Remote Employee Reimbursement Rules by State Explained

In the United States, remote work has become the new norm, and employers are faced with the challenge of navigating complex reimbursement rules for their remote employees.

Some states, like California, have strict guidelines for remote employee reimbursement, requiring employers to reimburse employees for work-related expenses, including home office equipment and internet fees.

As of 2022, employers in California must reimburse employees for expenses such as home internet and phone services, as well as equipment and supplies used for work.

In contrast, states like Texas have more relaxed rules, allowing employers to set their own reimbursement policies for remote employees.

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California requires employers to reimburse any business-related expense incurred by an employee that's necessary to their job duty or function. This includes expenses like electronics, tools of the trade, and even a portion of home utility bills.

In Illinois, the Wage Payment and Collection Act requires reimbursement for expenses directly related to the scope of employment. Employers must reimburse employees for expenses tied to their job duties, even if it's just a portion of the cost.

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Iowa employers must reimburse any expense authorized by the employer. This can include expenses like travel costs, meals, and lodging. The reimbursement must be made within 30 days of the employee submitting a request.

Massachusetts employers are required to reimburse expenses that would drop an employee's wage below the state's minimum wage. This includes expenses like work-related transportation costs and equipment.

Minnesota employers must reimburse employees upon termination for certain necessary expenditures related to performing their job. This includes expenses like consumable supplies, work uniforms, and travel costs.

Montana employers must cover necessary expenses or losses workers face while doing their job. This can include expenses like cell phone bills, mobile data plans, and internet access.

New Hampshire employers must reimburse employees for business expenses within 30 days of the employee submitting a reimbursement request. Employers can also cover expenses with a cash advance.

New York employers must reimburse employees for agreed-upon costs related to work, such as travel or supplies. Employers must have an explicit agreement with employees to specify expense reimbursement.

North Dakota employers must reimburse expenses incurred in direct consequence of the discharge of duties. This includes expenses like equipment, tools, and other job-related costs.

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South Dakota employers must reimburse employees for necessary expenses incurred as a result of completing their job duties. This includes expenses like equipment, tools, and other job-related costs.

Seattle, Washington requires employers to reimburse employees for all necessary expenses they incur on the job, as outlined in the Seattle Wage Theft Ordinance.

Here is a list of the 11 states that require reimbursement for remote work expenses:

Only California and Illinois require cell phone and internet reimbursement. Employers in these states must reimburse employees for business-related expenses, including cell phone and internet costs, without qualifiers like "necessary."

Creating a clear reimbursement policy is crucial to avoid confusion, especially when dealing with remote employees across different states. As of January 2025, 11 states require employee expense reimbursements by law, including California, Illinois, Iowa, Massachusetts, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, and South Dakota.

These states have specific rules around reimbursement, with some requiring employers to reimburse employees for all necessary expenses incurred while performing their job duties. For example, California requires employers to reimburse any business-related expense incurred by an employee that's necessary to their job duty or function.

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To create a compliant remote employee reimbursement policy, you'll need to identify necessary expenses for your business, decide on reimbursement methods, outline documentation and approval processes, and set timelines for submission and payment. This will help you build a comprehensive policy that meets both business needs and compliance requirements.

Here are the 11 states that require employee expense reimbursements by law, along with a brief summary of their reimbursement rules:

By understanding these state-specific reimbursement rules, you can create a clear and compliant reimbursement policy that supports your remote employees and protects your business.

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To ensure compliance with remote employee reimbursement rules, you'll want to explore expense compliance tools and resources.

Expensify is a popular tool that can help you manage and track employee expenses, including receipts and invoices.

In California, for example, employers are required to reimburse employees for expenses related to using their personal vehicles for business purposes.

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Expensify's automated expense reporting feature can help streamline the reimbursement process and reduce errors.

In New York, employers must also reimburse employees for expenses related to using their personal vehicles, but the reimbursement rate is determined by the employer.

Expensify's mobile app allows employees to easily snap a photo of their receipts and submit them for reimbursement.

In Texas, employers are not required to reimburse employees for expenses related to using their personal vehicles, but may choose to do so voluntarily.

Expensify's reporting dashboard provides a clear and concise view of employee expenses, making it easier to identify trends and areas for improvement.

Some employers may choose to use other tools, such as Concur or Expensify's competitor, to manage employee expenses.

In Florida, employers are required to reimburse employees for expenses related to using their personal vehicles, but the reimbursement rate is determined by the employer.

Expensify's customer support team is available to help with any questions or issues you may have.

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