REMOTE WORKER EXPENSE REIMBURSEMENT POLICY

[// GUIDANCE: Several states require employers to reimburse employees for necessary business expenses. California Labor Code Section 2802 is the most comprehensive, requiring reimbursement of all necessary expenditures. Illinois (820 ILCS 115/9.5) requires reimbursement for reasonable expenses. Other states with requirements include Montana, Iowa, New Hampshire, North Dakota, and South Dakota. Review state law for each employee's work location.]

TABLE OF CONTENTS

1. Policy Overview
2. Legal Framework
3. Scope and Applicability
4. Definitions
5. Reimbursable Expenses
6. Non-Reimbursable Expenses
7. Expense Categories and Limits
8. Submission Process
9. Approval Workflow
10. Payment Terms
11. Tax Considerations
12. Documentation Requirements
13. State-Specific Requirements
14. Fraud Prevention
15. Dispute Resolution
16. Policy Administration
17. Acknowledgment

1. POLICY OVERVIEW

1.1 Purpose

This Remote Worker Expense Reimbursement Policy (the "Policy") establishes the guidelines and procedures for reimbursing remote employees for reasonable and necessary business expenses incurred while performing work duties.

1.2 Policy Statement

[Company Name] (the "Company") is committed to:
☐ Reimbursing employees for legitimate business expenses
☐ Complying with applicable federal, state, and local laws
☐ Providing fair and consistent treatment of expense claims
☐ Maintaining clear documentation and approval processes
☐ Ensuring timely reimbursement of approved expenses

1.3 Effective Date

This Policy is effective as of [Effective Date].

2. LEGAL FRAMEWORK

2.1 Federal Requirements

Under federal law:
☐ No general federal law requires expense reimbursement
☐ FLSA requires that expenses cannot reduce pay below minimum wage or affect overtime
☐ IRS rules determine tax treatment of reimbursements

2.2 State Requirements Summary

[// GUIDANCE: This summary reflects laws as of January 2026. State laws change frequently - verify current requirements.]

States Requiring Expense Reimbursement:

2.3 Compliance Commitment

Company will:
☐ Reimburse expenses required by applicable state law
☐ Apply the standard of the employee's work state
☐ Update this Policy as laws change

3. SCOPE AND APPLICABILITY

3.1 Covered Employees

This Policy applies to:
☐ Full-time remote employees
☐ Part-time remote employees
☐ Hybrid employees (for remote work days)
☐ Employees temporarily working remotely
☐ Employees working from a state requiring reimbursement

3.2 Excluded Personnel

This Policy does NOT apply to:
☐ Independent contractors (see separate agreement)
☐ Interns (unless required by state law)
☐ Volunteers
☐ Employees who have a separate reimbursement agreement

3.3 Work State Determination

Employee's "work state" for reimbursement purposes is:
☐ The state where the employee physically performs work
☐ For hybrid employees: the state of the home office location
☐ For multi-state workers: [Method for determination]

4. DEFINITIONS

"Accountable Plan" means an expense reimbursement arrangement meeting IRS requirements where reimbursements are excluded from taxable income.

"Business Expense" means an expense that is ordinary and necessary for the employee to perform their job duties.

"De Minimis Expense" means a small expense that does not require receipt submission (under $[25]).

"Necessary Expense" means an expense required by the employer or essential to perform job duties.

"Pre-Approval" means written authorization from an appropriate approver before incurring an expense.

"Reasonable Expense" means an expense that is appropriate for the business purpose and not excessive.

"Reimbursement" means payment to an employee for expenses incurred on behalf of the Company.

5. REIMBURSABLE EXPENSES

5.1 Internet Service

Reimbursable: A portion of home internet costs for remote work
☐ Reimbursement method: [Fixed monthly amount / Percentage of bill]
☐ Amount: $[Amount] per month OR [Percentage]% of monthly bill
☐ Maximum: $[Amount] per month
☐ Documentation: Internet bill showing name and service

5.2 Mobile Phone/Telephone

If required for work:
☐ Work mobile phone plan (if separate): Full cost or allowance
☐ Personal phone used for work: Pro-rata portion or monthly stipend
☐ Amount: $[Amount] per month
☐ Documentation: Phone bill or attestation

5.3 Office Supplies

Reimbursable supplies include:
☐ Paper, pens, notebooks
☐ Printer ink/toner (if printer is provided or required)
☐ Basic desk supplies (staplers, tape, etc.)
☐ Filing materials
☐ Limit: $[Amount] per month without pre-approval
☐ Documentation: Itemized receipts

