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New Illinois Expense Reimbursement Law

Placing new legal burdens on employers in Illinois, on August 26, 2018, Governor Rauner signed into law an amendment to the Illinois Wage Payment and Collection Act (IWPCA), requiring employers to reimburse their employees for all expenses within the scope of “necessary expenditures incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.” The statute defines “necessary expenditures” as all reasonable expenditures required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.

The new law (820 ILCS 115/9.5) goes into effect on January 1, 2019. Happily for employers, the new law specifically states that an employer is not responsible for specific expenses due to:

  1. an employee’s own negligence;
  2.  normal wear and tear; and
  3. theft unless the theft was a result of the employer’s negligence.

Placing a burden on employees, the new law requires employees to submit his/her expenses with appropriate supporting documentation within thirty (30) calendar days after incurring the expense; however, the employer may provide additional time for submitting expenses in a written expense reimbursement policy. Adding a layer of confusion, if supporting documentation is nonexistent, missing or lost, the employee shall submit a signed statement regarding such receipts, in order to be reimbursed.

Employers should note the following helpful tip: The new law also states that an employee is not entitled to reimbursement under this Section if

(i) the employer has an established written expense reimbursement policy; and
(ii) the employee failed to comply with the written expense reimbursement policy.

An employer is not liable under the new law unless the employer authorized or required the employee to incur the necessary expenditure or the employer failed to comply with its own written expense reimbursement policy. If the written expense reimbursement policy of an employer establishes specifications or guidelines for necessary expenditures, the employer is not liable under the new law for the portion of the expenditure amount that exceeds the specifications or guidelines of the policy so long as the employer does not institute a policy that provides for no reimbursement or de minims reimbursement.

The new law could impact (both pro and con) what employers are required to reimburse to an employee. For example, the new law could affect employers by requiring reimbursement for an employees’ use of his/her personal cell phone for business use. However, fortunate for the employer, the new law allows employers to establish a written policy, specifying the requirement and amount for such expense(s). Illinois employers should review their expense reimbursement policies to make sure they are in compliance with the new law prior to January 1, 2019.

If you have any questions regarding the new Illinois expense reimbursement law, please contact Joe Laverty at 563-333-9102 or Wessels Sherman can assist you in reviewing your company’s policy regarding expense reimbursements. If your company needs help with this, please contact any of our five offices.

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