Travel and Business Expense Reimbursement Policy

by Practical Standard documents Law Labor & Employment and Practical Law Tax

A Standard Document that private sector employers can adapt to create a policy for reimbursing employees for work-related expenses. This Standard Document provides a framework for managing costs associated with business travel, lodging, meals, entertainment, and other miscellaneous business expenses, and can be used either as a stand-alone policy or integrated into an employee handbook. A key focus of this Standard Document is its structure as an "accountable plan" under the Internal Revenue Code (Code), which allows for reimbursements to be excluded from an employee's gross income. It outlines the crucial requirements for an accountable plan, including business connection, substantiation of expenses, and the return of any excess reimbursements. This Standard Document also addresses important compliance considerations under the National Labor Relations Act (NLRA) and the rules for nonqualified deferred compensation under Section 409A of the Code, providing a solid foundation for drafting a federally compliant expense policy while noting that state or local laws may impose additional requirements.