Employee Expense Reimbursement Laws in Michigan

Federal law does not establish a blanket right to expense reimbursement. However, the Fair Labor Standards Act (29 U.S.C. § 203(b)) prohibits reductions in employee compensation that would lower wages below the federal minimum wage of $7.25 per hour. The Department of Labor enforces this requirement and has issued guidance stating that employers cannot require employees to pay for ordinary business operating expenses.

Under the FLSA, reasonable reimbursement practices are permitted and expected, but any deduction or non-reimbursement that results in wages falling below minimum wage is prohibited. Additionally, certain expenses incurred as a condition of employment (uniforms, tools, licenses required for the job) cannot be charged to employees if doing so reduces their pay below minimum wage. The EEOC also considers discriminatory denial of reimbursement a potential violation if it targets protected classes.

Federal law requires employers to maintain records of all compensation paid, including reimbursements. The Department of Labor can investigate complaints and assess back wages plus liquidated damages equal to the unpaid amount if violations are found.

Michigan law is more protective than federal baseline requirements. Michigan Compiled Law section 408.397 explicitly prohibits employers from deducting business operating expenses from employee wages. This statute establishes a clear affirmative duty for employers to reimburse necessary work expenses rather than leaving reimbursement to employer discretion.

Michigan defines necessary business expenses as costs the employee must incur to perform their job duties—including tools, equipment, supplies, mileage, uniforms, licensing, and professional development directly required by the employer. The state law applies to all employers with employees working in Michigan, regardless of business size. There is no small employer exemption.

Under Michigan law, reimbursement is not optional. Employers must reimburse within a reasonable time, typically understood as within the next pay period or upon termination as part of final wages under MCL 408.475. The statute is stronger than federal law because it creates an affirmative reimbursement obligation and does not permit employers to argue business necessity or economic hardship as a defense.

Michigan also prohibits wage deductions for errors or breakage unless the employee caused them through gross negligence or willful misconduct, and even then the deduction cannot reduce wages below minimum wage. The Michigan Department of Labor interprets this broadly to include expenses arising from the nature of employment itself.

Several important exceptions and limitations apply to Michigan's expense reimbursement requirement. Personal expenses—costs incurred for the employee's benefit rather than for business necessity—are not reimbursable. Examples include personal grooming beyond uniform requirements, commuting costs to the employer's facility, meals consumed during normal work hours that are not part of business travel, and personal use of company equipment.

Expenses incurred in violation of employer policy or law are generally not reimbursable if the employee acted without authorization. However, Michigan courts have held that employer policies cannot override statutory reimbursement duties. An employer cannot require an employee to sign a waiver releasing the employer from reimbursement obligations.

If an employee voluntarily assumes an expense that was not required by the employer, reimbursement may not be mandatory unless the employee can demonstrate the expense was necessary to perform assigned duties. Discretionary professional development or training the employee pursues independently may not be reimbursable unless explicitly required by the employer.

Unions subject to collective bargaining agreements may have negotiated expense reimbursement terms that differ from statutory minimums, though the contract cannot eliminate reimbursement obligations entirely. Certain independent contractors are not covered under Michigan wage and hour law, though true independent contractors are rare in Michigan practice. Sole proprietors and partners are not employees and have no reimbursement rights. Volunteers performing work for nonprofits are generally not covered, though the definition of volunteer is narrow.

Step 1: Document everything carefully. Keep all receipts, invoices, and records of expenses incurred for work purposes. Create a written log including the date, amount, business purpose, and category of each expense. Photograph receipts if originals might be lost. Note whether the expense was explicitly required by the employer or reasonably necessary to perform your job duties. Save all email communications from your employer requesting or acknowledging the expense.

Step 2: Request reimbursement through internal channels. Submit an expense report or reimbursement request to your supervisor or payroll department within a reasonable time after incurring the expense—typically within 30 days. Keep a copy of the request. If your employer has an expense reimbursement form or procedure, follow it exactly and retain proof of submission. Document the response: was reimbursement approved, denied, or ignored?

Step 3: File a wage claim with the Michigan Department of Labor and Economic Opportunity. The state agency handles wage violations, including improper deductions and non-reimbursement. Visit www.michigan.gov/leo or call 517-335-0400. You do not need an attorney to file. Provide: (1) your name, address, and job title; (2) employer name and location; (3) dates of employment; (4) specific dates and amounts of unreimbursed expenses; (5) documentation of your reimbursement requests; (6) evidence that the expenses were required or necessary for the job.

Step 4: Understand the investigation process. The Michigan Department of Labor will contact your employer and request records of wages paid, expense reports, and communications. The agency typically completes investigations within 30-60 days. The employer must prove that reimbursement was made or that expenses were not legitimately business-related. You may be contacted to provide additional documentation.

Step 5: Consult an employment attorney if the violation is substantial or if your employer retaliates against you for filing the wage claim. Michigan prohibits retaliation under MCL 408.475. An employment law attorney can pursue additional claims under wrongful termination statutes if you are fired or disciplined following the claim. Many Michigan employment attorneys work on contingency for wage violation cases. Contact the State Bar of Michigan Lawyer Referral Service at 800-968-0738.