Business Expense Reimbursement Requirements by State and Municipality 06.2026.xlsx

	A	B	C
1	Jurisdiction	Covered Employers	Business Expense Indemnification Requirements

2	Federal	Employers covered by the Fair Labor Standards Act (FLSA)	Tools of the trade that are "incidental to carrying on the employer's business" are considered to be primarily for the employer's benefit or convenience. As a result, employers generally are prohibited from counting tools of the trade as part of an employee's wages, unlike other things like meals and lodging. 29 USCS § 203(m). Business expenses that will be considered tools of the trade include "telephones used for business purposes" and "necessary tools or uniforms used in the employee's work," according to the US Department of Labor's enforcement manual. FOH 30c04. If an employer requires employees to provide their own tools of the trade to perform their jobs, there will be a Fair Labor Standards Act (FLSA) violation in any workweek when the cost of the tools the employees purchased cuts into the minimum or overtime wages they are owed. However, employers may prorate deductions for the cost of tools of the trade over a period of paydays, as long as the prorated deductions do not reduce employees' wages below the required minimum wage or overtime compensation in any workweek. DOL Fact Sheet #16. Most reimbursements for business expenses do not need to be included in the regular rate of pay when calculating overtime. However, only the actual or reasonably approximate amount of the expense may be excluded from the regular rate. If the amount paid as "reimbursement" is disproportionately large, the excess amount must be included in the regular rate. 29 CFR 778.217. Employers can reasonably approximate an employee's expenses for business use of their personal vehicle through methods other than the IRS business standard mileage rate. 2020 DOLWH LEXIS 21.
3	Alabama	N/A	N/A
4	Alaska	N/A	N/A
5	Arizona	N/A	N/A
6	Arkansas	N/A	N/A
7	California	All employers	An employer must indemnify an employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of their duties, or of their obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. Cal Lab Code § 2802. Any contract or agreement, express or implied, made by an employee to waive these benefits is null and void. Cal. Lab. Code § 2804. The term necessary may help exclude items that are more for an employee's convenience, such as wireless headphones or a coffee maker. Examples of expenses for which employees may need to be reimbursed include: • Use of personal cell phones for work-related calls, for which the reimbursement owed is a reasonable percentage of the employee's cell phone bill (Cochran v. Schwan's Home Service, Inc., 228 Cal. App. 4th 1137 (Cal. App. 2d Dist. 2014)); and • Use of a personal computer, printer and home internet connection, for which the employer must pay a reasonable percentage of the cost, even if the employee does not incur an extra expense for the business use of the personal equipment (Fox v. Eclear Int'l Co., 2018 U.S. Dist. LEXIS 226213 (C.D. Cal. 2018)). A fair interpretation of § 2802 and § 2804 focuses not on whether an employee makes a request for reimbursement but rather on whether the employer either knows or has reason to know that the employee has incurred a reimbursable expense. If it does, it must exercise due diligence to ensure that each employee is reimbursed. Stuart v. Radioshack Corp., 641 F. Supp. 2d 901 (N.D. Cal. 2009).
8	Colorado	N/A	N/A
9	Connecticut	N/A	N/A
10	Delaware	Employers that are party to an agreement to pay or provide benefits or wage supplements (which includes, but is not limited to, reimbursement for expenses)	A covered employer must pay employees within 30 days after payments are required to be made. Del. Code Ann. tit. 19, § 1109.
11	District of Columbia	All employers	An employer must pay the cost of purchasing and maintaining any tools required for performing the employer's business. CDCR 7-910.
12	Florida	N/A	N/A
13	Georgia	N/A	N/A
14	Hawaii	N/A	N/A
15	Idaho	N/A	N/A
16	Illinois	All employers	An employer must reimburse an employee for all necessary expenditures or losses incurred within the employee's scope of employment that are directly related to services performed for the employer. Necessary expenditures means all reasonable expenditures or losses that are required of the employee in the discharge of employment duties and that are for the primary benefit of the employer. 820 ILCS 115/9.5. All of the following factors are relevant when determining whether an expense is for the primary benefit of the employer: • Whether the employee has any expectation of reimbursement; • Whether the expense is required or necessary to perform the employee's job duties; • Whether the employer is receiving a value that it would otherwise have to pay for; • How long the employer is receiving the benefit; and • Whether the expense is required of the job. No single factor is determinative. Instead, the analysis should focus on the extent to which the expense benefits the employer and its business. If an employer denies a request for reimbursement that should have been reimbursed based on the primary-benefit-of-the-employer test, then: • If the employer has informed the employee that they are not entitled to seek reimbursement, or has failed to respond to the employee's request for reimbursement, that will be considered a denial of reimbursement and the employee may file a claim against the employer with the Department of Labor for reimbursement of expenses as provided under the primary-benefit-of-the-employer test; and • If the employee cannot recover expenses incurred related to the work performed for the employer during the course of the employee's employment, the expenses will be included in the employee's final compensation when their employment ends. An employer must maintain the following records for three years: • All policies regarding reimbursement; • All employee requests for reimbursement; • Documentation showing approval or denial of reimbursement; and • Documentation showing actual reimbursement and supporting documents. If an employer's written expense reimbursement policy establishes specifications or guidelines for necessary reimbursable expenses, but the employer, through direct authorization or practice, allows for reimbursement of amounts that exceed those specified in its written policy, the employer will be liable for full reimbursement of the expenses. 56 Ill. Adm. Code 300.540, enacted April 14, 2023, and effective March 31, 2023. An employer is not responsible for losses due to an employee's own negligence, normal wear, or losses due to theft unless the theft was a result of the employer's negligence. When seeking reimbursement, an employee must submit appropriate supporting documentation for the expenditures or losses within 30 calendar days after they are incurred. However, an employer may give employees additional time to submit reimbursement requests in a written expense reimbursement policy. If supporting documentation is nonexistent, missing or lost, the employee must submit a signed statement regarding any receipts. An employee is not entitled to reimbursement if the employer has an established written expense reimbursement policy with which the employee fails to comply. An employer is liable for failing to reimburse an employee if it authorized or required the employee to incur the necessary expenditure or failed to comply with its own written expense reimbursement policy. 820 ILCS 115/9.5.
