state laws, and the United States Code. Learn more about IRS rules and accountable reimbursement plans. 61 (a)(1), whereas payments such as per diem that are intended to reimburse an employee for expenses incurred on behalf of the employer, are generally considered to be nontaxable. 115,9.5; Mont. See Ruiz v. Hull, 191 Ariz. 441, 459, 957 P.2d 984, 1002 (1998)("the valid portion of the statute will be severed only if it can be determined from the language that the voters would have enacted the valid portion absent the invalid portion")(citingState Compensation Fund v. Symington, 174 Ariz. 188, 195, 848 P.2d 273, 280 (1993)). 2894 0 obj <>stream By the time the Commission was created in 1970, Arizona courts had distinguished between "salary" or "compensation" and "reimbursement." The Commission hasnoauthority to venture into other areas, such as recommending that Arizona voters approve entering treaties with foreign countries, imposing new taxes, or altering legislative per diem rates. 38-624. 2. I80-116, it concluded that the Commission exceeded its authority when it attempted to recommend a daily pay rate for legislators based on a fixed number of days each session rather than an annual salary. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. %PDF-1.6 % However, a key to maintaining any accountable plan is to properly and timely substantiate expenses. With this unprecedented shift in working habits, employers may be overlooking business-related expenses being incurred by their employees. Expenses that were properly incurred in the administration of the trust. See1968 Ariz. Sess. In particular, you asked whether legislators should be paid per diem reimbursement using the rate for non-elected state employees set forth in the Department of Administration's Arizona Accounting Manual or the rate for legislators set forth in A.R.S. Lab. Minimum wage regulations apply only to employees. Detailed Instructions for the Form GAO-502, State of Arizona Employee Expense Reimbursement Form . ." QhK Workers are protected from retaliation if they file a claim. The federal Fair Labor Standards Act (FLSA) generally does not require that an employee be reimbursed for expenses incurred while working from home. Enter your username and password below to log in. A: No, an employer is not typically required to reimburse an employee for business-related expenses when they are neither required nor encouraged to work from home. documentation doesnt exist, is missing or is lost. This form is not to be used to record allowances. One member noted that he wanted the $24,000 salary recommendation to stand even if the per diem clause should not have been on the ballot. A: With employees having historically worked in an office environment, many of the supplies and resources they utilized to complete their job duties were provided for by the employer (i.e., printer paper, pens/pencils, computers, electricity, computer monitors, internet, phones, etc.) Copyright 2013-2023 Justworks, Inc. and its affiliates. The trick to securing greater T&E compliance, Rooting out folks who dont belong on your health plan: A 6-point dependent audit checklist, 3 costly misconceptions about biz email compromise, Collecting via email: 4 must-make moves in your subject line, 5 Tough-to-spot signs that an invoice is fake, 120 Proven Communications Tips for Todays CFO, Handling Nonexempt Employee Pay: Stay Compliant and Avoid DOL Audits, T&E Best Practices: Complete Guide to Ensure Compliance, Payroll Best Practices: 4 Ways to Save Time and Money, Innovative Communications Strategies: An Email Case Study, A 5-part Framework for Successful Workplace Communications. For instance, if the employer has an accountable plan, but the employee fails to properly substantiate the expenses within a reasonable time, or the employee fails to return excess advance payments, then any reimbursements could become taxable income. Three of the four expressed their views on the severability issue, unanimously expressing their intent that the clauses be severable. Remote work is quickly becoming a staple for the modern workforce. [13] See IRS Publication 5137 (Rev. Ariz. Rev. B. This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. The unique manner in which Proposition 302 was developed requires review of the Commission's intent as well as the intent of the electorate to determine whether severance applies.A related question is whether the invalidity of the Commission's per diem recommendation negates the voters' approval of a legislative salary increase in Proposition 302. If an employer knows that an employee will regularly incur a certain business-related/work-related expense, it can choose to increase that employees salary to cover the costs of those expenses. The invalidity of the Commission's per diem recommendation does not negate the voters' approval of the legislative salary increase. Id. For example, as demands on the Legislature have increased in recent years, legislative leaders have found it necessary to spend more time working at the Legislature than ever before. Shouse Law Group is here to help you fight back. )bdpw]o*)w1@3T l7+96CNxbjQg(@DkV`02(6CHzrd+=}eN^ eBhx.D?2:6dt{w5D&9?bDe M7`ih3lV Where an employee incurs expenses on his employer's behalf or where he is required to expend sums by reason of action taken for the convenience of his employer, section 7 (e) (2) is applicable to reimbursement for such expenses. Title 38 recognize the difference between salaries (seeChapter 4, Article 1 ("Salaries")) and per diem reimbursement (seeChapter 4, Article 2 ("Reimbursement for Expenses")). Beginning January 1, 2020, the minimum wage in Arizona rose to $12 per hour. [2] D.C. Municipal Regulation Title 7, Section 910.1. Other jurisdictions that already have expense reimbursement laws on the books include: Generally, your department knows what typical business expenses states will expect to be reimbursed, like transportation, lodging, meals and entertainment. A trustee is entitled to be reimbursed out of the trust property, with reasonable interest, for: 1. 