The rules around remote work expense reimbursement are confusing by design — not maliciously, but because they’re patched together from state laws, federal guidelines, and employer policies that rarely align. In 2024, Amazon settled a California lawsuit over unpaid remote work costs for nearly $950,000, a reminder that this isn’t a small problem or a rare one.
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Why Your Location Matters More Than Your Company Policy
There’s no federal law that says your employer has to reimburse you for remote work expenses. The Fair Labor Standards Act only kicks in when those costs would push your effective hourly wage below $7.25 an hour — or below $684 a week for salaried employees. That’s a low bar, and it doesn’t cover most people.
Instead, the real action is at the state level. Twelve states, plus Washington, D.C., and Seattle, have their own laws requiring employers to cover necessary work-related expenses. The catch is that each one defines “necessary” differently, and the deadlines, documentation rules, and penalties vary widely.
California’s Labor Code Section 2802 is the broadest: employers must reimburse all necessary expenditures, including a reasonable percentage of internet and cell phone bills. Illinois asks that employees submit documentation within 30 days. New Hampshire and New York enforce strict 30-day deadlines for submitting receipts. In Massachusetts, you’re only protected if unreimbursed expenses would drop your pay below the state minimum wage of $15 an hour.
What this means in practice: two remote workers doing the same job for the same company could have completely different reimbursement rights depending on where they live. The employer’s written policy matters, but state law overrides it when the two conflict.
The Expenses That Actually Count
Most people assume reimbursement covers a laptop and maybe a monitor. In practice, the list is longer — and more complicated — than that.
Standard reimbursable items include internet charges, cell phone bills, office supplies, and home office equipment. Some states also allow for a prorated share of utility costs like electricity, based on the percentage of your home used for work. But the key word across every state law is “necessary.”
If your employer requires you to work remotely, the costs are generally considered necessary. If you chose to work remotely on your own, the line gets blurrier. California courts have been explicit: remote work expenses fall under the state’s reimbursement laws when the employer directs the arrangement. Illinois courts agree.
Unlimited data plans are a common sticking point. If your internet bill is $80 a month regardless of how much you use, what counts as a “reasonable” portion for work? California courts have said employers may still need to cover a percentage of that flat rate. Other states cap reimbursement at documented market rates, meaning you’ll need to show what a typical plan costs in your area.
Equipment like ergonomic chairs, desks, and monitors are standard claims, but you’ll need receipts. Software subscriptions that directly support your job — Microsoft Office, cloud storage, project management tools — are reimbursable in most states that have laws on the books. The common thread is that the expense must be directly tied to your job duties, not just convenient for you.
How Reimbursement Structures Work (and Where They Break)
How your employer handles reimbursement matters as much as what they cover. The IRS draws a sharp line between two approaches, and the tax consequences are significant.
An accountable plan requires three things: the expense is business-related, you substantiate it within a reasonable period (the IRS says no more than 60 days), and you return any excess reimbursement within 120 days. Reimbursements under this structure are not considered wages — they’re not subject to income tax, Social Security, or Medicare deductions.
A nonaccountable plan skips those requirements. The employer pays you a flat amount or covers expenses without asking for documentation. That money is treated as taxable income and appears on your W-2.
Under an accountable plan, every dollar you get back is tax-free. Under a nonaccountable plan, you lose roughly 20–30% of that reimbursement to taxes depending on your bracket. If your employer offers a flat $50 monthly internet stipend without requiring receipts, that’s effectively less than $40 after taxes. The structure changes the real value of the reimbursement.
Some employers skip the formal structure entirely and offer a remote work stipend. These are simpler to administer, but they’re almost always taxable. A 2022 Reuters report noted that some companies settled remote work claims by providing monthly stipends of up to $83, which gives you a sense of the scale most employers are thinking about.
The practical trade-off is this: accountable plans are better for you financially but require more paperwork. Nonaccountable plans are easier but cost you in taxes. If your employer doesn’t have a formal policy, you’re likely leaving money on the table — or overpaying in taxes on what you do get.
When Employers Skip Reimbursement — The Real Risks
The Amazon settlement isn’t an isolated case. Employees have sued Wells Fargo, Liberty Mutual, Visa, Oracle, and Bank of America over unpaid remote work costs. These aren’t small claims — they’re class actions with significant payouts.
For employers, the legal risk is real. In California, violating Labor Code Section 2802 can trigger penalties plus potential attorney fees of $10,000 per claim. In New York, if an employer has agreed to reimburse expenses and doesn’t, the failure can be a misdemeanor. In Montana, every necessary job-related expense must be reimbursed, with no exceptions.
Assuming an exempt or salaried classification means you’re not entitled to reimbursement. In California and several other states, exempt status does not erase reimbursement obligations. The two are separate legal questions. If you’re salaried and paying for your own internet, printer ink, and software subscriptions out of pocket, those costs may still be reimbursable under state law — regardless of your pay grade.
For employees, the risk is different. If you haven’t been tracking your expenses or submitting them properly, you may not have a clear claim. Most state laws require documentation — receipts, bills, or logs — and strict deadlines. New Hampshire gives you 30 days from proof of payment to submit a claim. Illinois requires documentation within 30 days unless the employer’s policy extends the window. Miss the deadline, and you lose the reimbursement even if the expense was legitimate.
The broader pattern is that unpaid reimbursements become taxable income, which complicates withholding and year-end reporting. For employers who neglect documentation, the exposure to state audits and wage claims grows every quarter.
What You Can Do Right Now
You don’t need to wait for your employer to update their handbook. There are concrete steps you can take today to understand what you’re owed and make sure you get it.
Check your state’s reimbursement law
If you live in California, Illinois, Iowa, Massachusetts, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, or Washington — or in D.C. or Seattle — your employer likely has obligations beyond what their policy says. Look up the specific statute for your state to understand what counts as a necessary expense.
Review your employer’s written policy
Check your employee handbook, offer letter, or onboarding materials. If there’s no mention of remote work expense reimbursement, that’s a gap worth raising. If there is a policy, note the deadlines and documentation requirements — those are the details that determine whether you actually get paid.
Start documenting everything
Save your internet and phone bills. Keep receipts for office supplies, equipment, and software subscriptions. Note the date you incurred each expense. If your state requires submission within 30 days, you’ll need that record ready.
Submit claims the right way
If your employer uses an accountable plan, submit documentation within 60 days and make sure you’re not over-reimbursed. If they use a nonaccountable plan, understand that you’re paying tax on that money. Either way, submit in writing and keep a copy of your request.
For a deeper look at your broader rights as a remote employee, the guide on understanding remote work expense reimbursement rights covers the legal landscape in more detail. And if you’re navigating a situation where your employer isn’t cooperating, the piece on solving remote work disputes with mediation offers a practical path that doesn’t start with a lawsuit.
The difference between getting reimbursed and covering costs yourself isn’t about being pushy or patient. It’s about knowing which rules apply to your zip code, what documentation your employer needs, and how to submit a claim before the deadline passes. The legal framework exists — but it only works if you use it. Take an hour this week to check your state’s law and your employer’s policy. That hour is almost certainly worth more than the expenses you’re not claiming.