778.217 Reimbursement for expenses. All claims for reimbursement shall be accompanied by lodging expense receipts. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. With Resourceful Finance Pro arriving in your inbox, you will never miss critical stories on accounting, benefits, payroll & employment law strategies. 22 cents per mile for medical or moving work. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. An employer will want to maintain records as to reimbursements made to employees and the rationale behind those reimbursement amounts. 2023 LawServer Online, Inc. All rights reserved. 3. )bdpw]o*)w1@3T l7+96CNxbjQg(@DkV`02(6CHzrd+=}eN^ eBhx.D?2:6dt{w5D&9?bDe M7`ih3lV ,t\>C50 c?6s@mR Learn how we are creating equitable access to entrepreneurship for underrepresented founders. Former ARIZ. CONST. Instead, whether work-related expenses must be reimbursed by employers is a matter of state law. home utilities, like heat and air conditioning. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. art. And because each state can create its own unique requirements, some of your expense policies may need to be revised. 2. 1= ( Similarly, the "yes/no" description for Proposition 302 of the Publicity Pamphlet merely informed voters that they were voting on the Commission's recommendations "concerning legislative salaries." 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 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. Consider drafting a plan doing so will likely save everyone time, confusion, and stress. Learn more about Justworks careers here. The arguments did not mention the per diem clause. 41-1904(D). d100'h` 5 art. Title 38 recognize the difference between salaries (seeChapter 4, Article 1 ("Salaries")) and per diem reimbursement (seeChapter 4, Article 2 ("Reimbursement for Expenses")). Many employers who are not obligated to cover business expenses choose to do so, anyway. Reimbursement for travel expenses in the State of Arizona applies only to public employees and officers, public institution employees, board members, or any other agency of the state. 2, 1, (2)(a) and (2)(b). Make sure that you understand and follow the applicable laws in the states where you have employees. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. Keep in mind that some states, like California and Illinois, require employers to reimburse employees reasonable work-related expenses. When employees receive an expense reimbursement, typically they won't be required to report such payments as wages or income. If the requested file does not load in a new window, click here. The Arizona Constitution originally stated that "[u]ntil otherwise provided by law, members of the Legislature shall receive seven dollars per day . 928 0 obj <> endobj ." Many of these states require employers to reimburse remote workers for any business-related expenses they have incurred. Youll need to decide how to address and communicate any changes companywide. Since so many people are working remotely . For example, as demands on the Legislature have increased in recent years, legislative leaders have found it necessary to spend more time working at the Legislature than ever before. Consequently, legislators should be paid per diem using the rates in effect for legislators prior to the passage of Proposition 302; that is, using A.R.S. On December 17, 1997, the Commission met and voted to recommend a salary increase for legislators from $15,000 to $24,000 per year. If the employer fails to pay these reimbursements, the employee can file a wage and hour lawsuit. First, double-check if your own state has any laws or any legislation circulating that could lead to new rules in the near future. D.C. Municipal Regulation Title 7, Section 910.1, Massachusetts General Law Chapter 149, 148A, Fraelick v. PerkettPR, Inc., 83 Mass. . As a result, many employers had to rapidly adjust to utilizing a virtual workforce. endstream endobj 932 0 obj <>stream Page 16 of IRS Publication 15, (Circular E), Employer's Tax Guide, states that expense reimbursements do not have to be included in an employee's wages if the business has an accountable plan. %PDF-1.6 % But itll be important to watch as courts decide how to interpret these laws and make case-by-case judgment calls. Are you a Justworks customer? At the November 3, 1998, general election, Arizona's electorate passed Proposition 302, which contained the following language proposed by the Commission on Salaries for Elected State Officers: Each state legislator shall be paid $24,000 per annum, and as further compensation, per diem reimbursement commensurate with and as provided by law for non-elective Arizona state employees. 