How to Draft a Business Expense Reimbursement Policy

Author: William Hays Weissman, Littler

After wages, healthcare benefits and retirement benefits, the most common type of payment employees receive from their employer is for the reimbursement of expenses incurred while performing their work. Having a compliant business expense reimbursement policy is critical to ensure that employees understand exactly which types of expenses are reimbursable and which are not. It also helps an employer ensure that employees' reimbursements are not treated as taxable wages by the IRS.

Although there is no federal law requiring an employer to reimburse employees for general business expenses (with some exceptions, including but not limited to the OSHA rules for certain kinds of protective gear), many states do have such laws. While some of these state laws are quite specific about the types of business expenses that must be reimbursed, others are quite broad and open to interpretation by courts.

There are many decisions to be made when determining the scope of a business expense reimbursement policy. This How To can help an employer make those decisions.