IBA Compliance Connection

Your go to source for compliance!

Under recent revisions to the Illinois Wage Payment and Collection Act that become effective January 1, 2019, we are required to reimburse our employees for “necessary expenditures or losses” that are “directly related” to the services performed by the employee. For unlimited plans for cell phones, can we reimburse employees with a monthly allowance instead of requiring documentation of usage every month?

Dec 17, 2018

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Yes, we believe that your bank may pay employees a monthly allowance for their cell phone expenses, provided that your bank has adopted a written expense reimbursement policy that provides for the monthly allowance.

The new requirements in the Illinois Wage Payment and Collection Act require employers to reimburse authorized employee expenses only if the employee meets the “specifications or guidelines” outlined in the employer’s written expense reimbursement policy, which must provide for more than a de minimis reimbursement amount. If your bank’s written expense reimbursement policy provides for a monthly allowance for cell phone usage that is more than a de minimis amount, we believe that your bank may continue to follow its policy.

For resources related to our guidance, please see:

Illinois Wage Payment and Collection Act, 820 ILCS 115/9.5(a) (“An employer shall reimburse an employee for all necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer. As used in this Section, ‘necessary expenditures’ means all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.”)

Illinois Wage Payment and Collection Act, 820 ILCS 115/9.5(b) (“An employee is not entitled to reimbursement under this Section if (i) the employer has an established written expense reimbursement policy and (ii) the employee failed to comply with the written expense reimbursement policy. An employer is not liable under this Section unless the employer authorized or required the employee to incur the necessary expenditure or the employer failed to comply with its own written expense reimbursement policy. If the written expense reimbursement policy of an employer establishes specifications or guidelines for necessary expenditures, the employer is not liable under this Section for the portion of the expenditure amount that exceeds the specifications or guidelines of the policy so long as the employer does not institute a policy that provides for no reimbursement or de minimis reimbursement.”)