The shift to remote work has complicated who pays for the necessary equipment and expenses. Employees often incur costs for equipment, internet service, and utilities previously covered by the employer’s office. The legal obligations are governed by a patchwork of federal and state regulations. Because there is no clear, unified federal mandate, your rights depend heavily on where you live and the specific details of your job.
Federal Guidelines on Expense Reimbursement
The federal baseline for expense reimbursement is established by the Fair Labor Standards Act (FLSA). The FLSA does not generally require employers to reimburse employees for work-related expenses. Reimbursement is only mandated if an employee’s unreimbursed business expenses would cause their effective pay rate to fall below the federal minimum wage of $7.25 per hour.
For most employees earning above the minimum wage, this protection is unlikely to apply. The Occupational Safety and Health Administration (OSHA) requires employers to provide a safe workplace, which technically extends to a home office. However, OSHA guidance states the employer is only responsible for the work-related area and equipment they provide. They are not expected to inspect or regulate an employee’s entire home or personal furnishings. Therefore, OSHA requirements do not typically mandate that employers purchase standard home office equipment.
State Laws Mandating Expense Reimbursement
While federal law sets a low bar, several states have enacted statutes or case law that significantly broaden employer obligations. These state laws often require employers to cover all “necessary” business expenses, regardless of whether the expense drops the employee’s wage below the minimum wage threshold. This provides stronger financial protection for remote workers in these jurisdictions.
California, under Labor Code 2802, mandates that employers reimburse employees for all necessary expenditures or losses incurred as a direct consequence of their job duties. This applies even if the employee uses existing personal resources, such as a personal cell phone or home internet plan, for work. Illinois has a similar provision under the Illinois Wage Payment and Collection Act, requiring reimbursement for all necessary expenditures incurred within the scope of employment.
Massachusetts law requires employers to reimburse expenses if the costs reduce the employee’s earnings below the state’s minimum wage. The Massachusetts Attorney General’s Office suggests employers consider reimbursing all expenses that are unavoidable and necessary for the job. New York does not have a broad statute mandating reimbursement for home office expenses. However, employers are legally bound to honor any expense reimbursement agreements made in employment contracts or company policies.
Differentiating Necessary Equipment
The distinction between “necessary” and “convenient” equipment is central to most remote work expense disputes. Courts and state labor agencies apply a legal test: if the equipment is required for the employee to perform the basic functions of their job, it is a necessary business expense that must be covered. This places the burden of proof on the employer to show why an item is not necessary.
Necessary equipment typically includes a work-specific laptop or desktop computer, specialized software, security tools, and a dedicated work phone line if required for the role. Items considered a matter of employee preference or comfort are often deemed a convenience. Examples include a high-end ergonomic chair, a standing desk, or a large secondary monitor. While an employer may choose to provide these items, they are not legally required unless mandated as a reasonable accommodation under disability laws.
Handling Ongoing Utility and Internet Costs
Recurring expenses like internet service, mobile phone usage, and increased electricity consumption are challenging because they are shared between business and personal use. States that mandate reimbursement, such as California and Illinois, require employers to cover the portion of these costs attributable to work. The employee is not responsible for the full cost of their home internet or cell phone bill just because they use it for work.
The difficulty lies in precisely calculating the “business use portion” of these shared utilities. Although there is no single, universally defined formula, an employee may be asked to calculate the percentage of time a service is used for work versus personal activity. Many employers address this complexity by providing a fixed monthly stipend or allowance to cover these prorated costs. This approach simplifies the administrative burden but the stipend must be high enough to reasonably cover the necessary work-related portion of the expense to comply with state laws.
The Role of Employer Policies and Work From Home Agreements
An employer’s own written policies and individual work-from-home agreements often dictate the terms of equipment provision and expense reimbursement, regardless of state or federal law. Many companies offer equipment or stipends as standard practice to attract talent or ensure employees have the proper tools for security and productivity. These internal documents create a contractual obligation for the employer.
Employees should review their employment contract, employee handbook, or specific remote work agreement. These documents may promise equipment provision or reimbursement even if the law does not explicitly mandate it. While a policy promise is distinct from a legal mandate, failure to honor an established company policy can lead to internal disputes or a breach of contract claim. A clear, written policy setting expectations for equipment ownership and return procedures protects both the employee and the company.
Tax Considerations for Remote Work Expenses
The tax implications for remote work expenses affect the employee’s net financial situation. Following the Tax Cuts and Jobs Act, W-2 employees can no longer deduct unreimbursed employee business expenses on their federal income tax return. This suspension is in effect through 2025 and eliminates the ability for most employees to recoup these costs through a federal tax deduction.
The most financially advantageous way for an employee to cover work expenses is through an employer-funded reimbursement or stipend. If an employer uses an “accountable plan,” the reimbursements provided are not considered taxable income. To qualify, the expense must have a business connection, and the employee must substantiate the expense with receipts and return any excess funds to the employer. A fixed stipend provided without substantiation is typically treated as taxable wages.
What to Do If Equipment Is Not Provided
If you believe your employer is legally obligated to provide or reimburse you for necessary equipment and has failed to do so, you can take several steps. First, document everything, including the specific equipment needed, the cost, and all communication with your manager or Human Resources regarding the item. This documentation is necessary regardless of the jurisdiction.
Next, formally communicate your concern through internal channels, citing the company policy or state law you believe applies. If internal resolution efforts are unsuccessful, the next avenue is to file a wage claim with the state labor department where you perform the work. The labor department can investigate the claim and potentially order the employer to provide the equipment or reimbursement.