Whether your employer must reimburse your business expenses depends almost entirely on where you work. Federal law sets only a narrow floor, but expense reimbursement laws by state fill the gap in about a dozen jurisdictions, requiring employers to cover the necessary costs of doing the job. Everywhere else, workers rely on the federal minimum-wage protection and whatever the employer has promised in writing.
The Federal Floor Every Worker Has
Federal law does not broadly require employers to reimburse business expenses. What it does is prohibit employers from passing costs to workers in a way that effectively cuts hourly pay below $7.25, the federal minimum wage. This protection comes from the Fair Labor Standards Act’s “kickback” regulation at 29 C.F.R. § 531.35, which requires wages to be paid “free and clear” and treats any workweek where employer-required tools or supplies eat into the minimum wage or overtime pay as a violation.1eCFR. 29 CFR 531.35 – “Free and Clear” Payment of Wages
In practice: if you earn $8.00 per hour and your employer requires you to buy a $60 uniform in a 40-hour week, that expense drops your effective rate to $6.50, below the federal minimum. Your employer owes you the difference. If you earn $25 per hour, that same $60 expense triggers no federal obligation because your effective rate stays well above the floor.
The federal rule primarily protects lower-wage, non-exempt workers. Higher your pay, less likely any single expense pulls you below the threshold. For everyone else, the answer to whether you get reimbursed is a question of state law.
States That Require Expense Reimbursement
Roughly a dozen states and the District of Columbia require employers to reimburse necessary business expenses regardless of what the employee earns. The scope, deadlines, and penalties vary, but the shared principle is that the employer, not the worker, bears the operating costs of the business.
California
California Labor Code § 2802 is the strongest and most frequently litigated expense reimbursement statute in the country. It requires employers to indemnify employees for all necessary expenditures or losses incurred as a direct consequence of performing their duties, and it applies to every employee regardless of wage level.2California Legislative Information. California Code, Labor Code LAB 2802 Covered costs range from mileage to cell phone bills to home internet for remote workers.
Any court or Division of Labor Standards Enforcement award carries interest from the date the employee incurred the expense. The statute also defines “necessary expenditures or losses” to include attorney’s fees the worker spends enforcing the right, so an employer that fights a valid claim pays the employee’s legal bills too.
Illinois
Illinois requires employers to reimburse all necessary expenditures within the employee’s scope of employment that directly relate to services performed for the employer, under 820 ILCS 115/9.5 of the Wage Payment and Collection Act.3Illinois General Assembly. 820 ILCS 115/9.5 – Reimbursement of Employee Expenses Employees must submit expenses with supporting documentation within 30 calendar days, though employers can extend that window through written policy. If receipts are lost, a signed statement can substitute. Employers can set written reimbursement policies, but a policy cannot set standards below what the statute requires.
Massachusetts
Massachusetts does not have a standalone reimbursement statute. Instead, obligations arise under the Wage Act, M.G.L. c. 149, § 148, which governs timely payment of wages and has been interpreted to reach certain required business expenses. The real teeth come from § 150, which allows employees who prevail in court to recover treble damages (three times their losses), plus attorney’s fees and litigation costs.4General Court of Massachusetts. Massachusetts General Laws Part I, Title XXI, Chapter 149, Section 150
Montana
Montana Code § 39-2-701 requires employers to indemnify employees for everything they necessarily spend or lose as a direct consequence of the job, including losses from following employer directions. The one carve-out is for losses arising from ordinary risks of the business itself. The statute also separately requires indemnification for any losses caused by the employer’s own lack of ordinary care, which applies regardless of the ordinary-risk exception.5Montana State Legislature. Montana Code 39-2-701 – Indemnification of Employee
New Hampshire
New Hampshire RSA 275:57 covers expenses incurred “at the request of the employer” but excludes costs “normally borne by the employee as a precondition of employment.” The employer must reimburse within 30 days after the employee presents proof of payment.6New Hampshire General Court. New Hampshire Code 275:57 – Reimbursement of Employee Expenses That precondition exception matters. If an employer told you at hiring that you needed your own laptop, that cost might not be reimbursable. If the employer later requires software or equipment you were not told about upfront, the statute applies.
