Odette CaplanMillions of American workers are quietly losing hundreds — sometimes thousands — of dollars each year to a gap most don't know exists: the space between what their employer is legally required to reimburse and what actually shows up in their expense account. "Reimbursement" emerged as a trending search term in the US this October 2026, reflecting a wave of workers asking, for the first time, whether they have a legal right to be paid back for work expenses their employer refuses to cover.
The answer is yes — but only in certain states, and only under specific conditions. Knowing the rules in your jurisdiction could mean recovering years of unpaid out-of-pocket costs.
The Question Your Employer Hopes You Won't Ask
When your company asks you to drive to a client site, take calls on your personal cell phone, or maintain a home office internet connection that supports video conferencing, the unspoken assumption is that these costs are just "part of the deal." For most of the 20th century, that assumption was essentially correct — federal law provided almost no protection for workers who spent their own money to do their jobs.
That has changed, quietly and unevenly, across the United States. As hybrid and remote work became permanent arrangements after 2020, a patchwork of state statutes has expanded employee rights significantly — but only in some states. In others, nothing has changed.
The gap has become more visible in 2026 as companies that encouraged or required remote work five years ago now pull workers back to physical offices — without acknowledging the years of home office expenses those workers absorbed. Workers returning to the office are also incurring new commuting and equipment expenses they didn't have when fully remote. The question of who pays is no longer hypothetical.
What Federal Law Actually Guarantees
The federal Fair Labor Standards Act (FLSA) does not require employers to reimburse employee work expenses in any general or comprehensive sense. The FLSA's one relevant provision is narrow: if unreimbursed work costs bring a non-exempt employee's effective hourly pay below the federal minimum wage of $7.25 per hour, the employer must make up the difference.
In practice, this threshold is rarely triggered. A worker earning $16 per hour who incurs $250 in unreimbursed monthly expenses — roughly $3,000 per year — still earns well above minimum wage even after absorbing those costs. Federal law simply does not provide a remedy in this scenario, regardless of how clearly the expenses were required by the employer.
For the vast majority of American workers, any meaningful right to expense reimbursement lives — or does not live — at the state level.
The States That Have Your Back (and the Ones That Don't)
As of 2026, at least 11 jurisdictions impose an affirmative duty on employers to reimburse necessary work expenses: California, Illinois, Massachusetts, Montana, New Hampshire, North Dakota, South Dakota, Iowa, Washington D.C., and the City of Seattle.
California is the most protective by a substantial margin. Under Labor Code §2802, employers must reimburse employees for "all necessary expenditures or losses" incurred in the direct consequence of performing their duties. Courts have interpreted this broadly: in one widely cited ruling, IBM was required to reimburse remote workers for necessary home office expenses, even when the remote arrangement was the employee's preference rather than the employer's mandate. No employer policy can override this statutory requirement — a written expense policy that caps reimbursement or excludes categories of expense cannot eliminate the underlying legal obligation.
Illinois operates under the Wage Payment and Collection Act, which requires reimbursement of all necessary expenses an employee incurs in the course of employment, provided the employee submits appropriate documentation within 30 calendar days of incurring the expense.
Massachusetts, Montana, and New Hampshire follow similar models, imposing affirmative reimbursement duties without conditioning them on the existence of a written policy.
By contrast, New York only requires reimbursement when an employer's own written policy promises it. Colorado, New Jersey, and most of Washington State only mandate reimbursement in narrow circumstances, typically limited to uniform expenses. Texas and Florida impose no general reimbursement duty whatsoever beyond the federal minimum wage floor.
One number every worker should know in 2026: the IRS standard mileage rate for business travel is 76 cents per mile, effective July 1, 2026 — up from 72.5 cents in the previous rate period. While this rate is not a legal mandate in most states, it is the benchmark that courts and regulators use to evaluate whether an employer's mileage reimbursement rate is "reasonable." If your company reimburses at 40 or 50 cents per mile, a 26- to 36-cent gap per mile may constitute an unlawful wage deduction in states with affirmative reimbursement duties.
What Happens When Your Employer Says No: A Real-World Calculation
Consider a hybrid customer success manager based in Chicago who works three days per week from home and two days at the office. In a typical month, she drives 260 miles to client visits at her direct manager's request, uses her personal phone for an average of 10 hours of work calls per week, and pays a $35 monthly surcharge above her baseline internet plan — a faster tier her employer's IT department formally required to support the company's video conferencing system.
Under Illinois law, all three expense categories are likely reimbursable, because they were directly required by the employer and necessary to perform her job duties.
If her employer denies reimbursement:
- Mileage: 260 miles × $0.76 = $197.60 owed per month
- Cell phone: a "reasonable percentage" of a $90 plan — courts typically assess 30-50% of the bill based on work usage. At 40%: $36 per month
- Internet upgrade: $35 per month
Total monthly shortfall: $268.60 — or $3,223.20 per year.
Over 30 months of employment (a common tenure in this role category), the unreimbursed amount reaches $8,058 before penalties. Under the Illinois Wage Payment and Collection Act, an employer who willfully withholds required reimbursements may face a penalty of 2% of the unpaid amount per month, compounding over time.
The if/then logic is direct: if you live in a state with an affirmative reimbursement duty, and your employer directed or required you to incur the expense, then you are legally entitled to be paid back — and a documented pattern of denials becomes the foundation of a wage claim.
What often surprises workers is how the documentation requirement works in their favor. Every denied expense report, every email requesting reimbursement that went unanswered, every receipts you submitted and then absorbed — that paper trail is evidence.
What a Lawyer Can Actually Do for You
For workers in protected states, recovering unpaid reimbursements doesn't always require litigation. Many claims are resolved through an HR complaint or a formal written demand, once the employee demonstrates they understand the law. Employers with legal counsel often settle quickly when they learn they have ongoing liability.
When internal resolution fails, an employment lawyer can assess whether your expenses qualify as "necessary" under your state's statute, calculate the full value of unpaid claims including penalties, evaluate whether your employer's written policy creates additional liability, and determine whether the conduct rises to the level of a class action — a factor that changes the economics significantly, as it has in several remote worker expense cases filed since 2022.
In California, expense reimbursement claims can also be filed through the Division of Labor Standards Enforcement at no cost to the worker. Successful claimants in California are entitled to attorney's fees if they hire representation, which means winning even a modest claim often costs the employee nothing in legal fees.
Timing matters. The statute of limitations for expense reimbursement claims is typically three years in California (and can extend further if the violations form a continuing pattern) and two years in Illinois. Waiting to consult an attorney — especially if you're still employed at the company — can affect what portion of your claim remains recoverable.
If your employer has recently changed its expense policy, merged with another company, or implemented a return-to-office mandate that shifted your cost burden, those are trigger events worth reviewing with a professional. The situation the Chicago customer success manager faces — expenses clearly required by the employer, no reimbursement, no written policy addressing the gap — is not unusual. It's the typical case that labor lawyers see regularly in 2026.
You can also find guidance on employment law rights across related workplace situations, including how contract changes and policy shifts affect your rights under US employment law, or explore what other worker protections apply to your situation.
This article is for informational purposes only and does not constitute legal advice. Expense reimbursement laws vary significantly by state and circumstance. Consult a qualified employment attorney for advice specific to your situation.
