New York Expense Reimbursement Law: Covered Costs and Remedies

Under New York expense reimbursement law, an employer must pay you back for business costs when it has agreed to do so, whether through a contract, handbook, written policy, or established practice. That agreement is the trigger. Once it exists, Section 198-c of the New York Labor Law treats the reimbursement as a wage supplement, giving it the same legal weight as your paycheck and exposing the employer to criminal penalties, liquidated damages, and a six-year statute of limitations if it fails to pay.¹²

When Your Employer Has to Reimburse You

Section 198-c defines “benefits or wage supplements” to include reimbursement for expenses, and Section 190 folds wage supplements into the definition of wages. Because of that link, an agreed-upon reimbursement is enforceable the same way unpaid wages are.²

The critical word is “agreed.” Section 198-c applies when an employer is party to an agreement to provide wage supplements. That agreement can come from an employment contract, an employee handbook, a written policy, or a verbal promise. Once it exists, the employer has 30 days from when payment is due to pay, or it commits a misdemeanor.³

Section 193 adds a separate protection that does not depend on any agreement. It bars employers from deducting business costs from your paycheck. The statute limits permissible deductions to a short list, including insurance premiums, pension contributions, charitable donations, and transit passes, and each deduction requires your written authorization.⁴ An employer who docks your pay for tools or equipment violates this rule even if no reimbursement policy exists, and even if you earn well above minimum wage.

Expenses Typically Covered

Travel and Mileage

Where an employer has committed to cover business travel, that includes transportation, lodging, and meals on the road. For driving your own vehicle, many New York employers peg mileage reimbursement to the IRS standard rate, which is 72.5 cents per mile for 2026.⁵ New York State itself reimburses its own employees at the IRS and GSA rates.⁶ Private employers are not legally required to use the federal rate, but paying below it can signal that reimbursements don’t cover actual costs.

For overnight trips, the federal per diem for meals and incidental expenses ranges from $68 to $92 per day in fiscal year 2026, depending on location.⁷ Employers can set their own per diem rates, but rates well below actual costs in expensive areas can be challenged as inadequate.

Commuting Is Not Reimbursable

Your daily commute to a regular workplace is a personal expense, not a business one. The IRS defines your “tax home” as the entire city or general area where your main place of work is located, and travel to that location is personal.⁸ Travel becomes reimbursable when your duties take you away from that area long enough that you need to sleep or rest before returning. Temporary assignments away from your regular workplace qualify; an indefinite assignment expected to last more than a year does not. Subway or bus fare for a trip beyond your normal commute, like a same-day visit to a client site, does count as a business expense when the employer has agreed to cover travel.

Tools, Uniforms, and Equipment

When your job requires you to buy tools, uniforms, or supplies, those are business costs. Section 193 stops the employer from taking their cost out of your paycheck.⁴ If a reimbursement policy applies, failing to pay is a wage supplement violation under Section 198-c.

Even without a New York reimbursement agreement, federal law sets a floor: under the FLSA, if the cost of employer-required tools or uniforms pushes your effective pay below the federal minimum wage in any workweek, the employer has violated federal law. The same rule protects overtime pay.⁹

Licenses and Certifications

Employees required to maintain professional licenses, certifications, or memberships as a condition of employment can be entitled to reimbursement when the employer has agreed to cover the cost. Financial professionals renewing securities licenses and healthcare workers renewing certifications are common examples. The question is always whether the employer committed to covering the expense, in writing, in a handbook, or through established practice.

Remote Work: The Current Gap

New York does not have a statute that specifically requires employers to reimburse remote workers for home office costs like internet, phone, or computer equipment. Several bills to create such a requirement have been introduced, but none had been enacted as of early 2026.

The existing framework still helps in two situations. If a written policy or employment agreement promises to cover remote work expenses, that promise is enforceable as a wage supplement.² And if the employer deducts technology costs from your paycheck, Section 193 blocks the deduction.⁴ The practical gap is that an employer who simply never reimburses remote costs, and never makes a deduction, may not be violating current New York law. Check your offer letter, handbook, and any written communications about remote work for reimbursement language before assuming you’re owed anything.