North Dakota and South Dakota
Both states have nearly identical indemnification statutes. North Dakota’s § 34-02-01 requires employers to indemnify employees for all they necessarily spend or lose as a direct consequence of their duties, with one exception: the obligation does not extend to tools of a trade or other equipment that the employee also uses outside work.7North Dakota Legislative Branch. North Dakota Century Code Title 34 Chapter 02 South Dakota’s § 60-2-1 uses virtually identical language.8South Dakota Legislature. South Dakota Codified Laws 60-2-1 – Indemnification of Employee by Employer
Iowa
Iowa Code § 91A.3 uses an authorization-based approach. Expenses authorized by the employer must be reimbursed no later than 30 days after the employee submits an expense claim. If the employer refuses to pay all or part of a claim, the employer must provide a written justification within that same 30-day window.9Iowa Legislature. Iowa Code 91A.3 – Mode of Payment That requirement forces denials onto the record.
District of Columbia
D.C. Code § 32-1301 folds promised reimbursements into the definition of “wages” by including “other remuneration promised or owed” under an employment contract or applicable law.10D.C. Law Library. D.C. Code 32-1301 – Definitions That lets employees use the same enforcement mechanisms available for unpaid wages. Under § 32-1303, an employer who fails to pay owes liquidated damages of 10 percent of the unpaid amount for each working day the failure continues, or treble the unpaid amount, whichever is smaller.11D.C. Law Library. D.C. Code 32-1303 – Payment of Wages Upon Discharge or Resignation
Partial Protections in Other States
A handful of other states address expense reimbursement in narrower ways. Minnesota requires employers to reimburse the cost of equipment and consumable supplies used in employment upon termination, though tools of a trade and personal vehicles are excluded. New York requires employers to pay any “benefits or wage supplements,” including business-related expense reimbursements, that have been promised to the employee. Pennsylvania does not mandate reimbursement by default, but if an employer has a policy or agreement promising it, those amounts become enforceable as wage supplements under state law.
States Without a General Mandate
Most states have no general statute requiring expense reimbursement. In those states, the federal FLSA kickback rule is the fallback, and it only helps if unreimbursed costs drop your pay below minimum wage. If you earn well above the minimum and your state has no reimbursement law, your employer has no legal obligation to cover business expenses unless a written policy or contract promises it.
A written policy still matters. If your employer has one, it can become enforceable as part of your employment agreement even without a specific state statute, because wage-payment laws in most states require employers to pay any compensation they have promised.
Remote Work, Cell Phones, and Home Internet
The shift to remote and hybrid work has made cell phone and internet reimbursement one of the most contested expense categories. In states with broad reimbursement statutes like California and Illinois, employers who require employees to use personal devices or home internet for work must cover a reasonable portion of those costs. That obligation exists even when the employee would have paid for the service anyway.
The leading case is Cochran v. Schwan’s Home Service, Inc., a California appellate decision holding that employers must always reimburse employees for mandatory use of personal cell phones, regardless of whether the employee has an unlimited plan and incurs no extra out-of-pocket cost. The court reasoned that the employer benefits from a resource the employee pays for, and must reimburse “a reasonable percentage” of the bill.12FindLaw. Cochran v. Schwan Home Service Inc The court deliberately left the exact percentage flexible, since usage patterns differ.
In states without mandatory reimbursement laws, remote work costs fall back on the FLSA kickback rule. Non-exempt workers whose unreimbursed internet and phone costs push their effective hourly rate below the applicable minimum wage are owed the difference. Higher-earning workers in those states have no guaranteed right to reimbursement.
