HR Management & Compliance

From the Experts: A Sample Business Expense Reimbursement Policy






This month’s experts are
Tyler M. Paetkau, Esq., and Hilary J. Vrem, Esq., with the law firm of Littler Mendelson,
in San Francisco and San Diego, respectively.

 

Last month, our From
the Experts
column focused on a recent California Supreme Court decision
approving the use of lump sum (or increased compensation) expense
reimbursements. The article explained the need for employers that use the lump
sum method to have a clear expense reimbursement policy that includes a mechanism
for employees to challenge the reimbursement amount. Here is a sample policy
you can tailor to your organization’s needs.

 


400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.


 

Sample Expense Reimbursement Policy

The Company’s policy is
to reimburse its employees for all appropriate and reasonable expenses
necessarily incurred during the course of business through increased
compensation. This increased compensation is intended to fully compensate and
reimburse employees for all necessary and reasonable business-related expenses.
However, in the event of any underpayment of such reimbursement, employees
should submit a written request to the Human Resources Department, as discussed
in this policy.

 

Under the Company’s
policy, employees will receive an increased [salary/wage] (in the amount of
______) per pay period/annually. This increased [salary/wage] takes into
account, and is intended to reimburse and compensate employees for, all
reasonable and necessary business-related expenses including, but not limited to,
expenses incurred as a result of employees’ operation and use of their personal
vehicle(s) during the discharge of their employment duties for the Company.
(Examples of specific expenses taken into account in determining the amount of
employees’ increased [salary/wage] include, but are not limited to, the cost of
fuel, mileage, insurance, repairs, maintenance, registration, and depreciation
based on a national average as determined by the Internal Revenue Service.) The
increased [salary/wage] payment paid to employees will be itemized as a
separate category on employees’ regularly issued wage statements.

 

What to Do If You Believe You Have Not Been
Fully Reimbursed for All Reasonable and Necessary Business Expenses:
If you believe you have not been fully compensated or reimbursed for
actual expenses reasonably and necessarily incurred in the discharge of your
employment duties for the Company, you should promptly inform the Human
Resources Department [or your direct supervisor]. All reports of possible
inadequate reimbursement or compensation for actual business expenses will be
promptly investigated, which will include a review of all of an employee’s
expense-related records and receipts. If, as a result of the investigation, it
is determined that an employee has been inadequately reimbursed or compensated
for actual and necessary business expenses, the Company will promptly reimburse
the employee in full for his or her actual and reasonable and necessary
business-related expenses incurred. It is the responsibility of every employee
to keep accurate records and receipts of all business-related expenses for the
purpose of disputing his or her increased [salary/wage] payments.