What States Require Internet Reimbursement for Remote Workers?

Several states and local jurisdictions require employers to reimburse at least some necessary work expenses, and those rules can include home internet costs when employees need internet to do their jobs. California, Illinois, Iowa, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, and South Dakota are commonly identified in HR and legal summaries, while other summaries also include New York. Washington, D.C., and Seattle are frequently cited as additional jurisdictions with relevant requirements. The exact list depends on how a source classifies laws and local rules, and not every requirement expressly names internet service. Whether reimbursement is due can depend on the employee’s work location, the job’s internet needs, and how the applicable law treats shared personal and business expenses.

Which States May Require Internet Reimbursement?

Current compliance summaries do not always give the same exhaustive list because state laws vary in scope. Some statutes expressly require reimbursement of employee expenses, while others use broader language that may cover necessary remote-work costs such as internet or phone service.

States commonly identified as having reimbursement requirements that may apply to remote-work expenses include:

• 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. Its summary also highlights California and Illinois, where reimbursement questions can arise even when an employee has no separate, direct out-of-pocket cost for a work-related expense.

Other guidance includes New York among the states with remote-employee reimbursement rules. It describes 11 states along with Seattle and Washington, D.C., as having laws that require reimbursement of certain remote-work expenses. Because summaries differ in how they classify statutes, court interpretations, and local requirements, no general list determines an employer’s obligations for a particular employee.

Why Do Local Work Locations Matter?

A statewide policy may miss an obligation that applies in a city or district. Washington, D.C., and Seattle are frequently cited as jurisdictions where employers may need to reimburse eligible employees for work-related internet expenses.

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.

For a distributed workforce, an employee’s work location can raise a local compliance question even if the employer has no office there. The location where the employee performs the work may therefore matter more than the company’s headquarters.

When Is Home Internet a Necessary Work Expense?

Internet service is not automatically reimbursable simply because an employee works from home. A central question is whether the employee needs the service to perform the job. The rules differ by jurisdiction and may also turn on whether the employee’s work creates a business expense, even when the employee already pays for a personal internet connection.

Illinois takes a broad approach. Its law requires reimbursement for necessary expenses or losses incurred within the scope of employment. Internet and phone costs may fall within that requirement when an employee needs them for work. As a result, an existing personal subscription does not necessarily mean the employer owes nothing for business use.

California’s reimbursement obligation is grounded in broader necessary-expense rules and their interpretation, rather than a single statute that specifically addresses home internet. Litigation has treated phone and internet costs as potentially reimbursable work expenses in remote or hybrid settings.

When a connection serves both personal and business purposes, employers commonly estimate a reasonable business-use share or set a flat monthly amount for employees in similar roles. An employee who relies on internet access for video calls and customer support throughout the day may have a different level of work-related use from someone who only occasionally checks email. Employers can document the work requirement and use a consistent method without necessarily asking employees to account for every unit of data used.

When choosing a method, employers may need to consider whether work caused an additional expense, whether a flat amount reasonably reflects expected business use, whether similar employees are treated consistently, and whether the payment method meets the rules that apply in each location.

Why Does California Receive Particular Attention?

California is often a focus because its expense reimbursement requirements have been the subject of ongoing litigation. The general principle is that employers should not shift necessary expenses incurred in performing job duties to employees.

A legal analysis from Kelley Drye & Warren LLP reports that employers that failed to provide phone or internet stipends or reimbursements have faced multimillion-dollar class actions. It discusses 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. This history makes a documented reimbursement process important for employers with California remote workers.

Should Employers Use Reimbursement or a Stipend?

Employers generally use actual-expense reimbursement, a flat stipend, or a combination of the two. The appropriate approach depends on the applicable rules and whether the amount reasonably covers the work-related expense.

Reimbursement of Actual Expenses

Employees submit receipts or other documentation for eligible expenses, and the employer pays an approved amount. Where a cost is shared between personal and business use, reimbursement may be based on the business portion. This approach creates detailed records but can add administrative work for employees, managers, payroll, and HR.

Flat Monthly Stipend

A stipend provides a set amount for internet, mobile phone, home-office, or other remote-work expenses. It is predictable for employees and generally easier to administer. Employers can learn more about how stipends work.

A flat amount is not automatically compliant in every location. Employers should consider whether it reasonably reflects likely business use for the relevant roles and locations, because a payment that satisfies one jurisdiction’s approach may not satisfy another’s.

How Can Employers Build a More Reliable Policy?

A remote-work expense policy should be clear enough for employees to follow and flexible enough to account for different locations and changing requirements. A practical process includes:

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 rules that apply to each location.
4. Review the policy regularly. State and local requirements can change, and litigation may affect how broader reimbursement rules are interpreted.

Consistency is important, but the same payment for every employee may not account for different legal requirements or work-related costs across locations. A policy can use common procedures while adjusting the payment method or amount where the employee’s location or role calls for it.

*This article is for general informational purposes only and is not legal advice.