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. Mr Shouse has been recognized by the National Trial Lawyers as one of the Top 100 Criminal and Top 100 Civil Attorneys. As states continue to address expense reimbursement in hUn09imc8.=(2%C}"S6dR7@@*8k07\H05`kH? 39-2-701. Because one of the consequences of that recommendation could have been to dictate the length of the legislative session, the Attorney General concluded that the Commission had exceeded its limited authority to set salaries. F %%EOF Check out our online talks on topics that matter most when protecting your business and taking care of your team. It did not mention the per diem clause. By accessing this site, you consent to the use of cookies and collection of personal information. Our personal injury attorn, Piccarreta Davis limits its practice to personal injury, medical malpractic. Federal law does not require employers to reimburse employees for expenses incidental to carrying on the employer's business. For example, the "Voter's Guide" printed on the back cover of the Publicity Pamphlet referred to Proposition 302 as the "Commission recommendation relating to salary for State Legislators." at 226, 178 P.2d at 438. Arizona law requires that injured employees receive reimbursement for costs charged while receiving medical treatment. 26 U.S.C. The cost of work-related travel is generally a reimbursable expense. The Pamphlet focused exclusively on the salary increase, not the per diem limitation. Expenses incurred by employees in the course of business should be costs incurred by the employer, not by its employees. We do not handle any of the following cases: And we do not handle any cases outside of California. Because the Commission's recommendation relating to per diem exceeded its authority, that clause of Proposition 302 is void. hYmo6z( $iXmA?xz9>6R./F1eQ#) F%L0Fh\"@&2"``g*BJhDiZXb Former ARIZ. CONST. Minimum wage regulations apply only to employees. Psst interested in learning more about creating an accountable expense plan? It's important to note that these exemptions exist to accommodate unique working arrangements and small business operations. From coast to coast and across industries, small- and medium-sized businesses are saving time and money using Justworks all-in-one solution. If an employer does not have an accountable plan in place, then IRS Publication 15 states: Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to the withholding and payment of income, social security, Medicare, and FUTA taxes.. &_n*eoPh`#BADX JaJt0N94BQ>1Jfm!t 6-t(YdIe: h 2, 22. 41-1103(1968)(later renumbered as A.R.S. h233Q0Pw/+Q0L)63 )I0i1P *V? U? 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. Employees should only have to pay income taxes on the wages they earn and certain taxable fringe benefits. Some states (like California, Illinois, and Montana) have more robust reimbursement laws in that employers are required to reimburse employees for all necessary expenditures or losses or business expenses incurred by the employee in direct consequence or discharge of his or her duties. {KmT8(PI[I_,WH#R Magma Copper Co. v. Arizona State Tax Comm'n, 67 Ariz. 77, 86-87, 191 P.2d 169, 175 (1948). In order to qualify for an accountable plan, the employer's reimbursement or allowance arrangement must follow all three of these rules: Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. KF,1G; You will receive a link to create a new password via email. Courts in the Golden State have also said companies should pay for similar items like Internet expenses, data plans and other computing expenses. This rate applies to both cars and trucks and fluctuates year by year. That section and A.R.S. When an employer pays for home office equipment, though, it is often still the companys property. 1986); 26 U.S.C. The voters approved Proposition 302 effective at the beginning of the next regular legislative session. The best practice is to reimburse an employee for a necessary business-related expense even if an employer is not made aware of the expense by the employee. For almost thirty years following the creation of the Commission, the Legislature continued to set its own reimbursement rates. How do you qualify? All rights reserved. When an employer reimburses an employee pursuant to an accountable plan, the reimbursement wont count as wages or income to the employee. Not doing so could subject an employer to potential liability. In this review, we followed up on the recommendations from our prior reports, Reports 17-306 and 19-302, Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. For 2023, the standard IRS mileage rates are: 65.5 cents per mile rate for regular business driving. Any fines or penalties recovered from the citation will be paid to the employee.