Mileage Reimbursement for Employees Working from Home

It turns out that we all love working from home. According to the Pew Research Center, only 20% of workers with jobs that could be done remotely worked from home all or most of the time before the pandemic. Now, that number has risen to 71%, and most of these workers say that they’d like to continue working at home even after employers start having employees return to the office. We’ve all seen that business can continue even without a central workplace, and as a result, many companies are listening to employees and relaxing work-from-home (WFH) policies.

Among the policies that needed to be adjusted for a new remote working model, expense reimbursement, in particular, has presented a challenge. What role do employers play in supporting their employees’ work environment outside of the office? Do employees have the right technology to support their job duties? What new expenses will be incurred as a result of a WFH situation? Will your current expense policies support them? Of course, even working from home, employees may still be traveling on a daily basis to perform their jobs, which raises another expense issue: handling mileage reimbursement for employees working from home. 

WFH Expenses Reimbursement

If you’re expecting that having employees work from home will result in less expenses as an employer, that’s not necessarily true. A WFH expense reimbursement would cover the use of employees’ own personal assets for business-related purposes. Therefore, while you may not have to rent office space or pay for high speed internet at the office, you should still be covering these costs for your employees. 

Per the Fair Labor Standards Act (FLSA), employees must earn at least the minimum wage net of any necessary business expenses they incur to do their jobs. That means that if your workers earn at or close to the minimum wage, you need to make sure you’re properly reimbursing them when they use their personal assets to work from home; for example, their wifi, their phone plans, office supplies, etc. Even if they have unlimited internet or phone plans, you should still reimburse employees for the portion of the costs attributed to business uses, lest you be accused of being “unjustly enriched” by using employee-purchased plans. 

Creating a framework for handling WFH reimbursements is doubly important now that the recent Tax Cuts and Jobs Act eliminated the deduction for unreimbursed job expenses. That means employees experiencing many of the new costs of working from home have no way to see any of those costs returned to them other than reimbursement. 

Mileage Reimbursement for Employees Working From Home

Learning how to manage WFH expenses is altogether a new thing for most businesses – and so mistakes are sure to be made along the way. Figuring out what to do about mileage reimbursement for employees working from home is especially confusing, though. Currently, the IRS hasn’t provided any guidance on the matter, and they aren’t expected to, so we’re left to our own devices on this one. 

Prior to COVID-19, reimbursement for employees’ commuting miles – getting from their personal residence to their assigned office location – would not be reimbursed in most cases. If employees traveled directly from their residence to their first appointment – or directly home from their last appointment – this travel was generally considered to be a commute. That’s because the location of the first appointment could be considered an office location. An adjustment to the reimbursable miles was therefore necessary. 

If the office location has been closed and/or an employee is now working from home, home-based employees have no need to go to the office. In fact, their home can be considered the office location. Therefore, there should be no need to adjust the reimbursable miles by factoring in commuting miles. 

To properly calculate mileage reimbursement for employees working from home, you must make sure to document that they are serving at, and for, the convenience of their employer by working from their home location. Once you’ve clarified that an employer’s office location is in effect an employee’s home, the distance they must travel from their home to another location for a business-purpose is no longer considered a commute. 

Adjusting Your Expense Policies for a WFH World

Managing an expense reimbursement program for a workforce that operates on a mostly remote basis can be tricky. It may be tempting to simply give everyone a blanket allowance. However, costs may vary considerably for each employee. Some may need more than the allowance, and some may require less, so a WFH allowance creates a scenario with winners and losers. It’s much more beneficial for everyone to create a reimbursement process in line with an accountable plan. 

To ensure that you don’t unintentionally violate the FLSA, employee expense reimbursements should be as fair and accurate as possible. At the very least make sure your policy covers: 

• Phones: device costs, carrier costs, etc.
• Internet: plan costs, equipment like a modem or ethernet cable, etc.
• Home office and living costs: a webcam, external mic, printer, etc.

As for mileage, your reimbursement plan would need to be modified to record when the office closed and state that until further notice, employees are therefore not required to travel to the office to work. This lets everybody know – from those submitting expense reports to accounting administrators – how mileage reimbursement for employees working from home should be handled. 

CompanyMileage Works Anywhere

Figuring out this whole working from home thing may cause some growing pains for some businesses, but ultimately, employee satisfaction and productivity will improve, and employers will be more flexible and scalable. While you’re in the midst of making changes to your organizational structure, now is the best time to update the technologies your business uses, too.

CompanyMileage has revolutionized mileage and expense tracking with their solutions, SureMileage, SureMobile and SureExpense. It only takes a few minutes everyday for any employee to accurately manage their trip mileage, submit expense reports and have their reimbursement approved. 

Because CompanyMileage only charges you when your employees use our system, we are a very affordable and flexible option to streamline expense reimbursement management. If you’re wondering how to go about managing expense and mileage reimbursement for employees working from home, request a demo with CompanyMileage today We’ll help you create a program that all of your employees will love.

For more guidance on mileage reimbursement policies, download our sample policy ebook today!