Which States Require Reimbursement for Home Charging of Electric Fleet Vehicles?
Today, many companies are adding electric vehicles to their fleets to both reduce their carbon footprint and save money. When those vehicles are lightweight passenger cars, trucks, or SUVs it benefits the company and its employees to have employees charge at home where electricity rates are usually 30-60% cheaper and the vehicles can charge overnight. In this model, employee’s dwellings effectively become gas stations. It follows that if your company wants employees to refuel at home, you need to offer a reimbursement program covering the cost of their electricity. But, as MoveEV Founder, David Lewis, always says, “you can’t slide a credit card into someone's house.” That is why we invented ReimburseEV - to make accurately and fairly reimbursing drivers for home charging sessions easy - regardless of charging method or approach.
Many forward thinking companies are implementing charging-at-home programs for all employees. Best practices aside, you may be wondering if your company is legally obligated to reimburse for home charging. The answer depends on which states your company operates in. This article reviews the current federal reimbursement rules and the regulations in the 11 states that require employers to reimburse employees for necessary work-related expenses.
Federal Reimbursement Rules For Home Charging
Currently, there is no specific federal law mandating reimbursement for electric vehicle (EV) charging at home. The Fair Labor Standards Act (FLSA) governs the reimbursement of work-related expenses that would bring the employee's pay below the minimum wage (or cut into overtime pay). However, many fleet drivers will have salaries well above this threshold, so the federal law may not apply to charging-at-home expenses.
State Laws on Reimbursement for Work-Related Expenses
With no nationwide standard, a number of states have enacted legislation to protect employees' rights concerning work-related expenses. These laws typically require employers to reimburse employees for expenses necessary to fulfill their job duties. Failure to do so can result in expensive lawsuits. Although the focus of these laws do not explicitly mention electric vehicle charging costs, their broad language could potentially include home charging expenses. The 11 US jurisdictions with relevant reimbursement laws are California, Illinois, Massachusetts, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and the District of Columbia.
California (Labor Code Section 2802) Employers must reimburse employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Note: This right to reimbursement cannot be waived by the employee.
Washington D.C. (D.C. Mun. Regs. tit. 7 § 910) Employers must reimburse employees for “the cost of purchasing and maintaining any tools required of the employee in the performance of the business of the employer.”
Illinois (Wage Payment and Collection Act) Employers must reimburse employees for “all necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.”
Iowa (Iowa Code 91A.3(6)) “Expenses by the employee which are authorized by the employer and incurred by the employee shall either be reimbursed in advance of expenditure or be reimbursed not later than thirty days after the employee’s submission of an expense claim.”
Massachusetts (Massachusetts General Law Chapter 149, § 148A) Employers should reimburse expenses that are “unavoidable and necessary” for employees to fulfill their job responsibilities, according to guidance by the Massachusetts Attorney General’s office.
Minnesota (Minnesota Statute 177.24(4)-(5)) An employer…must reimburse the full amount deducted, directly or indirectly, for… purchased or rented equipment used in employment, except tools of a trade, a motor vehicle, or any other equipment which may be used outside the employment; …. [including] consumable supplies required in the course of that employment.”
Montana (Montana Code 39-2-701) Employers must reimburse employees “for all that he necessarily expends or loses in direct consequence of the discharge of his duties as such or of his obedience to the directions of the employer.”
New Hampshire (New Hampshire Revised Statutes 275:57) “An employee who incurs expenses in connection with his or her employment and at the request of the employer, except those expenses normally borne by the employee as a precondition of employment, which are not paid for by wages, cash advance, or other means from the employer, shall be reimbursed for the payment of the expenses within 30 days of the presentation by the employee of proof of payment.”
New York (New York Labor Law 198-C) Employers must cover reimbursement “for business-related expenses”, that have been promised to an employee.
North Dakota (N.D. Cent. Code. 34-02-01) “An employer shall indemnify the employer’s employee, except as prescribed in section 34-02-02, for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee’s duties.”
Pennsylvania (43 Pa. Stat. Ann 260.3) Pennsylvania does not mandate expense reimbursement in general, but if an employer has a policy or agreement the requires expense reimbursements to employees, then the reimbursements are considered “fringe benefits or wage supplements” and must be paid to the employee within 10 or 60 days after a claim.