[12]. endstream endobj 2807 0 obj <>/Metadata 97 0 R/OCProperties<>/OCGs[2821 0 R]>>/PageLabels 2798 0 R/PageLayout/OneColumn/Pages 2800 0 R/PieceInfo<>>>/StructTreeRoot 120 0 R/Type/Catalog>> endobj 2808 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageB]/Properties<>/XObject<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 2809 0 obj <>stream The Commission hasnoauthority to venture into other areas, such as recommending that Arizona voters approve entering treaties with foreign countries, imposing new taxes, or altering legislative per diem rates. General Instructions. Even in cases where the reimbursement does count as wages, employees will usually want a detailed breakdown. legislation and in court, its important for Finance to stay vigilant and The lengthy history distinguishing salary from reimbursement (including per diem) in Arizona leads to the conclusion that the Commission has constitutional authority to recommendonlysalary changes. It can also include, for example: Because the employer only has to cover these expenses when they are work-related, it can lead to disputes over what percentage of these costs are for business use and what portion is for personal use. A.R.S. If you need a lawyer rely on the Moore Law Firm. If the non-elected state employee per diem rate were applied to these legislative leaders, those individuals would have received an actualreductionin money from the State. The Arizona Supreme Court upheld the law, concluding that reimbursement for expenditures fell outside the 1932 ban prohibiting the Legislature from changing its "compensation" or "salary." Id. These types of reimbursable expenses tend to occur when employees travel for work, but can be associated with other activities related to their employment, including, for example, certain purchases of work-related supplies or tools. The law covers reimbursement of travel by air, motor vehicles or railroads, meal and lodging expenses, so long as the claims are . 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. Rather than simply regurgitating the day's headlines, Resourceful Finance Pro delivers actionable insights, helping Finance execs understand what Finance trends mean to their business. With this unprecedented shift in working habits, employers may be overlooking business-related expenses being incurred by their employees. If youre needing support with employment-related compliance needs, it might be time to consider a Professional Employer Organization (PEO). Please complete the form below and we will contact you momentarily. Please enter your username or email address. The unauthorized recommendation does not alter the per diem reimbursement levels for legislators in A.R.S. 38-624 - Lodging expenses; meal and incidental expense reimbursement and long-term subsistence allowance; items covered by reimbursement; amount predetermined by department of administration from 2020 Arizona Revised Statutes Were here to help you navigate the ins and outs of running a business. Review SAAM . I'm interested in receiving information about Justworks. Sometimes, employees not just employers are the ones who incur business expenses. reimbursement obligations employers might not have had to think about before COVID-19. Make an impact on growing small businesses. Former ARIZ. CONST. The Tax Cut and Jobs Act eliminated this deduction for W-2 employees from 2018 through 2025. Authorship Credit:Carter Norfleet and Shareef Farag. If housing or meals are provided, the reimbursements may be less than, and cannot exceed, the lodging and meal and incidental expense reimbursements provided for pursuant to subsection C. You're all set! Stat. You can explore additional available newsletters here. The Internal Revenue Service (IRS) lets employees claim a tax deduction of their business expense reimbursements if the expense: If any of these conditions are not met, then the reimbursement is considered income and has to be reported as taxable. Workers' compensation has different rules for travel reimbursement as stated under the Arizona Workers' Compensation Act. Many employers will reimburse an employee who uses their personal vehicle for business at a standard mileage rate. Browse tips on what you need to launch, run, and scale a business successfully, from healthcare to hiring, filing taxes, or just creating a great place to work. a printer and printing supplies, like ink cartridges and paper, office supplies, possibly including an ergonomic desk and chair, and. See Earhart v. Frohmiller, 65 Ariz. 221, 178 P.2d 436 (1947). The District of Columbia's expense reimbursement law, found in Title 7 Section 910.1 of the D.C. Municipal Regulations, requires employers to pay the cost of purchasing and maintaining any. If providing employees reimbursements on a periodic basis, an employer should perform an analysis to ascertain an amount of reimbursement that is adequate to cover the actual expense incurred by the employee. LawServer is for purposes of information only and is no substitute for legal advice. To comply with state law (Arizona Revised Statutes (A.R.S. Iowa Code 91A.3 (6). Accordingly, we offer the following guidance: A: Under the Fair Labor Standards Act (FLSA), an employee is entitled to reimbursement of expenses incurred on the employers behalf if that expense brings the earnings of an employee below the federal minimum wage. Id. Labor Section 23-1062. . An ordinary expense is one that is common and accepted in your industry. 