5.4 Equipment and Technology

With pre-approval:
☐ Computer peripherals (keyboard, mouse, cables)
☐ Webcam (if not provided)
☐ Headset (if not provided)
☐ Monitor (with approval)
☐ Ergonomic equipment (with approval)
☐ See Home Office Stipend Agreement for initial setup

5.5 Software and Subscriptions

Required for work:
☐ Company-required software licenses
☐ Work-related subscriptions (with approval)
☐ Must be pre-approved unless on approved list

5.6 Printing and Shipping

☐ Printing work documents: Reimbursed at $[0.10] per page B&W / $[0.25] color
☐ Shipping work materials: Full reimbursement with receipt
☐ Postage for business mail: Full reimbursement

5.7 Travel to Company Office

For required office visits by remote employees:
☐ Mileage: IRS standard rate (currently [X] cents per mile)
☐ Public transportation: Actual cost
☐ Parking: Actual cost
☐ Airfare/hotel: Per Company travel policy
☐ Note: Daily commute for hybrid employees is NOT reimbursable

5.8 Professional Development (Pre-Approved)

☐ Required certifications
☐ Company-approved training
☐ Professional memberships (if required)
☐ Must have written pre-approval

5.9 Client-Related Expenses (Pre-Approved)

☐ Client entertainment/meals (per entertainment policy)
☐ Client gifts (within limits)
☐ Travel for client meetings

6. NON-REIMBURSABLE EXPENSES

6.1 Personal and Commuting Expenses

☐ Regular commuting to office for hybrid employees
☐ Personal vehicle maintenance, insurance, or registration
☐ Personal cell phone plan (beyond work portion)
☐ Personal internet upgrade beyond business needs

6.2 Home-Related Expenses

☐ Rent or mortgage payments
☐ Property taxes
☐ Home insurance
☐ Utilities (electricity, gas, water) - unless required by state law
☐ Home maintenance or repairs
☐ Furniture (unless specifically approved)

6.3 Non-Essential Items

☐ Decorative items
☐ Coffee, snacks, beverages
☐ Personal comfort items (unless medically necessary)
☐ Smart home devices not required for work

6.4 Unapproved Expenses

☐ Items purchased before approval was obtained
☐ Items purchased after employment ends
☐ Expenses exceeding policy limits without approval
☐ Items on the prohibited list

6.5 Duplicate and Covered Items

☐ Expenses already provided by Company
☐ Expenses covered by another policy or benefit
☐ Duplicate expenses for the same purpose

7. EXPENSE CATEGORIES AND LIMITS

7.1 Standard Monthly Limits

7.2 Annual Limits

7.3 Pre-Approval Thresholds

Pre-approval is REQUIRED for:
☐ Any single expense over $[100]
☐ Any expense not specifically listed as reimbursable
☐ Equipment purchases
☐ Software and subscriptions
☐ Professional development
☐ Travel expenses

7.4 Exception Process

To request an exception to limits:
(a) Submit exception request to [Manager/Finance] via [Method]
(b) Include business justification
(c) Await written approval BEFORE purchasing
(d) Attach approval to expense report

8. SUBMISSION PROCESS

8.1 How to Submit Expenses

Step 1: Gather Documentation
☐ Collect itemized receipts for all expenses
☐ Note business purpose for each expense

Step 2: Complete Expense Report
☐ Use [Expense System/Form]
☐ Enter all required fields
☐ Attach receipt images
☐ Categorize expenses correctly

Step 3: Submit for Approval
☐ Submit via [System/Email]
☐ Expenses route to appropriate approver
☐ Track approval status in system

8.2 Submission Deadlines

☐ Submit expenses within [30] days of incurring
☐ Monthly recurring expenses: Submit by [Day] of following month
☐ Year-end deadline: All expenses must be submitted by [Date]
☐ Late submissions may be denied

8.3 Receipt Requirements

Required Information:
☐ Vendor/merchant name
☐ Date of purchase
☐ Itemized list of items purchased
☐ Total amount
☐ Proof of payment

Acceptable Formats:
☐ Original paper receipts
☐ Digital receipts (email confirmation)
☐ Scanned copies (clear and legible)
☐ Screenshot of online purchase

Not Acceptable:
☐ Credit card statements alone (no itemization)
☐ Handwritten notes without receipt
☐ Illegible or partial receipts (without explanation)

8.4 Missing Receipts

If receipt is lost or unavailable:
☐ Complete Missing Receipt Affidavit
☐ Provide: Vendor, date, amount, business purpose
☐ Manager approval required
☐ Limit: [2] missing receipt claims per year

9. APPROVAL WORKFLOW

9.1 Approval Authority

9.2 Approval Timeline

☐ Approvers should review within [5] business days
☐ Employees will be notified of approval status
☐ Requests for additional information must be responded to promptly

