Remote Work Expense Reimbursement: What Employers Must Know

As remote work has become a permanent feature of the modern workplace, a fundamental question keeps arising: must employers reimburse employees for expenses incurred while working from home? The answer depends on a mix of federal wage rules, state-specific reimbursement statutes, and what employers promise in contracts or written policies. This guide explains the key legal principles, state differences, and practical steps for employers and employees navigating remote work expenses.

1. Core Legal Framework for Remote Work Expenses

Expense reimbursement for remote work in the United States is governed primarily by two layers of law:

• Federal law under the Fair Labor Standards Act (FLSA)
• State and local reimbursement laws, which vary significantly by jurisdiction

1.1 Federal Minimum Wage Requirements

The FLSA sets a baseline rule: employers must ensure that an employee’s effective pay, after accounting for necessary, job-related expenses that the employee pays out-of-pocket, does not fall below the federal minimum wage of $7.25 per hour. If unreimbursed remote work costs reduce net earnings below minimum wage, reimbursement may be legally required.

In practical terms, this means:

• Remote work expenses are treated as part of the employee’s total compensation picture.
• There is no general federal right to reimbursement for all remote work costs, but there is a right to minimum wage net of necessary business expenses.
• The rule is most critical for low-wage employees or those with substantial job-related expenses.

1.2 State and Local Reimbursement Statutes

Several states go far beyond federal law and explicitly require employers to reimburse employees for “necessary” or “reasonable” business expenses, including many remote work costs. Some local jurisdictions such as the District of Columbia, and certain cities, also impose obligations.

Common elements of these laws include:

• A duty to reimburse necessary expenditures or losses incurred in the scope of employment.
• Focus on expenses that primarily benefit the employer (e.g., required internet access, phone usage, home office tools).
• Fact-specific assessments of what is “necessary,” “reasonable,” and tied to job duties.

2. What Counts as a Reimbursable Remote Work Expense?

Not every cost associated with working from home is automatically reimbursable, even in states with strong statutes. Laws and guidance emphasize expenses that are necessary, job-related, and primarily for the employer’s benefit.

2.1 Typical Categories of Remote Work Costs

Common remote work expenses that may be reimbursable, depending on jurisdiction and circumstances, include:

• Internet service needed to perform job duties, attend virtual meetings, or access employer systems.
• Mobile phone service used for work calls, messaging, and multi-factor authentication.
• Computers and devices when employees are required to use personal laptops, tablets, or smartphones for work.
• Home office supplies such as printer ink, paper, ergonomic equipment, and other tools needed to perform job functions.
• Specialized software or apps purchased personally but required for job performance.

2.2 Partial vs. Full Reimbursement

In states like California, employers are typically obligated to reimburse the work-related portion of mixed-use services such as internet and phone, rather than the entire monthly bill. The law looks at what share of the expense is reasonably attributable to business use.

Employers and employees often need to determine a reasonable percentage, for example:

• Estimating the proportion of internet use tied to work vs. personal activities.
• Allocating phone usage based on call logs or typical work patterns.
• Considering whether the plan would be less costly if work use were removed.

Courts have found that reimbursement may still be required even if the employee’s costs do not visibly increase when they begin using personal services for business purposes, to prevent the employer from being unjustly enriched.

3. State-by-State Snapshot of Remote Work Reimbursement

Because obligations depend largely on where employees work, multistate employers must pay close attention to specific statutes and guidance in each jurisdiction.

Additional states, including Iowa, Minnesota, New Hampshire, New York, South Dakota, Pennsylvania, and others, have varying degrees of reimbursement obligations or recommendations, often focused on necessary and reasonable expenses or contractual commitments.

4. When Is Remote Work Expense Reimbursement Required?

Whether reimbursement is legally required generally turns on three core questions:

• Is remote work mandatory or optional?
• Is the expense necessary to perform job duties?
• Does the law or contract in that jurisdiction impose a reimbursement obligation?

4.1 Mandatory vs. Voluntary Remote Work

Many legal analyses distinguish between employees who must work remotely and those who choose to do so voluntarily. When remote work is required—either all the time or under specific conditions—the employer is more likely to be responsible for the costs that enable the employee to perform their job.

Key implications:

• If the employer closes offices or directs employees to work from home, necessary remote work expenses are more clearly business-related.
• If employees voluntarily work from home but have access to an employer-provided workspace and tools, some jurisdictions may treat certain costs as less clearly reimbursable.
• In all cases, the specific statutory language and administrative guidance in the state are critical.

4.2 Necessary and Reasonable Business Expenses

States like California and Illinois define “necessary expenditures” as reasonable costs required to perform job duties that primarily benefit the employer. Regulators and courts consider factors such as:

• Whether the employer requires a particular tool or service for work.
• Whether the employee reasonably expected reimbursement.
• How long the employer is receiving the benefit of the expense.
• Whether the expense substitutes for a resource the employer would otherwise have to pay for (e.g., office internet).