What Counts as a Reimbursable Expense
Across the state statutes, the shared thread is that the expense must be necessary for the employee to do the job the employer assigned. Categories that come up repeatedly:
- Personal vehicle mileage. The IRS standard mileage rate for 2026 is 72.5 cents per mile, covering fuel, depreciation, insurance, and maintenance. Many employers use this rate as a benchmark, though some states allow other reasonable methods.13Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents per Mile, Up 2.5 Cents
- Specialized tools and equipment. Diagnostic equipment, professional software, and specialized gear beyond basic hand tools generally count. North Dakota and South Dakota carve out tools the employee also uses outside work.
- Required uniforms. Clothing with company logos, safety gear like steel-toed boots, and specialized attire not suitable for everyday wear are reimbursable in most mandatory-reimbursement states.
- Travel expenses. Lodging, meals, and transportation during business trips fall within every broad reimbursement statute.
- Cell phone and home internet. Reimbursable when the employer requires their use for work, even if the employee would have paid for the service anyway.
What You Can Recover If Your Employer Refuses
Remedies depend heavily on whether the violation is federal or state.
Under the FLSA, when unreimbursed expenses push a non-exempt worker below minimum wage, the Department of Labor can sue for back wages plus an equal amount in liquidated damages, effectively doubling the employer’s liability. Employees can also file private lawsuits for the same relief, plus attorney’s fees and court costs. Willful violations can result in criminal prosecution with fines up to $10,000, and a second conviction can lead to imprisonment.14U.S. Department of Labor. Fair Labor Standards Act Advisor
State remedies tend to be more aggressive. California allows the Labor Commissioner to issue citations directly against non-compliant employers, and employees who sue can recover full attorney’s fees on top of the owed expenses plus interest. Massachusetts workers who prevail recover treble damages plus attorney’s fees. In the District of Columbia, liquidated damages accrue at 10 percent of the unpaid amount for each working day the employer is late, capped at triple the amount owed.
Most state labor departments allow employees to file administrative wage claims at no cost, so you do not need a lawyer to start the process. If the administrative route fails or the amounts are large enough, a private lawsuit is typically the next step. The availability of attorney’s fees in most state statutes makes it easier to find a lawyer, since the employer foots the legal bill if the employee wins.
How to Document and Submit a Request
Strong documentation separates a request that gets paid from one that gets denied. Every expense needs an itemized receipt showing the merchant name, date, items purchased, and total amount with taxes. Credit card statements alone are rarely sufficient because they do not show what was purchased. For mileage, keep a log with starting and ending locations, total distance, and the business reason for each trip. A lump-sum monthly total will not survive scrutiny.
Each expense also needs a brief written explanation connecting it to a specific job duty, project, or client. For meals, note who attended and the business topic. This level of detail is the difference between a clean reimbursement and a protracted back-and-forth with accounting.
Submit promptly. Illinois requires employees to submit within 30 calendar days of incurring the expense. Iowa gives employers 30 days to reimburse after the employee submits the claim. New Hampshire sets the same 30-day clock running from the presentation of proof of payment. Even in states without a statutory deadline, internal policies can impose shorter windows, and stale expenses are harder to verify. Keep copies of everything you submit; the IRS recommends retaining supporting records for at least three years from the date you file the tax return that covers the expense period.15Internal Revenue Service. How Long Should I Keep Records?
Tax Treatment of the Money You Get Back
How your employer structures its reimbursement program determines whether the money is tax-free or shows up as taxable wages on your W-2. The IRS draws a sharp line between “accountable plans” and “non-accountable plans.”
An accountable plan must meet three requirements: the expense must have a business connection; you must substantiate the amount, date, place, and business purpose within a reasonable period (the IRS treats 60 days as reasonable); and you must return any excess advance within a reasonable period (120 days). Reimbursements under a qualifying accountable plan are not reported as income and are not subject to income tax withholding or payroll taxes.16Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses If the arrangement fails any of these requirements, every dollar the employer pays for expenses becomes taxable wages subject to withholding and FICA.17Office of the Law Revision Counsel. 26 U.S.C. 62 – Adjusted Gross Income Defined