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Calif.: Employers Must Pay for Employee Cell Phone Use

By Joanne Deschenaux  8/19/2014
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Employers must reimburse employees a reasonable percentage of their bills when they are required to use their personal cell phones for work, a California appellate court ruled Aug. 12, 2014 (Cochran v. Schwan’s Home Services Inc., No. B247160).

“This sweeping decision may lead to a new wave of class action lawsuits against California employers,” according to Remy Kessler, an employment lawyer with Reed Smith in Los Angeles.

A customer service manager sued his employer to recover expenses for the work-related use of his personal cell phone. He asked the court to certify his case as a class action. The trial judge denied class certification on the ground that individualized inquiries about the class members’ cell phone plans would overwhelm common issues. The trial court determined that no “expense” was incurred, and no reimbursement owed, unless the employee had to pay something out of pocket, above and beyond the expense to maintain the cell phone for personal use. The appellate court disagreed, finding that an employer is obligated to reimburse an “expense,” even if the employee has incurred no additional cost associated with the business use of the phone. Because this error was the basis for the trial court’s decision to deny certification, the court reversed that decision and sent the case back to the trial court.

California Labor Code section 2802 obligates employers to reimburse employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” 

The appellate court found that the trial court erred when it determined that the statutory obligation to reimburse would depend on 1) whether the employee had a plan allowing unlimited use; and 2) whether the employee or a family member paid the bill. Instead, it held that when an employee “must” use his personal cell phone for work-related calls, the employer is required to reimburse him or her and that the “reimbursement owed is a reasonable percentage of the cell phone bills.”

Employers Should Review Reimbursement Policies

To the extent employers require employees to use a cell phone for work, employers should consider providing their employees with cell phones and voice/texting plans, according to Kessler. In the alternative, employers should implement written policies requiring their employees to track and submit expense reports regarding their work-related cell phone usage so that employees can be reimbursed for the actual cost of such usage.

The court ruled that, if the actual cost of an employee’s cell phone use for work cannot be determined, for example if an employee has an unlimited minutes/texting personal plan, the employer will then be required to reimburse the employee for a “reasonable percentage” of the personal cell phone bill. However, the court did not provide any guidance as to what a “reasonable percentage” means, Kessler said. He noted that employers can avoid the problem altogether by making clear that cell phones are not needed and should not be used for work.

Joanne Deschenaux, J.D., is SHRM’s senior legal editor.


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