Expenses that are discretionary or primarily personal, such as premium internet speed well beyond what the job requires or luxury equipment, may fall outside the scope of required reimbursement.

5. Written Policies, Procedures, and Documentation

Written expense reimbursement policies play an important role in both limiting disputes and clarifying obligations. In some states, employers are allowed to set reimbursement procedures, but cannot adopt policies that effectively deny reimbursement altogether where the law requires it.

5.1 Elements of a Strong Reimbursement Policy

To manage remote work expenses compliantly and transparently, employers should consider including the following elements in a written policy:

• Clear definition of reimbursable expenses (e.g., internet, phone, equipment, software) linked to job duties.
• Submission procedures describing how employees must document and claim expenses, including deadlines.
• Approval criteria explaining what counts as necessary and reasonable, and any prior approval requirements.
• Partial reimbursement rules for mixed-use services such as home internet and personal phones.
• Payment timelines, such as reimbursement within a specified number of days after claim submission, in line with applicable law.

Jurisdictions may also require employers to provide written justifications when reimbursement is denied or adjusted.

5.2 Importance of Employee Recordkeeping

Employees can strengthen reimbursement claims by keeping detailed records of work-related expenses, including:

• Copies of phone and internet bills with usage summaries.
• Receipts for equipment and supplies used primarily for work.
• Notes identifying which purchases were made at the employer’s direction or to fulfill job duties.

Written communication with the employer regarding remote work expectations and tools needed can also help demonstrate that expenses are necessary and job-related.

6. Practical Guidance for Employers

Employers designing or refining remote work reimbursement practices can take several steps to reduce legal risk and maintain fairness:

• Audit where employees work to identify which state and local laws apply to each worker, not just where the company is headquartered.
• Align policies with the strictest applicable jurisdiction when feasible, to maintain consistency and reduce administrative complexity.
• Differentiate mandatory and voluntary remote work in policies, with clear rules for each scenario.
• Set reasonable flat stipends or allowances but ensure they are large enough to cover typical necessary expenses in jurisdictions requiring full reimbursement, and allow additional claims for documented costs.
• Train managers and HR teams on how to evaluate remote work expenses and when they must be reimbursed under federal and state law.

Employers should also consider the tax implications of stipends and allowances, as some flat payments may be treated as taxable income if they are not structured as accountable expense reimbursements.

7. Practical Guidance for Employees

Employees seeking reimbursement for remote work expenses should approach the issue systematically and professionally:

• Review your employer’s policies and any employment agreements to understand what is already promised.
• Identify expenses directly tied to job duties, such as required internet, phone usage, or personal devices used for company systems.
• Submit claims with clear documentation, including receipts and brief explanations of how each cost relates to work.
• Reference applicable state laws if you work in a jurisdiction with a reimbursement statute, such as California or Illinois.
• Seek legal advice from an employment attorney or legal aid organization if you believe required reimbursements are being withheld, particularly where statutory rights exist.

8. Frequently Asked Questions (FAQs)

8.1 Do employers have to pay for my home internet if I work remotely?

In most states, employers are not automatically required to cover home internet costs; federal law only mandates reimbursement when unreimbursed necessary expenses would reduce pay below minimum wage. However, in states like California, Illinois, and Montana, employers must reimburse the reasonable portion of internet costs that is necessary for performing job duties when remote work is required.

8.2 What if I have an unlimited phone or internet plan?

Courts have found that reimbursement may still be required in some jurisdictions even when employees use unlimited plans, because the employer should not gain a free benefit from business use of personal services. Laws focus on whether the expense is necessary for the job, not on whether the employee’s total bill increases.

8.3 Are ergonomic chairs and desks reimbursable?

Ergonomic equipment can be reimbursable if it is necessary for an employee to perform job duties safely and effectively, especially when the employer requires full-time remote work and does not provide an alternative workspace. Whether reimbursement is legally required depends on state law and the employer’s policy, as well as whether the expense is considered reasonable and primarily for the employer’s benefit.

8.4 How do I prove what portion of my internet bill is work-related?

Employees and employers can estimate the work-related portion using factors such as typical work hours, the nature of job tasks, and whether a lower-cost plan would be sufficient without business use. Some organizations adopt standard percentages (for example, a set allocation for full-time remote workers), while allowing employees to request adjustments with supporting documentation.

8.5 Does it matter where my company is based?

Compliance obligations generally depend on where the employee works, not just where the company is headquartered. A company based in a state without reimbursement laws may still need to comply with statutes in the state where its remote employees reside.

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Sneha TeteBeauty & Lifestyle Writer

 

Sneha is a relationships and lifestyle writer with a strong foundation in applied linguistics and certified training in relationship coaching. She brings over five years of writing experience to waytolegal,  crafting thoughtful, research-driven content that empowers readers to build healthier relationships, boost emotional well-being, and embrace holistic living.

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