As part of Panther Workforce Solutions’ ongoing commitment to regulatory compliance and workforce best practices, we are providing this important update regarding employer obligations under the Illinois Wage Payment and Collection Act (IWPCA) related to expense reimbursement.
General Rule
Under the IWPCA, Illinois employers are required to reimburse employees for necessary expenses or losses incurred as a direct result of their employment, provided the expenses primarily benefit the employer. This obligation applies regardless of whether employees are using personal devices (e.g., mobile phones, internet, tablets) for work-related purposes.
Five-Factor Test (IDOL Guidance)
To determine if an expense qualifies for reimbursement, the Illinois Department of Labor advises employers to consider the following factors:
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Employee’s expectation of reimbursement
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Necessity of the expense in performing job duties
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Direct benefit to the employer (and whether the employer would otherwise need to pay for it)
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Duration the employer receives benefit from the expense
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Whether the expense is a job requirement
Use Case Example: Multi-Factor Authentication (MFA)
If contingent workers or employees are required to use personal cell phones to access secure employer systems via MFA, a portion of their phone bill is likely subject to reimbursement under IWPCA.
Penalties and Enforcement
Non-compliance with IWPCA reimbursement provisions can lead to serious financial penalties:
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Restitution is required, along with monthly penalties for the duration between the date of expense and the date of reimbursement.
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Regulatory enforcement is increasing, and violators have faced substantial financial exposure due to backdated penalties.
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There is a growing body of enforcement actions despite limited case law historically.
Employer Best Practices
To reduce risk and ensure compliance, PWS recommends the following:
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Implement and document a clear expense reimbursement policy, including eligible expense types.
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Maintain accurate records of expense submissions, approvals, and payments for at least three years.
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Proactively review and update internal policies in light of evolving enforcement trends.
At Panther Workforce Solutions, we ensure our clients benefit from compliance-focused workforce management—including policy guidance that aligns with local, state, and federal labor regulations. As a Minority Owned and Certified MSP, PWS is proud to support it;s clients and its suppliers in maintaining compliant, efficient, and inclusive workforce practices across all engagements.