Who Is Not Fully Covered

Section 198-c carves out an exemption for workers employed in a bona fide executive, administrative, or professional capacity who earn more than $1,300 per week.³ That threshold, updated in 2024, means highly compensated white-collar employees cannot use 198-c’s criminal enforcement route. They still have civil remedies under the broader Labor Law and can sue for breach of contract, but the enforcement teeth are weaker. Everyone else is treated the same as an unpaid-wages claimant, and the New York State Department of Labor will investigate.¹⁰

How to Recover Unpaid Reimbursements

You have two paths, and you can use both.

File a Complaint With NYSDOL

Start with a Labor Standards Complaint Form (LS223). Once the department accepts the claim, an investigator contacts the employer. If a violation is confirmed and the employer refuses to pay, the Commissioner of Labor issues an Order to Comply that now includes 100% liquidated damages on top of the unpaid amount.¹¹¹² Filing with the department does not stop you from suing, and no NYSDOL investigation is required before you go to court.¹

Sue in Court

A prevailing employee can recover the full unpaid amount, reasonable attorney’s fees, and prejudgment interest. Unless the employer proves a good faith belief that it was complying with the law, the court adds liquidated damages of 100% of the amount owed, which effectively doubles the recovery.¹ The statute of limitations is six years and is tolled during any NYSDOL investigation, so filing a complaint doesn’t eat into your litigation window. Where a whole group of employees is affected by the same failure, class actions are available.

Documentation and Tax Treatment

Keep itemized receipts, invoices, or proof of payment for every business expense. Most employers set internal submission deadlines of 30 to 60 days, which lines up with IRS “accountable plan” rules. Missing a reasonable deadline can cost you both the reimbursement and its tax-free treatment.

Under IRS rules, reimbursements paid through an accountable plan are not treated as income and are exempt from income tax, Social Security, Medicare, and federal unemployment taxes.¹³ To qualify, the arrangement must meet three requirements:

Business connection. The expenses must be paid or incurred while performing services as an employee.
Substantiation. You must document the expenses to the employer within a reasonable time, generally 60 days after the expense is paid.
Return of excess. Any reimbursement that exceeds documented expenses must be returned within 120 days.

If the plan fails any test, the IRS treats it as nonaccountable and the reimbursements are added to your taxable wages on your W-2. That matters more than it used to: since the 2017 Tax Cuts and Jobs Act, employees cannot deduct unreimbursed business expenses on their federal returns, and the suspension remains in effect for 2026. Electronic receipts and digital records are acceptable as long as they meet the same standards as hard copies, including proof of payment and business purpose.¹⁴ Keep your own copies for at least three years in case of an audit.¹⁵

Penalties the Employer Faces

Failing to pay agreed-upon reimbursements within 30 days is a misdemeanor under Section 198-c. For corporate employers, the president, secretary, treasurer, and officers exercising similar functions can each be held individually guilty.³ New York’s Penal Law also classifies wage theft as larceny, which can lead to referral to a local district attorney.¹⁰

Retaliation against an employee who files a wage complaint can trigger fines up to $20,000 plus an additional $20,000 in liquidated damages, along with reinstatement and compensation for lost wages.¹⁶

The New York State FY 2026 Budget expanded NYSDOL’s collection powers. After an unpaid wage theft judgment, the department can now levy liens on an employer’s property, seize financial assets, and issue stop-work orders.¹⁰ Those tools mirror what the department already uses in unemployment insurance enforcement and mean the state can actually collect, not just order payment.

1
New York State Senate. New York Code LAB – Article 6 – 198 – Costs, Remedies
2
New York State Senate. New York Labor Law 198-C – Benefits or Wage Supplements
3
New York State Senate. Section 198-C – Benefits or Wage Supplements
4
New York State Senate. Section 193 – Deductions From Wages
5
Internal Revenue Service. 2026 Standard Mileage Rates
6
Office of the New York State Comptroller. XIII.4.C Travel Mileage Rates
7
U.S. General Services Administration. GSA Per Diem Bulletin FTR 26-01
8
Internal Revenue Service. Topic No. 511, Business Travel Expenses
9
U.S. Department of Labor. Fact Sheet 16 – Deductions From Wages for Uniforms and Other Facilities Under the FLSA
10
Department of Labor. Unpaid/Withheld Wages and Wage Supplements
11
Department of Labor. The Labor Standards Complaint Process
12
Labor.ny.gov. P715 – Wage Theft Prevention Act
13
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
14
Internal Revenue Service. What Kind of Records Should I Keep
15
Internal Revenue Service. How Long Should I Keep Records
16
New York State Department of Labor. Wage Theft Prevention Act Frequently Asked Questions