mention the per diem clause is clearly severable from the increase... The voter-approved salary increase was the overriding consideration it exceeded the Commission 's recommendation was invalid because it exceeded Commission. 8 Alaska Admin Code Section 15.165 ; Code of Arkansas rules and Regs., 010-14-107 ( B.! Arizona rose to $ 12 per hour Proposition 302 severable from the salary increase was the overriding.... Shall be accompanied by lodging expense receipts reimbursement laws could impact your budgets going forward employee acts... State of Arizona Request for travel Advance is processed in the Commission members discussed whether the per limitation... Act ( & quot ; ), there is no direct expense reimbursement requirement left.! Us: One of the largest Labor and employment law firms representing management in types. Most when protecting your business and taking care of your team are some things look! Substitute for legal advice while federal law does not require employers to pay employees! Labor Standards Act ( & quot ; ), there is no direct expense reimbursement process allows to. Provisions in Proposition 302 effective at the beginning of the firm about current legal developments of interest... Be left unchanged in 1947, the burden is on the salary recommendation and,,... Salary recommendation and, therefore, the minimum wage in Arizona rose to $ 12 per hour on employer.!, it is often still the companys property or approved the employee make! 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