United States: Mistakes With Employee Expense Reimbursements Can Be Expensive
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Q: My employee is asking to be reimbursed for mileage and other expenses. Am I obligated to pay them?
A: When it comes to reimbursement of employee expenses, New Hampshire employers must take care to comply with the applicable requirements.
Under New Hampshire law, employers must reimburse employees for employment-related expenses, unless either, the expenses are the type that are normally borne by the employee as a precondition of employment, or, the employer pays for the expenses through wages, cash advance, or other means.
Expenses that must be reimbursed by the employer are generally expenses that are for the benefit of the employer. Examples of these expenses include mileage for the use of the employee's vehicle for work-purposes, costs for fuel or maintenance of the employer's vehicles, replacement parts for the employer's equipment, or costs incurred to protect the employer's property, such as protective packaging for shipping employer-owned equipment. On the other hand, expenses incurred primarily for the benefit of the employee, such as mileage for the employee's regular commute, generally do not need to be reimbursed.
Under certain circumstances, New Hampshire law permits employers to pay for expenses incurred by employees through wages, cash advances or other means, rather than by writing a check for the amount of the expense. Employers that wish to reimburse expenses in this manner must be able to clearly establish that the employee's wages, or any cash advance or other means, are intended to cover, and reimburse the employee for, any expenses that the employer is required to reimburse. Employers may be able to make this showing by entering into a written agreement with the employee, or issuing a detailed written policy, stating that expenses are reimbursed through wages, cash advance or other means. Employers that seek to reimburse expenses in this way should take care to ensure that any wages, cash advance or other means of reimbursement are set at an amount that is high enough to cover the expenses the employee actually incurs.
An employer's failure to properly reimburse employee expenses is treated as a failure to pay wages. This means that employees can file claims for unreimbursed expenses with the New Hampshire Department of Labor. Additionally, employers that are found to have willfully failed to properly reimburse expenses may be required to pay interest and civil penalties of up to $1,000 per violation.
Employers with questions about reimbursement of employee expenses should consult with qualified counsel to avoid costly mistakes.
Laura Kahl is an attorney in McLane Middleton's Woburn office and is admitted to practice in Massachusetts.
Published in the Union Leader (3/28/2021)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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