California Companies Ordered to Pay Employees’ Personal Cell Phone Bills
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UPDATED: Sep 25, 2014
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A California court of appeal found that when employees must use their personal cell phones or other electronic devices for work-related purposes, the state Labor Code requires that their employers reimburse them for a “reasonable part” of their expenses.
The case, Colin Cochran v. Schwan’s Home Service, Inc., was a class action initiated by Colin Cochran, a customer service manager for Schwan’s.
Many employers have formal or informal “bring your own device” (BYOD) programs that allow employers to use their own phones, laptop computers, and tablet devices for work purposes. This can both save money for employers and allow employees to work on devices with which they feel most comfortable. The practice reportedly enhances employees’ morale and even their productivity.
BYOD programs need to deal with issues like data security and IT support. Under the Cochran case, California employers must also deal with the issue of reimbursement – even when business use of a personal device requires no added expense.
California Labor Code
Section 2802 of the California Labor Code requires employers to reimburse their employees for expenses “necessarily incurred” in the course of their work. The purpose of the law is to prevent employers from passing their operating expenses on to their employees.
The Labor Code also prevents employers from forcing employees to waive this right to reimbursement.
At a trial court hearing in the Cochran case, Home Service argued that a class action was not appropriate because many people had unlimited data plans and didn’t run up additional expenses when they used their devices for work purposes as well as personal reasons.
The court of appeal noted that the threshold question in the case was:
Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job?
The court concluded:
The answer is that reimbursement is always required. Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee.
The court also found that it was irrelevant whether the employee’s phone expenses were actually paid by a third person (such as a live-in girlfriend, in Cochran’s case).
What can California employers do?
To comply with the Labor Code as interpreted by the recent Court of Appeals decision, California employers can:
- Provide all employees with cell phones and pay for a voice/data plan
- Provide employees with a lump-sum monthly allowance for use of their personal phones
Employers that wish to limit their expenses for “dual use” (business plus personal) phones, can cap usage and only pay employees for phone charges up to that cap.
A 2013 California appellate case, DeLeon v. AirTouch Cellular, found that such a cap would violate the law “only if it were insufficient to provide full reimbursement for expenses necessarily incurred.”
What can California employees do?
California employees who are not currently reimbursed for their personal cell phone (or other data plan) costs can contact their personnel departments and bring the Cochran case to their attention.
If an employer refuses to take appropriate action, employees (individually or as a group) can consider contacting a California labor lawyer.
For more information about Employment and Labor Laws, see the FreeAdvice Employment & Labor Law page.