Home Office Expenses: US

This Home Office Expenses (Home Office Allowance) policy explains how your organization may reimburse remote employees for reasonable work-related home office costs, including what may be covered, how employees should document expenses, and where to go with questions.

While there's no single federal "home office allowance" law, reimbursement obligations can be triggered under a mix of wage-and-hour rules and state or local expense reimbursement laws, and those requirements can apply differently depending on where an employee works.

A clear, consistent policy helps you support remote work, set practical expectations, and reduce risk by making sure employees are not paying out-of-pocket for expenses that are necessary for their jobs.

The History Behind Home Office Expenses Policies in the US

Home office expense programs initially came from the fact that you cannot shift your business costs onto employees if doing so effectively drops their pay below the legal minimum. Federal law covers part of that through the Fair Labor Standards Act and the U.S. Department of Labor's rules on "facilities" and "other items", which treat certain costs as primarily for the employer's benefit. That framework matters for remote work because laptops, required internet access, and other tools can turn into de facto deductions if employees have to pay first and eat the cost. Employers started treating this as a practical Benefits & Perks question because it touches recruiting, retention, and employee experience, but it also keeps wage compliance from getting weird at the margins.

State law (in some states) add a heavier impact. California (how'd you know?) became the headline example because Labor Code section 2802 requires reimbursement of "necessary expenditures" incurred in direct consequence of an employee's duties, and courts applied it to everyday remote-work costs like a reasonable share of a personal cell phone plan when work use is required (Cochran v. Schwan's Home Service, Inc., 2014). Illinois followed with a reimbursement statute that covers necessary expenses within an employee's scope of employment, with specific notice and documentation rules baked in. Other states took narrower approaches, and many states still rely mostly on minimum wage and overtime principles, which leaves employers managing multi-state situations that differ based on an employee's location.

Remote work went from a niche arrangement to a default option during COVID-19, and it turned reimbursement from an occasional exception into an operational system. HR teams also had to react to the 2017 federal tax law change that suspended the employee deduction for unreimbursed business expenses for most W-2 employees through 2025, which made "just deduct it" a non-answer for many. That mix of wage rules, state reimbursement mandates, and tax reality is why a home office allowance policy became a popular way to inform employees, even for employers that keep the program super simple.

Which Law is the Home Office Expenses Policy Meant to Comply With?

If you create and distribute a Home Office Expenses Policy for your US-based employees, you'll want to make sure you're in compliance with the Fair Labor Standards Act (FLSA) regulations on wage payments and permissible deductions (29 CFR Part 531).

How to Write a US-Specific Home Office Expenses Policy

• Start with "why" and introduce the concept, explain that your organization may provide a home office allowance to support effective remote work.
• Define what the allowance is meant to cover, such as workspace, equipment, and other work-from-home essentials.
• State that eligibility and allowance limits are set based on role and business needs.
• Require employees to provide receipts or other documentation to receive reimbursement.
• Link the process to your broader expense policy for submission and documentation standards.
• Direct employees to HR for current coverage details and how to request support.

When to Include this Policy in Your Employee Handbook

The law does not require you to publish a policy or issue a specific notice. That said, you still have to comply with the requirements that apply to you as an employer. 

This is a "depends on your workplace" policy. Include it if you offer the benefit, operate in a setting where this comes up, have a state-specific rule that differs from your national approach, or you've had issues in this area before. If you already have a clear all-employee policy that covers the same ground (and it meets US's requirements), you may not need a separate policy here. 

Other Considerations

None.

Exceptions

None.