• OCC Announces Adoption of 18-Month Examination Cycle Final Rule; Employers Must Reimburse Illinois Employees’ Business Expenses

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    February 18, 2019
    OCC Announces Adoption of 18-Month Examination Cycle Final Rule;
    Employers Must Reimburse Illinois Employees’ Business Expenses

    A.        OCC Announces Adoption of 18-Month Examination Cycle Final Rule
    On January 17, 2019, the Office of the Comptroller of the Currency (“OCC”) announced, together with the Federal Reserve Board and the FDIC, the final rule amending regulations governing eligibility for the 18-month on-site examination cycle, pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act.  The final rule was published without change from the interim rule issued in August 29, 2018. The final rule allows for qualifying insured depository institutions with less than $3 billion in total assets (which is an increase from the previous threshold of $1 billion) to be eligible for an 18-month on-site examination cycle.  The agencies reserve the right to adopt a more frequent schedule than 18 months for qualifying institutions if deemed “necessary or appropriate.” The final rule is effective January 28, 2019.
    B.        Employers Must Reimburse Illinois Employees’ Business Expenses
    Public Act 100-1094, effective January 1, 2019, amended the Illinois Wage Payment and Collection Act (“Act”), 820 ILCS 115/1 et seq., to require employers to reimburse an employee for “all necessary expenditures or losses incurred within the employee’s scope of employment and directly related to the services performed for the employer.” 820 ILCS 115/9.5(a).  “Necessary expenditures” means “all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer.”  The types of expenses that may be subject to reimbursement include business travel, customer entertainment, home office, and cellular telephone and data plan expenses, among others.
    Employees must submit supporting documentation for their expenses within 30 days after incurring the expense or provide a signed statement if supporting documentation is nonexistent, missing or lost. This 30-day period may be longer if so stipulated in the employer’s written expense reimbursement policy.  Employees are not entitled to reimbursement if the employer has a written expense reimbursement policy and the employee failed to comply with the policy.  Under the law, an employer is not required to reimburse employees for expenses that exceed expenditure amounts specified in such policy as long as the limitations are reasonable.
    It remains to be seen how the new law will be applied to “bring your own device” and other employer policies and practices.  Will the Act’s provision limiting the reimbursement obligation to expenditures that “inure to the primary benefit of the employer” be interpreted to allow an employer to refuse to reimburse expenditures for cellular telephone and/or data plans that an employee would have for personal use regardless of the need to also use the device for work?  It remains to be seen.  Employers with employees in Illinois are encouraged to review and update their expense reimbursement policies and practices in light of the changes to the Act.  If no written expense reimbursement policy is in place, an employer should consider adopting one given the deference to it under the new law, especially in terms of setting reasonable limitations on expense reimbursement amounts.
    Steven A. Migala
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