9.3 Denial Process

If an expense is denied:
☐ Employee receives written explanation
☐ Employee may appeal to [HR/Finance]
☐ Appeal must be submitted within [10] business days
☐ Final decision made within [10] business days of appeal

10. PAYMENT TERMS

10.1 Reimbursement Timeline

☐ Approved expenses reimbursed within [15] business days
☐ Payment included in regular payroll OR
☐ Separate reimbursement payment on [Schedule]

10.2 Payment Method

Reimbursements paid via:
☐ Direct deposit to payroll account
☐ Separate check
☐ Company expense card (if applicable)

10.3 Currency

☐ All reimbursements in USD
☐ Foreign currency expenses converted at [Rate determination method]

10.4 Non-Payment Situations

Reimbursement may be withheld if:
☐ Documentation is incomplete
☐ Expense is non-reimbursable
☐ Approval is not obtained
☐ Fraud is suspected

11. TAX CONSIDERATIONS

11.1 Accountable Plan Requirements

For reimbursements to be non-taxable (accountable plan):
☐ Expense must have business connection
☐ Employee must adequately account for expense
☐ Employee must return any excess reimbursement

11.2 Tax Treatment

Non-Taxable (meets accountable plan requirements):
☐ Not included in W-2 wages
☐ No tax withholding
☐ No FICA taxes

Taxable (does not meet requirements):
☐ Included in W-2 wages
☐ Subject to tax withholding
☐ Subject to FICA taxes

11.3 Employee Tax Obligations

☐ W-2 employees generally cannot deduct unreimbursed business expenses on federal returns
☐ State tax treatment may vary
☐ Employees should consult tax advisor for specific situation

11.4 Stipends vs. Reimbursements

☐ Fixed stipends without documentation may be taxable
☐ Actual expense reimbursements with documentation generally non-taxable
☐ See Home Office Stipend Agreement for stipend treatment

12. DOCUMENTATION REQUIREMENTS

12.1 Standard Documentation

All expense reports must include:
☐ Expense report form/submission
☐ Itemized receipt for each expense over $[25]
☐ Business purpose description
☐ Pre-approval documentation (if applicable)

12.2 Category-Specific Requirements

Internet/Phone:
☐ Monthly bill showing service and cost
☐ First bill plus attestation for ongoing claims, OR
☐ Updated bill submitted [quarterly/annually]

Equipment:
☐ Itemized receipt
☐ Pre-approval documentation
☐ Asset information (serial number, etc.)

Travel:
☐ Receipts for all expenses over $[25]
☐ Mileage log for personal vehicle
☐ Business purpose and destination

Meals/Entertainment:
☐ Itemized receipt (not just credit card slip)
☐ Names and business relationship of attendees
☐ Business purpose discussed

12.3 Record Retention

☐ Company retains expense records for [7] years
☐ Employees should keep personal copies for [3] years
☐ Records subject to audit

13. STATE-SPECIFIC REQUIREMENTS

[// GUIDANCE: Include specific language for states with mandatory reimbursement requirements. Customize based on where employees are located.]

13.1 California Employees

Per California Labor Code Section 2802:
☐ Company reimburses all necessary expenditures incurred in direct consequence of job duties
☐ This includes reasonable percentage of internet and phone for work use
☐ Company will not require employees to use personal equipment without reimbursement
☐ Employees may submit additional expense claims beyond policy limits if necessary for work

13.2 Illinois Employees

Per 820 ILCS 115/9.5:
☐ Company reimburses necessary expenditures per this written policy
☐ Employees must comply with submission requirements
☐ 30-day submission deadline applies per policy
☐ Additional expenses may be submitted with documentation

13.3 Other States with Requirements

Montana, Iowa, New Hampshire, North Dakota, South Dakota:
☐ Company will reimburse necessary business expenses per state law
☐ Contact HR for state-specific questions

13.4 State Law Updates

☐ Company monitors changes in state expense reimbursement laws
☐ Policy will be updated as laws change
☐ Employees will be notified of changes affecting their state

14. FRAUD PREVENTION

14.1 Prohibited Conduct

The following are prohibited:
☐ Submitting false or inflated expenses
☐ Submitting personal expenses as business expenses
☐ Submitting duplicate expenses
☐ Altering or creating false receipts
☐ Misrepresenting business purpose
☐ Colluding with others to submit false expenses

14.2 Audits and Investigations

Company may:
☐ Conduct random audits of expense reports
☐ Request additional documentation at any time
☐ Investigate suspected fraud
☐ Verify receipts with vendors

14.3 Consequences of Fraud

Expense fraud may result in:
☐ Denial of reimbursement
☐ Requirement to repay fraudulent reimbursements
☐ Disciplinary action up to termination
☐ Criminal prosecution
☐ Civil action for recovery