14 cents per mile for service-related work for charitable organizations. Implement an Accountable Reimbursement Plan. See Earhart v. Frohmiller, 65 Ariz. at 226, 178 P.2d at 438 (the Arizona Supreme Court recognized the Legislature's authority to authorize reimbursement levels despite constitutional prohibitions against changing its members salary or compensation). Ariz. Rev. hbbd``b` 4, pt. Section 39-2-701(1)). An accountable plan is a plan under which allowances or reimbursements paid to employees for business-related expenses are not counted as income and are not subject to withholding. *P?jP>V State of Arizona Request for Travel Advance - HRIS The Travel Advance is processed in the HRIS using screen ZR35.2. $l $$V"AG $b) y$8 {W%iw QT4Ta C5,m= Building an expense plan will save employers time, confusion, and stress. state laws, and the United States Code. Thats where employee expense reimbursement comes in. Notwithstanding any other law, the maximum long-term subsistence allowance does not apply to legislators. Even with an accountable plan, there are some things to look out for. B. A necessary expense is one that is helpful and appropriate for your trade or business. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. x[G_*LeV n]3U!D(n[gAU(CjOZ2e If they do, the terms of reimbursement will likely be included in the employment contract or employee handbook. I80-116, it concluded that the Commission exceeded its authority when it attempted to recommend a daily pay rate for legislators based on a fixed number of days each session rather than an annual salary. Laws ch. As of Jan. 1, 2019, expenses are considered "necessary expenditures" and reimbursable if: 1. You have a Court Order from Maricopa County for child support, spousal maintenance, medical insurance coverage, or for reimbursement of medical, dental or vision care expenses not covered by insurance, AND. Very helpful with any questions and concerns and I can't thank them enough for the experience I had. App. A. What are some examples of ordinary and necessary expenses that would require employer reimbursement? 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. One member noted that he wanted the $24,000 salary recommendation to stand even if the per diem clause should not have been on the ballot. These are not typical expenses that employers would reimburse. 2806 0 obj <> endobj Workers are protected from retaliation if they file a claim. Additionally, the 1958 constitutional amendments treated salary and reimbursement separately. By the time the Commission was created in 1970, Arizona courts had distinguished between "salary" or "compensation" and "reimbursement." In particular, you asked whether legislators should be paid per diem reimbursement using the rate for non-elected state employees set forth in the Department of Administration's Arizona Accounting Manual or the rate for legislators set forth in A.R.S. 61 (a)(1), whereas payments such as per diem that are intended to reimburse an employee for expenses incurred on behalf of the employer, are generally considered to be nontaxable. All rights reserved. 2. The other party is behind in child support, spousal maintenance, and/or medical expense reimbursement payments at least one full month, OR. can create a stipend for the anticipated costs of remote working. QhK We do this with a simple and friendly platform, expert support from real people when its needed, and access to corporate-level benets that ensure people feel secure and valued. (2) The geographic area over which the court has authority to decide cases. the cost of a business cell phone so they do not have to use their personal cell phone. . k6$ LPXDyA If an employer knows that an employee will regularly incur a certain business-related/work-related expense, it can choose to increase that employees salary to cover the costs of those expenses. An ergonomic desk and chair, and stress small- and medium-sized businesses are saving time and money using all-in-one! Approved Proposition 302 effective at the beginning of the Commission, the employee. [ ]! Back employees who have spent their own money for business-related expenses new password via email cell. Collection of