The Illinois Wage Payment and Collection Act (IWPCA) is a state statute that outlines the rules and regulations regarding payment of wages. It is the piece of law that requires every employer to pay employees in a timely manner. What it has not included, until now, is that employers reimburse their employees for expenses incurred in the performance of an employee’s duties. The new amendment goes into effect January 1, 2019 and requires that employees be reimbursed for expenses such as cell phone costs, Internet costs, and the cost of any equipment required to perform their duties. This amendment is especially relevant to those employees who telecommute.
The Current Law
As it stands now, the IWPCA simply requires employers to pay wages. Therefore, employers were free to take the position that expense reimbursements were not wages and, thus, were not required to be paid to employees. If an employee wished to challenge an employer on expense reimbursement, that claim would have to be posed as a breach of contract – essentially that an employer breached its contract with its employee because it failed to reimburse an expense that the employee incurred in performance of his contractually mandated duties. Breach of contract claims are difficult to prove, especially in this instance, and do not allow for the award of liquidated damages or attorneys’ fees.
The Amendment and What It Means for Illinois Employers
The new amendment taking effect in 2019 includes expense reimbursement in the IWCPA, which means that employees can now recover liquidated damages if they are denied reimbursement. If it is found that an employer erred in not reimbursing an employee for qualified expenses, the employee can potentially recover the amount of the expenses, plus attorneys’ fees and a fee for interest equal to 2% of the expense amount per month of nonpayment.
Illinois’ amendment has language that is almost identical to that used in California, with one big difference: Illinois allows for employers to enforce their own written expense reimbursement policies. California failed to make such an allowance and has faced numerous cases as a result.
In Illinois, an employee is entitled to expense reimbursement, but only in accordance with their employer’s reasonable written policy. An employer’s written policy must allow an employee at least 30 days to submit their reimbursement request. They may allow for more time but may not require that employees submit their requests in less time. Also, employers are not allowed to require receipts. If an employee cannot produce a receipt as proof of the expense, a written statement signed by the employee must be sufficient proof.
An employer is also permitted to have expense limits outlined in their policies. Thus, they are entitled to set maximums, but they may not set minimums. If the employee’s expenses exceed a certain amount, amounts above the limit may be denied.
It is recommended that employers in Illinois draft written expense reimbursement policies that are in compliance with the new requirements set forth in the amendment to avoid the undoubtedly greater expense of potential litigation.
One other important note is that the IWPCA is not applicable to the state or federal government, but it is applicable to local governments and school districts.
Talk to a Chicago wage law attorney if you or someone you know is being taken advantage of by an employer.