Employee Expense Reimbursement Laws in Minnesota

Federal law under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 203(m), permits reasonable deductions from wages for business expenses only if the employee's earnings do not fall below the federal minimum wage of $7.25 per hour. However, the FLSA does not affirmatively require employers to reimburse work-related expenses; rather, it only limits deductions when they would reduce wages below minimum wage thresholds. The Department of Labor (DOL) has issued guidance indicating that business expenses necessary for job performance should generally be reimbursable, and deductions reducing pay below minimum wage are illegal under the FLSA.

Federal law applies to employers with two or more employees. The FLSA's position is that employers cannot shift the burden of ordinary and necessary work expenses onto employees through wage deductions, particularly in a manner that reduces gross pay below applicable minimum wage. Remedies under the FLSA include recovery of unpaid wages, liquidated damages, and attorney's fees. However, the federal framework is permissive rather than mandatory regarding reimbursement—it prevents employers from reducing wages below minimum wage through deductions but does not create an affirmative duty to reimburse in states without their own specific reimbursement statutes.

Minnesota Statute § 181.74 creates a much stronger and more explicit employer obligation than federal law. The statute mandates that employers reimburse employees for all necessary and ordinary expenses incurred in the discharge of duties or employment. This is not merely a protection against wage reductions below minimum wage; it is an affirmative duty to reimburse.

Under Minnesota law, necessary work expenses include travel costs, meals while traveling on business, tools and equipment required for the job, uniforms or protective clothing, professional licenses and fees, training and education directly related to employment, client entertainment expenses incurred with employer authorization, and communication costs (phone, internet) when required for work. The statute applies to all Minnesota employers with one or more employee, providing broader coverage than the federal FLSA's two-employee threshold.

Minnesota law is significantly stronger than federal law in three key ways. First, it creates an affirmative reimbursement obligation rather than merely limiting deductions. Second, it applies to smaller employers (one employee vs. federal two-employee threshold). Third, it does not require the expense to result in wage reduction below minimum wage to be unlawful—the failure to reimburse itself violates the statute regardless of final wage level.

The key distinction is that Minnesota imposes a positive duty: employers must reimburse. Federal law only prevents deductions that reduce wages below minimum wage. Under Minnesota law, an expense incurred in job performance must be reimbursed, and the employer cannot classify it as a wage deduction or offset to avoid reimbursement. Remedies under Minnesota law include recovery of all unpaid reimbursement amounts, penalties of up to $20 per day of violation, and in some cases attorney's fees if the violation is willful.

Minnesota law contains important exceptions and limitations to the reimbursement requirement. First, the expense must be 'necessary and ordinary' in performing the employee's job duties—personal expenses, optional tools, or expenses not genuinely required for job performance are not reimbursable. For example, an employee cannot require reimbursement for luxury items or expenses that exceed reasonable standards for the role.

Second, if the employer has a clear, written policy prohibiting certain categories of expenses or limiting reimbursement to specific purposes, and the employee is aware of this policy before incurring the expense, the employer may have a defense to reimbursement claims for expenses outside the policy scope. However, the policy cannot retroactively apply to expenses already incurred in reliance on prior employer communications, and any policy restrictions must be clearly communicated in writing before the employee incurs the cost.

Third, an employee's failure to submit proper documentation or receipts within a reasonable time may limit recovery. Employers may require reasonable substantiation (receipts, invoices) to process reimbursement, though the employee must have a reasonable opportunity to gather this documentation.

Fourth, expenses the employee voluntarily incurs without employer authorization—such as unauthorized travel or premium service upgrades—may fall outside reimbursement requirements if the expense was not necessary for job performance or if the employee was explicitly instructed not to incur that cost. However, silence or tacit acquiescence by an employer may waive this defense; if the employee has a pattern of incurring certain expenses and the employer does not object, the employer may be deemed to have authorized those expenses.

Fifth, at-will employment status does not override the reimbursement requirement. An employer cannot refuse to reimburse as a condition of continued employment or as retaliation for asserting the right to reimbursement.

Step 1: Document all work-related expenses thoroughly. Keep original receipts, invoices, or payment confirmations for every expense you incur in performing job duties. Record the date, amount, vendor name, and business purpose of each expense. Create a spreadsheet or log with these details and attach copies of receipts. Photographs of receipts are acceptable if originals are not available. Documentation serves as proof in any dispute and is required by most employers to process reimbursement requests.

Step 2: Review your employer's expense reimbursement policy if one exists. Check the employee handbook, onboarding materials, or company intranet for written policies on reimbursement. If no formal policy exists, confirm with your direct manager or HR department in writing (email is acceptable) that you should submit reimbursement for the specific expense category. Document the manager's response. This step is important because it establishes that you did not incur expenses in violation of a known company policy.

Step 3: Submit a reimbursement request to your employer in writing, typically to your manager or HR department, within a reasonable time (preferably within two weeks of incurring the expense). Include a cover letter listing all expenses, the business purpose of each, the dates incurred, and the amounts. Attach all supporting documentation (receipts, invoices). Request a specific reimbursement deadline (within 14 days is standard). Keep a copy of your submission for your records. If you submit by email, request a read receipt or follow up with a phone call to confirm receipt.

Step 4: Monitor the reimbursement timeline. Track when your request was submitted and the deadline you requested. If reimbursement is not processed within the deadline or within a reasonable time period (no longer than the next regular pay period after submission), contact your employer in writing asking for a status update. Document the date of your follow-up request and any response received. If the employer continues to delay beyond a reasonable time without justification, proceed to Step 5.

Step 5: If the employer refuses to reimburse or delays reimbursement beyond a reasonable time, file a wage complaint with the Minnesota Department of Labor, Wage and Hour Division. Visit the department's website at mn.gov/labor to file a complaint online, or call 651-284-5070 during business hours. You will need to provide your name, contact information, employer details, the amount of unreimbursed expenses, the dates expenses were incurred, the dates you submitted reimbursement requests, and copies of your documentation (receipts and communications with the employer). The department will investigate at no cost to you.

Step 6: Consider consulting an employment attorney if the unreimbursed amount is substantial (over $500) or if the employer retaliates against you for filing a complaint. An attorney can help you pursue a civil claim for unpaid reimbursement, penalties of up to $20 per day of violation, and potentially attorney's fees if the employer's violation was willful. Many employment attorneys offer free initial consultations and work on a contingency fee basis (no upfront cost; they take a percentage of any recovery). The Minnesota State Bar Association (612-388-5000) can provide referrals to employment lawyers in your area.