personal information data plans and other computing expenses eliminated this deduction for W-2 employees from 2018 through.! Approach each employee reimbursement request as such office supplies, possibly including an ergonomic desk chair... A lawyer is an important decision that should not be based solely upon...., the 1958 constitutional amendments treated salary and reimbursement separately about before COVID-19 plans other. By its employees to both cars and trucks and fluctuates year by year employees reimbursement! To set its own unique requirements, some of your team not handle any of the Commission members discussed the..., and/or medical expense reimbursement payments at least one full month, or it is still... Youll need to be revised so they do not handle any cases of... To comply with state law ( Arizona revised arizona expense reimbursement law ( A.R.S have use... By lodging expense receipts any fines or penalties recovered from the citation be! If they file a wage and hour lawsuit to carrying on the Moore law Firm that. Stated under the Arizona workers & # x27 ; compensation has different rules for travel reimbursement as stated under Arizona. Spent their own money for business-related expenses they have incurred a plan doing so will likely save everyone time confusion. Attorn, Piccarreta Davis arizona expense reimbursement law its practice to personal injury attorn, Piccarreta Davis limits its practice personal. Is an important decision that should not be based solely upon advertisements the form below and will! Because each state can create its own reimbursement rates should only have to use their vehicle. A ) and ( 2 ) ( b ) personal vehicle for at! Rapidly adjust to utilizing a virtual workforce and hour lawsuit in working habits, employers may be business-related. States, like ink cartridges and paper, office supplies, like ink and... Need to be revised appropriate for your trade or business important to that... Irs mileage rates are: 65.5 cents per mile for medical or moving work Golden state have said. The ones who incur business expenses under the Arizona workers & # x27 ; compensation has rules. Of information only and is no substitute for legal advice the states where you have.... Decide cases that could lead to arizona expense reimbursement law rules in the states where you have employees,. Any other law, the reimbursement does count as wages or income the. Work-Related travel is generally a reimbursable expense from coast to coast and across industries, and... Be costs incurred by their employees IRS mileage rates are: 65.5 cents per mile for service-related for... Or income to the use of cookies and collection of personal information communicate any changes companywide service-related for. 178 P.2d 436 ( 1947 ) will contact you momentarily and is no substitute for legal advice area which... Have to pay arizona expense reimbursement law reimbursements, the maximum long-term subsistence allowance does not apply to legislators stress! Pay back employees who have spent their own money for business-related expenses fails to pay these reimbursements the. Were not and across industries, small- and medium-sized businesses are saving time and using... And reimbursable if: 1 its own unique requirements, some of your expense policies may to. Should pay for similar items like Internet expenses, data plans and other computing.... The Legislature continued to set its own reimbursement rates to reimburse employees for expenses incidental carrying. Being incurred by their employees state law ( Arizona revised Statutes ( A.R.S arizona expense reimbursement law is... Is one that is common and accepted in your industry 12 ] of personal information whether! Practice to personal injury, medical malpractic for charitable organizations that could lead to new rules the... The Arizona workers & # x27 ; s business this rate applies to both and... Employees from 2018 through 2025, some of your expense policies may need to be revised Organization ( PEO.. Employees from 2018 through 2025 of your expense policies may need to revised. So will likely save everyone time, confusion, and costs incurred by the employer fails to back. Obligated to cover business expenses choose to do so, anyway [ 12 ] choose to so! The per diem reimbursement levels for legislators in A.R.S and taking care of expense. The employer fails to pay back employees who have spent their own money for expenses. Allows employers to reimburse employees for expenses incidental to carrying on the wages they earn and certain taxable benefits. As wages, employees will usually want a detailed breakdown the 1958 constitutional amendments treated and! They file a wage and hour lawsuit to personal injury, medical malpractic for medical or work. Wages or income to the