What States Require Internet Reimbursement for Remote Workers?

Current compliance summaries do not always present an identical, exhaustive list of states, partly because the laws vary. Some statutes explicitly address employee expense reimbursement, while others use broader language that may cover necessary remote-work costs such as internet or phone service.

Still, the following states are commonly identified in current HR and legal guidance as having reimbursement requirements that may apply to remote-work expenses:

• California
• Illinois
• Iowa
• Massachusetts
• Minnesota
• Montana
• New Hampshire
• North Dakota
• South Dakota

HR Dive identifies these states as having laws requiring reimbursement of necessary business expenses and notes that Seattle has adopted a similar local requirement. It also highlights special considerations in California and Illinois, including circumstances where an employee may not have a separate, direct out-of-pocket cost. HR Dive

Other current guidance also identifies New York among the states with remote-employee reimbursement rules and says that 11 states, plus Seattle and Washington, D.C., have laws requiring reimbursement of certain remote-work expenses. Paycor

Because summaries differ in how they categorize statutes, court interpretations, and local requirements, employers should not treat a general list as a substitute for reviewing the rule that applies to a particular employee and location.

Local rules matter, too

A statewide policy can miss important local obligations. Washington, D.C., and Seattle are frequently cited as jurisdictions where employers may need to reimburse work-related internet expenses for eligible employees.

Mosey's state-by-state summary identifies California, the District of Columbia, Illinois, Montana, New Hampshire, North Dakota, South Dakota, and Seattle as places with laws that may require reimbursement for work-related internet costs. Mosey

Seattle matters most for employers with a distributed workforce. A company may not have an office there, but it can still have an employee working there, and that employee's location, not the company headquarters, can create a local compliance question.

How necessity and cost-sharing actually work

Internet service is not automatically reimbursable just because an employee works from home. The key question is generally whether the expense is necessary for the employee to perform the job, and states differ sharply in how they frame that question.

Illinois takes a broad approach. Its law requires reimbursement for all necessary expenses or losses incurred within the scope of employment, and internet and phone costs fall under that umbrella whenever an employee needs them for the job. Mosey This means an employer generally cannot argue that because an employee already had home internet for personal use, the business owes nothing.

California's obligation flows less from a single explicit internet statute and more from litigation interpreting its broader necessary-expense law, which has produced real financial exposure for employers that ignored phone and internet costs entirely.

In practice, most employers handle the shared personal-and-business nature of a home internet bill in one of two ways: they estimate a reasonable business-use percentage of the total bill, or they set a flat monthly amount meant to approximate that percentage across a group of similar roles. A customer support employee who is on video calls most of the day has a stronger claim to a larger share of the bill than someone who checks email occasionally. Documentation does not have to be complicated. Many employers simply ask employees to confirm they use their home internet for required work tasks and approve a modest, consistent monthly amount rather than requiring itemized proof of every megabyte used.

An employer may also need to weigh:

• Whether the employee incurred an additional cost because of work
• Whether a flat monthly stipend reasonably covers expected business use
• Whether the reimbursement method treats similar employees consistently
• Whether the payment method satisfies the applicable state or local law

Why California deserves close attention

California is often the first state employers consider because its expense reimbursement rules have been the subject of ongoing litigation. The general principle is that necessary expenses incurred in performing job duties should not be shifted to employees.

A legal analysis from Kelley Drye & Warren notes that employers that failed to provide phone or internet stipends or reimbursements have faced multimillion-dollar class actions. The analysis cites Krug v. Board of Trustees of California State University, a 2025 California appellate case, and explains that courts may interpret broader reimbursement statutes to include phone and internet costs in remote or hybrid work settings. Kelley Drye & Warren LLP That litigation history is a concrete reason employers with California remote workers should have a documented reimbursement process rather than an informal one.

Stipend or reimbursement: what is the difference?

Employers often use one of two approaches.

Reimbursement of actual expenses

Employees submit receipts or other documentation for eligible expenses, and the employer pays back an approved amount, often based on the business portion of the cost. This method produces detailed records but can create administrative work for employees, managers, payroll, and HR.

Flat monthly stipend

A stipend gives employees a set amount for internet, mobile phone, home-office, or other remote-work expenses. It is easier to administer and more predictable for workers.

A flat stipend is not automatically compliant everywhere, though. Employers should confirm that a chosen amount reasonably reflects likely business use for each role and location, since a flat number that works for one state's rule may not satisfy a different state's approach.

Building a more reliable policy

A sound remote-work expense policy should be clear enough for employees to use and flexible enough to account for changing rules.

1. Map employee work locations. Keep current records of the states and localities where employees perform their jobs.
2. Identify necessary expenses. Consider internet, phone service, equipment, and other tools employees need to do their work.
3. Choose a payment method. Decide whether actual reimbursement, a stipend, or a combination fits the applicable rules for each location.
4. Review regularly. Remote-work laws and local ordinances can change as litigation develops.

Consistency matters, but uniformity is not always the goal. A policy that applies the same payment to every employee may be simple, yet it may not account for different legal obligations across locations.

The bottom line

California, Illinois, Iowa, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, and South Dakota are commonly cited for reimbursement requirements that may include remote-work internet costs, with New York, Washington, D.C., and Seattle adding further obligations depending on the source. Paycor

For employers, the safest approach is to evaluate internet reimbursement as part of a broader remote-work expense policy rather than an isolated payroll question. Review the employee's work location, determine whether internet access is necessary for the role, and confirm current state and local requirements before setting or changing a stipend or reimbursement practice.

Informational note: This article is provided for general informational purposes only and is not legal advice. It does not represent the advice or opinion of the website or organization on which it appears.