Expense Reimbursement Requirements: A 50-State Guide for Employers

What Changed

This article does not cover a single new law but rather provides an overview of the current landscape of employee expense reimbursement requirements across all 50 states. As remote and hybrid work arrangements continue to be the norm, employer obligations to reimburse employees for business-related expenses — including home office costs, cell phone and internet use, mileage, and equipment — have become a critical compliance area.

Currently, at least 11 states and the District of Columbia have laws requiring employers to reimburse employees for necessary business expenses, including:

California — Requires reimbursement for "all necessary expenditures or losses" incurred in the direct discharge of duties. Courts have interpreted this broadly to include home office equipment, internet, and cell phone costs for remote workers.
Illinois — Similar to California, requiring reimbursement for "all necessary expenditures and losses," though with narrower provisions around unauthorized expenses and employer policy compliance.
Iowa — Requires reimbursement of employer-authorized expenses within 30 days.
Massachusetts — Covers "all necessary and unavoidable" work expenses.
Montana — Requires reimbursement for what an employee "necessarily expends or loses" in work duties.
New Hampshire — Requires reimbursement for expenses not covered by wages.
New York — Requires reimbursement of all benefits and reimbursements promised to the employee.
North Dakota — Covers necessary expenditures, excluding ordinary business risks.
South Dakota — Similar to North Dakota's framework.
District of Columbia — Requires reimbursement for tools required for the job.

The remaining states do not have specific expense reimbursement statutes, though general labor law principles and employment agreements may still create reimbursement obligations.

Who Is Affected

All employers with employees in states that mandate expense reimbursement, regardless of employer size.
Employers with remote or hybrid workers — this is the fastest-growing area of exposure, as remote employees in California or Illinois are entitled to reimbursement for home office expenses even if the employer is headquartered in a state without such a law.
Employers without a formal expense reimbursement policy — the absence of a policy does not eliminate the obligation in states with reimbursement mandates.

Where It Applies

Expense reimbursement obligations are governed by the law of the state where the employee performs work. This is a critical distinction for multi-state and remote-first employers:

An employer headquartered in Texas (no reimbursement statute) with a remote employee in California must comply with California's reimbursement law.
The obligation follows the employee's work location, not the employer's principal place of business.

When It Takes Effect

These are existing state laws — there is no single effective date. However, enforcement activity and employee awareness have increased significantly since 2020 as remote work arrangements expanded. Employers should treat this as an ongoing compliance obligation rather than a one-time checkpoint.

Why It Matters

Failure to reimburse employees for necessary business expenses in states with mandatory reimbursement laws can result in:

Class action lawsuits — particularly in California, where expense reimbursement claims are frequently litigated.
Individual wage claims filed with state labor departments.
Penalties and interest on unreimbursed amounts.
PAGA claims in California (Private Attorneys General Act), which allow individual employees to bring representative actions on behalf of all similarly situated employees.

The rise of remote work has made this a higher-stakes issue than ever. Many employers added remote workers in states where they had no prior presence — and may not be aware of the expense reimbursement obligations that come with it.

The Humareso Take

This is one of those compliance areas that flies under the radar until it does not. If you have even one remote employee in California or Illinois, you likely have an expense reimbursement obligation you may not be meeting. We have seen employers get tripped up by this more often in the last few years as remote work expanded faster than policies could keep up. A written expense reimbursement policy is not just good practice — in many states, it is required. If you do not have one, or if your current policy does not account for remote work expenses, let us help you fix that.

Recommended Action Steps

Identify every state where you have employees performing work — including remote, hybrid, and traveling employees.
Determine which of those states have mandatory expense reimbursement laws and review your current compliance.
Implement or update a written expense reimbursement policy that meets the requirements of the most restrictive state where you have employees.
Address remote work expenses specifically — cell phone, internet, home office equipment, and supplies — in your reimbursement policy.
Train managers on the policy to ensure expense claims are processed consistently and within required timeframes.
Contact your Humareso representative for a multi-state expense reimbursement compliance review and policy drafting assistance.