41-1104. . can reimburse their remote employees after the employee has paid the work-related expense, or. Similarly, large portions of A.R.S. All four members present voted in favor of the salary and per diem recommendations. Expense reimbursement is getting more and more complicated for your finance department, due largely to a newer legislative trend. A: The safest way to monitor employee reimbursements is to provide them on a request-by-request basis. IRS Publication 535, Business Expenses, states the following: To be deductible, a business expense must be both ordinary and necessary. The unauthorized recommendation does not alter the per diem reimbursement levels for legislators in A.R.S. Legislative reimbursement continued to be governed by then A.R.S. art. . . The cost of work-related travel, including transportation, lodging, meals, and entertainment that meet the criteria outlined in IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, are generally reimbursable expenses. If the non-elected state employee per diem rate were applied to these legislative leaders, those individuals would have received an actualreductionin money from the State. hYmo6z( $iXmA?xz9>6R./F1eQ#) F%L0Fh\"@&2"``g*BJhDiZXb While federal law does not require employers to pay for work-related expenses incurred by employees while working from home, many state laws do. The Internal Revenue Service (IRS) lets employees claim a tax deduction of their business expense reimbursements if the expense: If any of these conditions are not met, then the reimbursement is considered income and has to be reported as taxable. The arguments did not mention the per diem clause. Even with an accountable plan, there are some things to look out for. 41-1104.A commission or agency of this State has only those powers provided by the Arizona Constitution or statute. %PDF-1.6 % Get to know our founding story and meet the Justworks Leadership Team. With Resourceful Finance Pro arriving in your inbox, you will never miss critical stories on accounting, benefits, payroll & employment law strategies. Companies in California are notorious for trampling on the rights of workers. Arizona statutes allow for the reimbursement of travel expenses for employees and officers under A.R.S. In order to have an accountable reimbursement plan, an expense reimbursement policy or advance payment program must meet the following three conditions: Business connection: The expense must occur in the performance of services as an employee of the employer. The director of the department of administration shall also establish policies and procedures for the claiming of lodging and meal and incidental expense reimbursements and long-term subsistence allowances by persons temporarily required, for a period of not less than thirty days, to reside away from their primary place of residence. Employees should only have to pay income taxes on the wages they earn and certain taxable fringe benefits. Again, it made no reference to the per diem limitation. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. . 2. [3] 820 Illinois Compiled Statute 115/9.5. C. Former ARIZ. CONST. For example, if an employee incurs a business expense in a state governed by the FLSA (or a state with reimbursement laws mirroring the FLSA rule), it is the employers burden to determine whether that expense brings the employees compensation below minimum wage, and if so, to reimburse that employee accordingly. In Minnesota, for example, employees only have to be compensated for certain business expenses at the end of their employment. . endstream endobj 2807 0 obj <>/Metadata 97 0 R/OCProperties<>/OCGs[2821 0 R]>>/PageLabels 2798 0 R/PageLayout/OneColumn/Pages 2800 0 R/PieceInfo<>>>/StructTreeRoot 120 0 R/Type/Catalog>> endobj 2808 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageB]/Properties<>/XObject<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 2809 0 obj <>stream Reimbursement for travel expenses in the State of Arizona applies only to public employees and officers, public institution employees, board members, or any other agency of the state. 39-2-701. App. Make an impact on growing small businesses. endstream endobj 709 0 obj <>stream (a) General rule. The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. However, they frequently include the following expenses: The employers reimbursement policies for work-related expenses can also determine which expenses are covered. Your company required or approved the employee to make the expense. Expense reimbursement laws. 41-1104. Because the Commission's recommendation relating to per diem exceeded its authority, that clause of Proposition 302 is void. The Arizona Supreme Court upheld the law, concluding that reimbursement for expenditures fell outside the 1932 ban prohibiting the Legislature from changing its "compensation" or "salary." 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