This note covers employee expense reimbursement in North Dakota. It addresses the state indemnity rule and the federal wage floor. The broader topic appears in the expense reimbursement practice guide.
Must an employer in North Dakota reimburse employee business expenses?
North Dakota employers must cover what an employee necessarily spends or loses as a direct consequence of job duties or employer directions, subject to the statute's exceptions. Section 34-02-02 limits liability for losses from ordinary business risks and coworker negligence, unless the employer failed to use ordinary care in selecting the coworker.
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North Dakota Century Code § 34-02-01 requires an employer to indemnify an employee for necessary expenditures or losses directly caused by job duties or employer directions, subject to stated exceptions.
An employer shall indemnify the employer's employee, except as prescribed in section 34-02-02, for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties as such or of the employee's obedience to the directions of the employer even though such directions were unlawful, unless the employee at the time of obeying such directions believed them to be unlawful.
See N.D. Cent. Code § 34-02-01
North Dakota Century Code § 34-02-02 excludes certain ordinary-risk and coworker-negligence losses from employer indemnity, with a negligent-selection exception.
Except as otherwise provided by law, an employer is not bound to indemnify the employer's employee for losses suffered by the latter in consequence of the ordinary risks of the business in which the employee is employed, nor in consequence of the negligence of another person employed by the same employer in the same general business, unless the employer has neglected to use ordinary care in the selection of the culpable employee.
See N.D. Cent. Code § 34-02-02
Which business expenses must a North Dakota employer reimburse?
North Dakota employers must cover necessary expenditures directly caused by an employee's duties or employer directions. The duty excludes buying or renting tools of a trade or other equipment that the employee also uses outside work. Separate limits apply to losses from ordinary business risks and coworker negligence.
Sources for this answer
North Dakota Century Code § 34-02-01 requires indemnity for necessary expenditures directly caused by employee duties or employer directions.
An employer shall indemnify the employer's employee, except as prescribed in section 34-02-02, for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties as such or of the employee's obedience to the directions of the employer even though such directions were unlawful, unless the employee at the time of obeying such directions believed them to be unlawful.
See N.D. Cent. Code § 34-02-01
North Dakota Century Code § 34-02-01 excludes the purchase or rental of tools or other equipment also used outside employment.
The obligation to indemnify does not include expenses incurred to purchase or rent tools of a trade or any other equipment that is also used by the employee outside the scope of employment.
See N.D. Cent. Code § 34-02-01
North Dakota Century Code § 34-02-02 limits indemnity for ordinary-risk and coworker-negligence losses.
Except as otherwise provided by law, an employer is not bound to indemnify the employer's employee for losses suffered by the latter in consequence of the ordinary risks of the business in which the employee is employed, nor in consequence of the negligence of another person employed by the same employer in the same general business, unless the employer has neglected to use ordinary care in the selection of the culpable employee.
See N.D. Cent. Code § 34-02-02
Must a North Dakota employer reimburse remote-work costs such as home internet or a personal phone?
North Dakota's indemnity duty does not cover buying or renting equipment, such as a personal phone or computer, that the employee also uses outside the scope of employment. The exclusion addresses equipment, not a non-equipment cost such as an internet service bill. Such a cost falls under the general duty if it is necessary and directly caused by job duties or employer directions.
Sources for this answer
North Dakota Century Code § 34-02-01 excludes purchase or rental expenses for tools or equipment also used outside employment.
The obligation to indemnify does not include expenses incurred to purchase or rent tools of a trade or any other equipment that is also used by the employee outside the scope of employment.
See N.D. Cent. Code § 34-02-01
North Dakota Century Code § 34-02-01 covers necessary expenditures directly caused by employee duties or employer directions.
An employer shall indemnify the employer's employee, except as prescribed in section 34-02-02, for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties as such or of the employee's obedience to the directions of the employer even though such directions were unlawful, unless the employee at the time of obeying such directions believed them to be unlawful.
See N.D. Cent. Code § 34-02-01
Can an offer letter or expense policy in North Dakota make the employee bear business expenses?
North Dakota's indemnity provision requires employers to cover necessary job expenditures and does not address waiver by an offer letter, policy, or agreement. Its express equipment exclusion applies when the employee also uses the tools or equipment outside employment. The statutory text supplies no basis to treat a general employee-pays clause as an additional exclusion.
Sources for this answer
North Dakota Century Code § 34-02-01 requires indemnity for necessary job expenditures and does not mention waiver.
An employer shall indemnify the employer's employee, except as prescribed in section 34-02-02, for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties as such or of the employee's obedience to the directions of the employer even though such directions were unlawful, unless the employee at the time of obeying such directions believed them to be unlawful.
See N.D. Cent. Code § 34-02-01
North Dakota Century Code § 34-02-01 excludes purchase or rental costs for tools or equipment also used outside employment.
The obligation to indemnify does not include expenses incurred to purchase or rent tools of a trade or any other equipment that is also used by the employee outside the scope of employment.
See N.D. Cent. Code § 34-02-01
How does federal minimum-wage law limit unreimbursed expenses in North Dakota?
Under 29 C.F.R. § 531.35, an employer that requires an employee to supply tools of the trade for the job violates the Fair Labor Standards Act in any workweek in which the employee's cost cuts into the minimum or overtime wages due. The regulation rests on the rule that wages count as paid only when they are paid free and clear, with no kick-back to the employer. On a touch screen, a tap shows all 2 sources in this group.
The federal rule is a floor, not a general duty to reimburse. It is breached only when an employer-required cost pushes the week's pay below the minimum or overtime wages due.
The federal rule does not depend on state law. North Dakota's statute excludes tools of a trade and other equipment the employee also uses outside the scope of employment , but an employer-required tool that the employee buys still breaches the federal rule in any workweek in which its cost cuts into the minimum or overtime wages due.
Sources for this answer
29 C.F.R. § 531.35 states that when an employer requires an employee to provide tools of the trade for the employer's work, the Fair Labor Standards Act is violated in any workweek in which the employee's cost of those tools cuts into the minimum or overtime wages required under the Act.
For example, if it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer's particular work, there would be a violation of the Act in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid him under the Act.
See 29 C.F.R. § 531.35
29 C.F.R. § 531.35 states that wages are not considered paid unless they are paid finally and unconditionally, or free and clear.
Whether in cash or in facilities, “wages” cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or “free and clear.”
See 29 C.F.R. § 531.35
29 C.F.R. § 531.35 states that the Fair Labor Standards Act's wage requirements are not met when an employee kicks back all or part of the wage to the employer or to another person for the employer's benefit.
The wage requirements of the Act will not be met where the employee “kicks-back” directly or indirectly to the employer or to another person for the employer's benefit the whole or part of the wage delivered to the employee.
See 29 C.F.R. § 531.35
N.D. Cent. Code § 34-02-01 excludes from the employer's indemnity duty the cost of buying or renting tools of a trade or other equipment that the employee also uses outside the scope of employment.
The obligation to indemnify does not include expenses incurred to purchase or rent tools of a trade or any other equipment that is also used by the employee outside the scope of employment.
See N.D. Cent. Code § 34-02-01