14.4 Reporting Concerns

Report suspected expense fraud to:
☐ [Finance/HR/Ethics Hotline]
☐ Anonymous reporting available
☐ No retaliation for good-faith reports

15. DISPUTE RESOLUTION

15.1 Informal Resolution

For questions or concerns about reimbursements:
☐ First discuss with direct manager
☐ Contact HR or Finance for policy clarification
☐ Most issues can be resolved informally

15.2 Formal Appeal Process

If expense claim is denied:
(a) Employee receives written denial with reason
(b) Employee may appeal in writing within [10] business days
(c) Include additional documentation or explanation
(d) Appeal reviewed by [HR Director/Finance Manager]
(e) Final decision provided within [15] business days

15.3 Escalation

If appeal is unsuccessful:
☐ Employee may request review by [VP of HR/CFO]
☐ Decision is final
☐ If state law requires reimbursement, Company will comply

16. POLICY ADMINISTRATION

16.1 Policy Owner

This Policy is administered by: [Finance/HR Department]
Contact: [Email/Phone]

16.2 Related Policies

This Policy should be read with:
☐ Remote Work Agreement
☐ Home Office Stipend Agreement
☐ Travel and Entertainment Policy
☐ Procurement Policy
☐ Accountable Plan Document

16.3 Policy Updates

☐ Policy reviewed annually
☐ Updates communicated via [Method]
☐ Employees will be notified of material changes
☐ Questions should be directed to [Contact]

16.4 Training

☐ New employee orientation includes expense policy review
☐ Expense system training available at [Resource]
☐ Updates provided as policy changes

17. ACKNOWLEDGMENT

By signing below, I acknowledge that:

☐ I have received and read the Remote Worker Expense Reimbursement Policy
☐ I understand the types of expenses that are reimbursable and non-reimbursable
☐ I understand the submission, documentation, and approval requirements
☐ I agree to submit only legitimate business expenses
☐ I understand that fraudulent expense claims may result in disciplinary action
☐ I will comply with all provisions of this Policy

Employee Acknowledgment

Employee Name (Print): _________________________________

Employee Signature: ____________________________________

Employee Work State: ___________________________________

Date: ________________________________________________

APPENDIX A: EXPENSE REPORT FORM

Employee Information:
Name: _________________________________________________
Employee ID: ___________________________________________
Department: ____________________________________________
Work State: ____________________________________________
Report Period: From _____________ To _____________
Submission Date: _______________________________________

Expenses:

Total Claimed: $_______________

Categories:
INT = Internet | PHN = Phone | SUP = Supplies | EQP = Equipment
SFT = Software | TRV = Travel | PRD = Prof Dev | OTH = Other

Certification:
I certify these expenses were incurred for business purposes and are accurate.

Employee Signature: ______________________ Date: ____________

Approvals:

Manager: ______________________ Date: ____________ ☐ Approved ☐ Denied
Finance (if required): __________ Date: ____________ ☐ Approved ☐ Denied

APPENDIX B: MISSING RECEIPT AFFIDAVIT

Employee Name: _____________________________________
Date of Expense: ____________________________________
Vendor: ____________________________________________
Amount: $ __________________________________________
Category: __________________________________________

Business Purpose:
_____________________________________________________________
_____________________________________________________________

Reason Receipt is Unavailable:
☐ Lost ☐ Not provided ☐ Damaged/illegible ☐ Other: __________

Explanation:
_____________________________________________________________
_____________________________________________________________

Certification:
I certify that this expense was incurred for legitimate business purposes and the information above is accurate to the best of my knowledge.

Employee Signature: ______________________ Date: ____________

Manager Approval:
☐ Approved ☐ Denied

Manager Signature: _______________________ Date: ____________

APPENDIX C: PRE-APPROVAL REQUEST

Employee Name: _____________________________________
Date of Request: ____________________________________

Item/Expense Requested:
Description: ____________________________________________
Vendor: ________________________________________________
Estimated Cost: $ _______________________________________
Category: ______________________________________________

Business Justification:
_____________________________________________________________
_____________________________________________________________

Alternatives Considered:
_____________________________________________________________

Timing:
Needed by date: _________________________________________

Employee Signature: ______________________ Date: ____________

APPROVAL DECISION:

☐ Approved ☐ Approved with modifications ☐ Denied

Modifications/Conditions: ________________________________
_____________________________________________________________

Reason for Denial: ______________________________________
_____________________________________________________________

Approver Signature: ______________________ Date: ____________
Approver Name/Title: ____________________________________

[END OF DOCUMENT]