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Who pays the bills?

Q. I work in the technology field. Our company president informed staff nationwide we would now be using our personal cell phones and not be provided company phones anymore. My understanding of the law was if your company required you to have and use a phone they had to provide it and pay for it. My California colleague agrees. Are we correct or misinformed?

A. Technology seems to go forward faster than company practices and policy, or some laws can get ahead of. I can venture guesses on why your firm has decided to go this route. How many people complained about having to check two numbers and two phones? How many people asked if they could have an iPhone or a Blackberry, or a Droid – whatever phone it was that was NOT the one chosen by the company? How many people were using their company phone as their personal phone? Did they reimburse the company for the minutes they may have used personally? Perhaps none of these were issues, but these are the concerns I hear from both employees and employers as they deal with business equipment and expenses.

I consulted Barry Miller, an employment attorney at Seyfarth Shaw, who specializes in providing advice to employers and defending employment-related claims. Attorney Miller explains, “The reimbursement of business expenses incurred by employees varies from state-to-state. A small number of states have adopted laws requiring that businesses compensate employees for, in California’s case, ‘all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer . . .’”

Miller continues, "Most states do not have such sweeping requirements and either have no laws requiring reimbursement of business expenses or have only very limited legislation. Massachusetts has no law requiring that employers reimburse employees for business expenses. However, regulations implementing the Massachusetts minimum wage law provide two specific circumstances in which employers must compensate employees for costs incurred relating to their jobs. First, an employer must reimburse an employee for ‘all transportation expenses’ when the employer requires the employee to travel during the work day. Second, an employer that requires employees to wear uniforms that require dry-cleaning, commercial laundering, or other special treatment must reimburse employees for the actual costs of those cleaning services, if those out-of-pocket costs have the effect of reducing the employee’s compensation below the minimum hourly rate of $8.00/hour.”

Surprisingly, aside from these two requirements, Massachusetts law leaves the reimbursement of business expenses to be governed by policies adopted by employers or to negotiations between employers and their employees. Most companies have expense policies and practices built from years of experience, and issues raised and resolved by employers and employees. Business expenses can range from travel, mileage, home internet access, home phones, or second phone lines, to who pays for cakes to celebrate staff birthdays.

The mutuality of business related activities and the costs incurred by an employee are most often at the heart of conversations about who pays for what. Employees are most concerned about new expenses for them, and employers are often concerned about picking up new expenses which do not relate to the business, or which an employee would already be paying for. Years ago, many employers paid for internet access for people working from home because it was not a “given” that a professional would have that available. Times changed, and many employers stopped paying for internet access as it became as expected as having a phone. Some firms choose to split these expenses recognizing that the employer and employee both benefit.

Discussions prior to incurring what you believe to be a company reimbursable expense should be had. No one wants to be surprised with a big bill, thinking some one else will be paying it. The same kinds of conversations should be had about what a company norm is. Is taking a client to lunch a $25 activity, or a $95 expense? Finding out what is within the realm of acceptable will prevent employee employer issues.

You may want to ask why the company decided to implement this new policy. It may actually work out in your favor. As new tools become available to use in our work, we will have to figure out who pays for what.

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