By Samantha Halem, Julia Russo, Sarah Ruter, Catherine Reuben September 22, 2026
Overview
Employers with remote workforces in multiple states face a complex and inconsistent set of obligations regarding reimbursing employee expenses. A significant number of states impose affirmative reimbursement requirements and several carry penalty exposures for non-compliance. With the increase in remote employees and the potential that companies have employees scattered throughout the country, it is important to ensure specific compliance with local laws. This client alert summarizes current state laws on affirmative expense reimbursement requirements for private employers.
States with Affirmative Reimbursement Requirements
The following states currently impose an affirmative obligation on private employers to reimburse employees for work-related expenses. The scope of that obligation, and the consequences for failing to meet it, vary considerably.
California requires employers to indemnify employees for “all necessary expenditures or losses” incurred in the direct discharge of their duties. Cal. Lab. Code § 2802(a), (c). California courts have applied this requirement broadly, extending coverage to a reasonable portion of employees’ personal cell phone bills, home internet service, home office supplies (computers, printers), and vehicle expenses. See, e.g., Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007) (holding that vehicle costs may be reimbursed where necessary to the job); Lindell v. Synthes USA, 155 F. Supp. 3d 1068, 1074–8 (E.D. Ca. 2016) (where internet access and home office upkeep were considered business expenses under California law).
In particular, the obligation to reimburse personal cell phone use and WiFi connection is well-established in California. Herrera v. Zumiez, Inc., 953 F.3d 1063, 1077–8 (9th Cir. 2020). When employees must use personal cell phones for work-related calls and a WiFi connection to perform their job, regardless of whether the employee has an unlimited plan or whether the phone/WiFi bill was increased, the employer must reimburse a reasonable percentage of the employee’s bill, to be determined based on the specific facts.
District of Columbia requires private employers to pay work-related travel expenses and to purchase and maintain any work tools required of the employee in the performance of the employer’s business. D.C. Mun. Regs. tit. 7, §§ 909.1, 910.1.
Illinois requires employers to reimburse employees for all necessary expenditures or losses incurred as a direct consequence of discharging employment duties, if the employer authorized or required the employee to incur the necessary expenditure. 820 ILCS 115/9.5(a). As this law operates under the Illinois Wage Payment and Collection Act, an employee not timely reimbursed may recover substantial damages in addition to the amount of the underpayment, including 5% of the underpayment per month if it remains unpaid, costs, and attorney’s fees.
Iowa requires reimbursement for authorized expenses, but only where the employee has obtained advance approval. Iowa Code § 91A.3(6).
Massachusetts requires reimbursement for travel expenses incurred when an employee who works at a fixed location is required to travel to a different location on employer business, or when an employee is directed to travel during the workday. 454 Mass. Code Regs. 27.04(4).
Minnesota requires employers to reimburse for uniforms, equipment used in the course of employment (excluding tools of the trade and motor vehicles), consumable goods, and work-related travel expenses (other than ordinary commuting). Minn. Stat. Ann. §§ 177.24.
Montana requires employers to indemnify employees for all expenditures or losses directly resulting from discharging employment duties, following employer instructions, or the employer’s own negligence, excepting ordinary business risks. Mont. Code Ann. § 39-2-701.
New Hampshire requires reimbursement for expenses incurred at the employer’s request in connection with employment, that the employer has not otherwise covered through wages or cash advances and is not an expense usually put upon the employee. N.H. Rev. Stat. Ann. § 275:57. Employers must also provide advance, written notice of their reimbursement policy and any changes to it. N.H. Admin. Code § 803.03(b), (c).
New Jersey does not have an express statutory reimbursement requirement, but in Sands v. Bd. of Review, Dep’t of Labor & Workforce Development, A-0413-22 2024 WL 1477415 (N.J. App. Div. 2024), a New Jersey Court held that an employer violated the New Jersey Wage Payment Law by requiring an employee to use a personal vehicle without reimbursement, finding that the employer had effectively transferred its own operating expenses to the employee and diverted his wages to pay those costs. New Jersey employers should treat unreimbursed, employer-required expenses as a wage payment compliance issue.
New York does not impose a general affirmative reimbursement obligation, but does subject employers to misdemeanor liability under N.Y. Lab. Law § 198-c(1) for failing to honor an agreement to provide an expense reimbursement within 30 days after the payment is required to be made. This provision, however, does not apply to administrative, executive, or professional employees earning more than $1,300 per week. N.Y. Lab. Law §198-c(3).
