Under the Illinois Wage Payment and Collection Act, employers are required to reimburse their employees for expenses incurred within the scope of their employment. This requirement was added by the Illinois General Assembly, effective this year, January 1, 2019. Employers who fail to comply with the amended law are subject to possible damages equal to the amount of the reimbursement, plus a two percent penalty for each month the expenses are unpaid, and attorney’s fees and costs the employee incurs. Dealerships should consider creating or modifying a written expense reimbursement policy that addresses which expenses may be reimbursed and up to what threshold amount.
There are certain requirements under the amended law to qualify for reimbursement. These include: a) the employer must have “authorized or required” the employee to incur the expense; b) the expense request must be submitted by the employee within thirty calendar days, unless a longer period is provided under the employer’s expense reimbursement policy; and c) the employee must provide a signed, written statement in lieu of a receipt when the supporting documentation has been lost or does not exist. There are also certain exceptions to the requirements. For example, an employer is not required to reimburse for losses that are due to a) the employee’s negligence; b) normal wear; or c) theft, unless the theft was a result of the employer’s negligence.
The Wage Payment and Collection Act, as amended, permits employers to promulgate written expense reimbursement policies that specify the requirements for and amounts of any reimbursement. Under the law, employees are not entitled to reimbursement if they do not comply with the employer’s written expense reimbursement policies. Also, if the written reimbursement policies specify the amounts and requirements for any reimbursement, the employer is not liable for expenses that exceed those amounts. Notwithstanding the employer’s ability under the law to establish policies that contain limits, an employer is not permitted to establish a policy that provides for no employee expense reimbursement or one that provides for nominal reimbursement. If the employer’s policy “authorizes” or “requires” a particular expense, the employer may not deny reimbursement, even if the amount or type of the expense would violate or exceed the employer’s policy.
With these modifications to the law this year, dealerships are reminded of the significance of having their company expense reimbursement policies in place. These can be added to the dealership’s existing employee manual or handbook; however, existing expense reimbursement policies and practices should be updated to ensure compliance with the amended law. By way of example, such policies should address required employee reimbursement of work-related mileage, not including the employee’s regular commute to work. Dealership policies should also address reimbursement of employee expenses for employee personal cell phone use, provided customers and other dealership employees call employees via personal cell phones for work-related purposes. Alternatively, employers would need to ensure their written policies explicitly advise against use of personal phones or computers for work-related business.
State and federal courts in other jurisdictions wherein similar laws have been enacted have ruled that employees are to be reimbursed for use of their vehicles and work-related calls with their cell phones, notwithstanding whether the employee has an unlimited data plan and incurs no additional costs as a result of such calls, requiring the employer to reimburse a percentage of the employee’s phone bill. Given the recency of the Illinois amendatory law, whether Illinois courts will hold the same view as courts in other states with similar laws, has yet to be determined. In the event the judicial interpretations follow the same path in Illinois, employees may not have to establish actual out-of-pocket costs in order for employers to be subject to reimbursement.
While most dealerships are organized as legal entities, corporations or otherwise, the amended Illinois law extends personal liability for noncompliance, beyond traditional corporate protections, to any officer or agent of the dealership employer who knowingly permits a violation of the law and fails to reimburse the employee’s expenses.
Dealerships should consult with their legal advisers to ensure their compliance with the law and evaluate existing expense reimbursement policies. Areas to be reviewed might include: specific reimbursable expenses, whether a portion of the expense is reimbursable, time frame for employee to submit documentation, kind of documentation required, and if such documentation is not available, whether the employee can submit a signed, written statement instead, dealership contact who can answer questions about employee reimbursable expenses, and the policy concerning employee use of personal equipment for work-related purposes.