17	Indiana	N/A	N/A
18	Iowa	All employers	An employer must reimburse employees for expenses authorized by the employer and incurred by the employee, either in advance of expenditure or no later than 30 days after the employee submits an expense claim. If the employer refuses to pay all or part of each claim, the employer must submit to the employee a written justification within 30 days after the employee submits an expense claim. Iowa Code § 91A.3.
19	Kansas	N/A	N/A
20	Kentucky	N/A	N/A
21	Louisiana	N/A	N/A
22	Maine	N/A	N/A
23	Maryland	N/A	N/A
24	Massachusetts	All employers	An employer must reimburse employees for transportation expenses when employees who regularly work at a fixed location are required to report to a location other than their regular worksites, and when they are required or directed to travel from one place to another after the beginning of or before the close of the work day. 454 CMR 27.04.
25	Michigan	N/A	N/A
26	Minnesota	N/A	N/A
27	Mississippi	N/A	N/A
28	Missouri	N/A	N/A
29	Montana	All employers	An employer must indemnify employees for all that they necessarily expend or lose as a direct consequence of discharging their duties or of obeying the employer's directions (even if the directions are unlawful, unless the employee at the time of obeying the directions believed them to be unlawful). An employer also must in all cases indemnify an employee for losses caused by its "want of ordinary care." However, an employer is not bound to indemnify employees for losses suffered because of the ordinary risks of the business in which they are employed. 39-2-701, MCA. Montana's Supreme Court has held that employees may not waive these protections. Rothwell v. Allstate Ins. Co., 1999 MT 50 (Mont. 1999).
30	Nebraska	N/A	N/A
31	Nevada	N/A	N/A
32	New Hampshire	All employers	An employer must reimburse employees for expenses they incur in connection with their employment and at their employer's request (except expenses normally borne by employees as a precondition of employment, which are not paid for by wages, cash advance or other means) within 30 days of when the employee presents proof of payment. RSA 275:57.
33	New Jersey	Employers that request or require applicants or employees to have medical tests as a condition of employment or of continued employment	An employer must reimburse applicants or employees who pay for medical tests that it requests or requires as a condition of employment or of continued employment. N.J. Stat. § 34:11-24.1.
34	New Mexico	N/A	N/A
35	New York	Employers that are party to an agreement to pay or provide benefits or wage supplements (which includes, but is not limited to, reimbursement for expenses)	A covered employer must pay employees within 30 days after payments are required to be made. Failure to do so is a misdemeanor punishable on first offense by a fine of $500 to $20,000 or imprisonment for up to one year. NY CLS Labor § 198-c.
36	North Carolina	N/A	N/A
37	North Dakota	All employers	An employer must indemnify employees for all that they necessarily expend or lose in direct consequence of discharging their duties or of obeying the employer's directions (even if such directions were unlawful, unless the employee at the time of obeying the directions believed them to be unlawful). This obligation to indemnify does not include expenses incurred to purchase or rent tools of a trade or any other equipment that is also used by the employee outside the scope of employment. Employers are not bound to indemnify employees for losses suffered as a result of the ordinary risks of the business in which they are employed, or of the negligence of another person employed by the same employer in the same general business, unless the employer neglected to use ordinary care in selecting the culpable employee. N.D. Cent. Code, § 34-02-01.
38	Ohio	N/A	N/A
39	Oklahoma	N/A	N/A
40	Oregon	N/A	N/A
41	Pennsylvania	Employers that agree to pay or provide fringe benefits or wage supplements (which includes reimbursement for expenses 43 P.S. § 260.2a)	A covered employer must reimburse employees for expenses within 10 days after such payments are required to be made directly to the employee or, in situations where no required time for payment is specified, within 60 days of the date when a proper claim was filed by the employee. 43 P.S. § 260.3(b).
42	Rhode Island	N/A	N/A
43	South Carolina	N/A	N/A
44	South Dakota	All employers	An employer must indemnify employees for all that they necessarily expend or lose in direct consequence of discharging their duties or of obeying the employer's directions (even if such directions were unlawful, unless the employee at the time of obeying the directions believed them to be unlawful). Employers are not bound to indemnify employees for losses suffered as a result of the ordinary risks of the business in which they are employed, or of the negligence of another person employed by the same employer in the same general business, unless the employer neglected to use ordinary care in selecting the culpable employee. S.D. Codified Laws § 60-2-1.
45	Tennessee	N/A	N/A
46	Texas	N/A	N/A
47	Utah	All employers	Effective May 6, 2026, an employer may not require an individual to pay for a medical examination even if the employer reimburses the individual. 2026 Bill Text UT H.B. 130, amending and renumbering Utah Code Ann. § 34-33-102.
48	Vermont	N/A	N/A
49	Virginia	N/A	N/A
50	Washington	N/A	N/A
51	Seattle	Employers covered by the Seattle Wage Theft Ordinance	A covered employer must indemnify employees for all necessary expenditures or losses they incur directly by discharging their duties or by obeying the employer's directions (even if the directions are unlawful, unless the employee at the time of obeying the directions believed them to be unlawful). Seattle, Washington Municipal Code Sec. 14.20.010.
52	West Virginia	N/A	N/A
53	Wisconsin	N/A	N/A
54	Wyoming	N/A	N/A
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100