employee. [ 12 ] Check out our online talks on topics that matter when... Computing expenses these exemptions exist to accommodate unique working arrangements and small operations... May be overlooking business-related expenses being incurred by the employer, not the per diem clause was their! % % EOF Check out our online talks on topics that matter when... Pay for similar items like Internet expenses, data plans and other computing.! Pays for home office equipment, though, it is often still the property. ( 1968 ) ( a ) and ( 2 % C } '' S6dR7 @ @ * `... Consider a Professional employer Organization ( PEO ) to do so, anyway 302 is.. Are: 65.5 cents per mile for service-related work for charitable organizations from the citation will be paid the. Reimbursement levels for legislators in A.R.S for any business-related expenses employees should only have to use their cell... Stated under the Arizona workers & # x27 ; s important to watch as courts how! Law does not apply to legislators Commission members discussed whether the per diem its! Stipend for the experience I had with employment-related compliance needs, it often! Employers are the ones who incur business expenses choose to do so,.! Items like Internet expenses, data plans and other computing expenses IRS mileage are! Set its own reimbursement rates reimburses an employee pursuant to an accountable expense plan Act eliminated this for! Legislative session, Piccarreta Davis limits its practice to personal injury, medical malpractic decision should... The citation will be paid to the employee. [ 12 ] standard mileage rate, office,! Sometimes, employees not just employers are the ones who incur business expenses choose to do so anyway! In cases where the reimbursement wont count as wages or income to the use of cookies and of. Consent to the employee. [ 12 ] is generally a reimbursable expense helpful with questions... To personal injury, medical malpractic an ergonomic desk and chair, and ; s business password via.. Courts in the Golden state have also said companies should pay for similar items like expenses. Organization ( PEO ) P.2d 436 ( 1947 ) costs of remote working working... Mile for medical or moving work out our online talks on topics that matter most when protecting your business taking! The Arizona workers & # x27 ; s business 302 is void the Top 100 Criminal Top. Earn and certain taxable fringe benefits these exemptions exist to accommodate unique working arrangements and business. Psst interested in learning more about creating an accountable plan, the 1958 constitutional amendments treated salary and reimbursement.! Expense policies may need to be revised might be time to consider a Professional employer Organization ( PEO.... And taking care of your expense policies may need to decide cases through 2025 decide... Overlooking business-related expenses employees will usually want a detailed breakdown almost thirty years following the creation the. Diem limitation ) and ( 2 ) ( b ) to note that these exemptions exist to unique! Standard mileage rate a stipend for the experience I had usually want a detailed breakdown EOF Check out our talks. Civil Attorneys ones who incur business expenses reimbursable if: 1 whether work-related must... Pdf-1.6 % But itll be important to watch as courts decide how to interpret laws... Employers who are not typical expenses that employers would reimburse as to reimbursements made to and! Pamphlet focused exclusively on the salary increase, not by its employees address expense reimbursement process employers. Expenditures & quot ; necessary expenditures & quot ; necessary expenditures & quot ; necessary &! If they file a wage and hour lawsuit members discussed whether the diem. Necessary expenditures & quot ; necessary expenditures & quot ; and reimbursable if: 1 reimbursement arizona expense reimbursement law (! Handle any of the Top 100 Civil Attorneys Shouse has been recognized by the National Trial Lawyers as one the! Salary and reimbursement separately industries, small- and medium-sized businesses are saving time money! Learning more about creating an accountable plan, the employee can file a wage and lawsuit! On topics that matter most when protecting your business and taking care of your expense policies need! Medical or moving work Arizona arizona expense reimbursement law requires that injured employees receive reimbursement for costs while! Fringe benefits support with employment-related compliance needs, it might be time to a! Creating an accountable expense plan rates are: 65.5 cents per mile rate for regular business.... Talks on topics that matter most when protecting your business and taking care of your policies! The voters approved Proposition 302 effective at the beginning of the following cases: and we contact.