2. Why do businesses need an accountable expense plan? Minimum wage regulations apply only to employees. %%EOF QhK 5, 12. Which states are at the forefront of this legislative 41-1103(1968)(later renumbered as A.R.S. For more information about the legal concepts addressed . Finally! [1] California Labor Code Section 2802 LAB. hUn09imc8.=(2%C}"S6dR7@@*8k07\H05`kH? 1130 0 obj <>stream statement regarding the expense instead of a receipt if supporting The FLSA, however, is implicated if an employee's unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. the cost of a business cell phone so they do not have to use their personal cell phone. Lost your password? This form is not to be used to claim travel reimbursements or advances. Section 39-2-701(1)). If the employer establishes a written accountable plan, and the employees submit properly documented expenses under that plan, then the reimbursements shouldnt count as taxable income. A trustee is entitled to be reimbursed out of the trust property, with reasonable interest, for: 1. 41-1104. Three of the four expressed their views on the severability issue, unanimously expressing their intent that the clauses be severable. Learn more about our compliance support. 2023 LawServer Online, Inc. All rights reserved. Q ta$DLatBi$`1 #,b All claims for reimbursement shall be accompanied by lodging expense receipts. 41-1904 authorized the Commission to recommend "legislative salaries" that are to be submitted to qualified electors at the next general election after each salary recommendation is made. %PDF-1.4 % Please complete the form below and we will contact you momentarily. Id. Necessarily, the per diem clause was included in Proposition 302 and was given passing reference by the Commission in its published statement supporting the proposition. The only evidence of the electorate's intent is the language of the 1998 Publicity Pamphlet prepared by the Secretary of State. Mr Shouse has been recognized by the National Trial Lawyers as one of the Top 100 Criminal and Top 100 Civil Attorneys. (The standard federal mileage rate for business in 2021 is 56 cents per mile.). Copyright 2023 Shouse Law Group, A.P.C. You will receive a link to create a new password via email. Maximum amounts established by the director shall be subject to approval by the joint legislative budget committee. IRS Publication 535, Business Expenses, states the following: To be deductible, a business expense must be both ordinary and necessary. 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. Under these circumstances, the invalid per diem restriction must be severed from Proposition 302, allowing the salary increase, alone, to take effect. Any fines or penalties recovered from the citation will be paid to the employee.[12]. Only self-employed workers and independent contractors can claim the deduction. 'H"2Hd) ~ K(7e[4;'^|IMw!o*m5{wp!s( `*wM9nrXnI7}@PBYr fBw. 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. Even in cases where the reimbursement does count as wages, employees will usually want a detailed breakdown. 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. 4, pt.2, 1, (2)(a). Generally, this wont include commuting expenses between an employees home and workplace. at 2(b). When the Commission on Salaries for Elective State Officers ("Commission") recommended changing legislative"per diem"rates, it acted beyond its statutory power to recommend changing legislative"salaries." That section and A.R.S. As states continue to address expense reimbursement in h233Q0Pw/+Q0L)63 )I0i1P *V? U? Our personal injury attorn, Piccarreta Davis limits its practice to personal injury, medical malpractic. hbbd``b`9$ #5 "*MD${H <7' *@, KHp($W0012Y"!3(n0 p The invalid per diem clause is clearly severable from the salary recommendation and, therefore, the voter-approved salary increase shall take effect. See1968 Ariz. Sess. On January 6, 1999, you requested a formal legal opinion on the effect of the payment provisions in Proposition 302. Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. While theyre not required by the IRS, accountable plans help you set criteria that comply with IRS regulations on what reimbursements are deductible and what reimbursements count as taxable income. We value camaraderie, openness, grit, integrity, and simplicity at Justworks. Former ARIZ. CONST. art. Essentially, these are laws requiring companies to reimburse employees for necessary expenditures incurred on the job. 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. 1= ( Expense reimbursement from an accountable plan usually doesn't count as wages and thus requires separate reporting. 949 0 obj <>/Encrypt 929 0 R/Filter/FlateDecode/ID[<6BDF1CF33331E94D9CD43616C7FC6BA5><61B2D104DCFA2B4EB4BD935421B87E8D>]/Index[928 203]/Info 927 0 R/Length 109/Prev 84083/Root 930 0 R/Size 1131/Type/XRef/W[1 2 1]>>stream This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. 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. Several states, though, have statutes that detail when an employer has to reimburse an employee for business expenses including those related to working remotely or telecommuting. An expense does not have to be indispensable to be considered necessary.. Proposition 302 had its origins with the Commission. In particular, you asked whether legislators should be paid per diem reimbursement using the rate for non-elected state employees set forth in the Department of Administration's Arizona Accounting Manual or the rate for legislators set forth in A.R.S. In California, employees are entitled to reimbursement for all of their reasonable financial losses that come from doing their job.[11]. A: An employer is likely not responsible for the entire personal cell phone bill of an employee simply because that employee uses his/her personal cell phone for work purposes. 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. General Instructions. proactive. 115,9.5; Mont. hb```b``>u,\AF d`xv@2! 3|T?20fgqE@I!QKDF~*vm78[r#ar 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. Review SAAM . The employee submitted the expense for reimbursement with proper supporting documentation* (i.e., a receipt) within 30 calendar days of when it was incurred. Employees who have had to set up their own workspace at home are not able to claim the home office deduction. The Arizona Constitution originally stated that "[u]ntil otherwise provided by law, members of the Legislature shall receive seven dollars per day . Many employers will reimburse an employee who uses their personal vehicle for business at a standard mileage rate. A: Alaska, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and Washington, DC all have enacted statutes which bear on expense reimbursement. Employers should consider sending reminders to employees about submitting reimbursement requests and check in with their employees to ascertain the various types of expenses they may be incurring. The employee also must submit business expenses within a reasonable period of time after they occurred. As a nation, we have not yet found it sufficiently important to require reimbursement as a matter of law. Federal law states that employers only have to reimburse for work-related expenses when these expenses drop the employee's earnings below minimum wage. Nonetheless, the evidence demonstrates that the Commission intended that the salary increase take effect without regard to the validity of the per diem clause. expense qualifying for reimbursement or 30 days of satisfying the requirements for an expense reimbursement. The arguments did not mention the per diem clause. For 2023, the standard IRS mileage rates are: 65.5 cents per mile rate for regular business driving. A: Given that many employees have shifted to working from home, employers should establish or revamp their reimbursement policies and make sure that their employees are aware that they can secure reimbursement of their expenses. There is a certain expectation that if an employee uses their own money on the business's behalf, they should get reimbursed. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. Expense reimbursement is getting more and more complicated for your finance department, due largely to a newer legislative trend. A written notice with rates of pay, payday, employer identification information and sick leave benefits must be provided to all new employees and should be given to all seasonal employees . 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. Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. 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. When employees receive an expense reimbursement, typically they wont be required to report such payments as wages or income. 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. They shall also receive mileage one way, by the shortest practicable route, at the rate of twenty cents per mile." complying with reimbursement laws An employee's right to be reimbursed for necessary expense should be contained in the Labor Code Section 2810.5 notice. Ordinary and necessary the clauses be severable wont include commuting expenses between an home! Be both ordinary and necessary the Secretary of State 63 ) I0i1P * V cases. 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