South Dakota (SDCL § 60-2-1) Employers must reimburse employees for “all that the employee necessarily expends or loses in direct consequence of the discharge of the employee’s duties.”
It is important to note that some cities have their own regulations, as well. For example, Washington State has no reimbursement requirements but employees working in Seattle are entitled to reimbursement of all employer expenses.
Defining "Necessary Costs" for Reimbursement
You will notice that a number of state laws use the term “necessary costs.” At the time of this writing, there are no current known cases addressing whether home charging is considered a necessary cost head on - as the entire concept is too new to have been litigated. In general, interpretations of qualifying expenses may vary across states and industries, but several factors can help define the concept of “necessary costs”:
Job-related requirement: Expenses that directly relate to an employee's job responsibilities and are essential for carrying out their duties are generally considered necessary. In the case of electric fleet vehicles, home charging is indispensable for ensuring adequate vehicle range and availability during work-related travel.
Employer's authorization: Reimbursement typically applies to expenses that an employer explicitly authorizes or expects employees to incur as part of their job requirements. Employers who mandate or encourage the use of electric fleet vehicles and are asking employees to take the vehicles home should consider home charging costs as a necessary expense.
Reasonable and customary: Reimbursable expenses should be reasonable and customary within the context of the industry or occupation. Considering the rising popularity of electric vehicles and the associated need for charging infrastructure, home charging costs are becoming increasingly customary for electric fleet vehicle drivers.
Proportional to job duties: The reimbursement amount should be proportional to the actual work-related charging costs incurred by the employee. Employers may adopt various methods, such as reimbursing based on mileage or actual electricity consumption, to ensure fair compensation for home charging expenses.
The Argument for Reimbursing For Home Charging Costs
Even if not required by federal or state law, reimbursing employees for home charging costs for electric fleet vehicles is a great way to incentivize a practice that saves your company money and employee time. If you reimburse for fuel on the road, reimbursing for charging at home is a logical extension for anyone driving an EV. Here are several additional reasons, separate from legal obligation, to consider when deciding whether or not to offer reimbursing for home charging to all of your employees, regardless of location:
Equity and fairness: Treating electric fleet vehicle drivers equally to conventional gas vehicle drivers aligns with the principle of fairness. Employees should not bear the financial burden of charging their vehicles when performing job-related tasks. Reimbursing for the real costs of charging is the most “fair” solution - even more so than a flat allowance system.
Encouraging electric vehicle adoption: By reimbursing home charging costs, employers can incentivize and support their employees' transition to electric vehicles. This approach aligns with broader sustainability goals and can help accelerate the adoption of cleaner transportation options at your company.
Consistency with existing policies: If your company already reimburses employees for fuel expenses incurred while driving company-owned vehicles, this is a logical extension of that practice. Reimbursing home charging costs for electric fleet vehicles maintains consistency and demonstrates a commitment to environmental responsibility.
Cost savings: Charging at home can be done in off-peak hours, usually at a reduced rate. In some areas, this can provide a 60% savings on charging costs for your EV fleet. Public chargers/fast chargers are more expensive and suck up valuable employee time. Reimbursing for home charging is a great way to encourage the behavior you want while saving money.
Enhancing recruitment and retention: Offering reimbursement for home charging costs can be an attractive perk for employees, particularly those who are environmentally conscious. It can improve employee satisfaction, retention, and help attract top talent.
Conclusion
While federal guidelines currently lack specific provisions for reimbursing home charging costs, many state and local laws require reimbursing employees for work-related expenses. Even though home charging is not specifically spelled out, there is legal precedent in states like California that indicate that home charging will likely be categorized as a reimbursable expense if the matter ever comes before a court. As ReimburseEV makes the process of reimbursing for the real costs of charging at home easy, prudent companies should begin reimbursing for charging at home as soon as possible to limit their potential liability. By adopting such practices, employers can demonstrate their commitment to sustainability, fairness, and employee satisfaction, ultimately driving the transition towards a greener future.
Ready to reimburse for charging at home? Learn more about ReimburseEV.
Note: This article is for informational purposes only and does not constitute legal advice. It is essential for employers and employees to consult legal professionals or relevant labor departments to ensure compliance with state-specific laws.