North Dakota requires reimbursement for expenses directly resulting from discharging employment duties or following employer instructions, excluding tools of the trade or equipment the employee also uses outside of work. This obligation does not extend to losses from ordinary business risks or the negligence of a co-worker, “unless the employer has neglected to use ordinary care in the selection of the culpable employee.” N.D. Cent. Code §§ 34-02-01, 34-02-02.
Oklahoma does not impose a general affirmative reimbursement obligation but, like New York, an employer that enters into a reimbursement agreement and fails to honor it may be found guilty of a misdemeanor under Okla. Stat. tit. 40, § 165.11.
Pennsylvania imposes an affirmative reimbursement obligation only with respect to sales representatives: the employer and representative must have a written agreement addressing expense reimbursements. 43 Pa. Const. Stat. § 1472. There is no general statutory reimbursement obligation for other employees, and Pennsylvania case law suggests that claims for unreimbursed expenses must be grounded in a breach of an agreement to reimburse.
South Dakota requires reimbursement for expenses directly resulting from discharging employment duties or following employer instructions. Ordinary business risks and costs arising from the negligence of a co-worker are excluded unless the employer failed to exercise ordinary care in selecting the at-fault employee. S.D. Codified Laws §§ 60-2-1, 60-2-2.
Washington imposes a requirement that employers pay any expenses related to work performed for the employer either through reimbursement or an allowance. Wash. Admin. Code § 415-104-390.
Remote Work Considerations
Outside of California, most states have not formally addressed how their reimbursement obligations apply to remote work arrangements, but there can still be liability for failing to pay expenses that employees incur by working from home.
California presents the greatest reimbursement claim risk for employers with remote workers. Courts have held that the broad indemnification obligation under Cal. Lab. Code § 2802 extends to home internet service, personal cell phone use, electricity, office supplies, and equipment, when employees are directed to work remotely and those resources are required to perform job duties. A key question in each case is whether the employer knew or had reason to know the expense was incurred. Cochran v. Schawn’s Home Service, Inc., 228 Cal. App. 4th 1137, 1140 (2014). Employers should define clearly what constitutes necessary home office tools and should establish written policies outlining reimbursement protocols. Employers that have not adjusted their reimbursement policies for remote employees face potential class-wide exposure in California.
Massachusetts has no standalone statute that expressly requires employers to reimburse remote employees for internet costs, but there is potential liability under the Wage Act for impermissible deductions or costshifting. For example, where an employer requires an employee to work remotely and the employee incurs internet expenses as a direct and necessary cost of performing work for the employer’s benefit, or where an employer abandons an express agreement to reimburse internet costs, the cost-shifting principle under the Wage Act may support a reimbursement claim. Fraelick v. PerkettPR, Inc., 83 Mass.App.Ct. 698 (2013)
For all other states with affirmative reimbursement obligations, the statutes apply based on the nature of the expense rather than work location. Employers should not assume that the absence of specific remote work guidance means remote expenses are excluded.
Takeaways for Employers
Identify which states impose affirmative obligations.
Fifteen states and municipalities impose some form of reimbursement obligation and standards for compliance. Employers operating in these jurisdictions should confirm that their policies satisfy the standards applicable to their workforce. Remember that this is an evolving area of the law.
Pay close attention to penalty exposure.
Several states link reimbursement requirements to wage payment laws, and thus attach additional damages, such as penalties, costs, and attorneys’ fees, to violations. In some states, non-compliance is not simply a civil risk; there could be misdemeanor liability. Employers in those states should ensure any reimbursement commitments are accurately documented and consistently honored.
Audit remote work policies.
While California law presents the highest risk for employers with remote or hybrid employees, employers should consider developing a national policy to address such issues. Even in states that have no applicable law, it is important to have a policy for remote employees regarding work-related reimbursements which makes clear what is covered and is not, and to ensure that employees make at least the applicable minimum wage.
To discuss how these laws affect your organization and how best to manage a remote workforce while ensuring compliance with the applicable state law(s), please contact your HRW attorney:
• Samantha Halem (shalem@hrwlawyers.com / 781-235-4878);
• Julia Russo (jrusso@hrwlawyers.com / 617-348-4338);
• Catherine Reuben (creuben@hrwlawyers.com / 617-348-4316);
• Sarah Ruter (sruter@hrwlawyers.com / 781-235-4879); or
• Any member of the HRW Team
This alert is provided for educational and informational purposes only and does not constitute legal advice. The law in this area is evolving rapidly, and an employer’s obligations will depend on the unique facts and circumstances, applicable state and local law, and other relevant factors. Employers should consult with legal counsel regarding expense reimbursement and other wage-and-hour issues.
