Are employers required to reimburse employees for cell phone usage?
When we look at California, the question from an employer is not, “Are we required to reimburse employees for use of their personal phone?” — it’s “How much do we reimburse an employee for use of their personal phone?” In many states, this is a grey area and one in which employers enjoy a great deal of discretion. However, in California, reimbursement for use of an employee’s mobile device is required by law (California Labor Code Section 2802), but the amount of reimbursement is open to discussion.
It wasn’t until 2014 that the question of whether an employer should reimburse its employees for the use of their personal devices became a hot-button topic. This was likely due in part to the appellate court ruling in Cochran v. Schwan’s Home Service, Inc., 228 Cal.App.4th 1137. In Cochran, the appellate court overturned the lower court’s ruling — which denied the plaintiff’s demand for reimbursement — and instead effectively found that any employee in the state of California was entitled to “reasonable” reimbursement of personal device used for business.
In reaching its decision, the appellate court stated, “… when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills.”
What the appellate court did not determine however was how to calculate a “reasonable percentage” of the employee’s bill. Instead, the appellate court cited Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554, 562 (2007): “[i]n calculating the reimbursement amount due under section 2802, the employer may consider not only the actual expenses that the employee incurred but also whether each of these expenses was ‘necessary,’ which in turn depends on the reasonableness of the employee’s choices.”
The answer to the question, “What is ‘reasonable’ reimbursement for an employee’s use of their personal devices?” can be a bit murky, but Cochran left some discretion to employers on how much to reimburse their employees. Recall that reimbursement should be a “reasonable percentage” of an employee’s cell phone bill. A few things that could be considered when determining what constitutes “reasonable” reimbursement for the use of personal mobile devices at work are:
- Which employees need mobile devices to do their jobs? For example, an individual who travels frequently for work likely needs their cell phone more than an individual who works from the corporate office.
- Will the employees who need mobile devices be offered company-issued devices? If so, will they be required to use the company-issued devices while being restricted from using their personal devices for business use?
- Are employees expected to use their personal devices to check their work e-mails, log on to the Internet, or perform any other duties that require data usage? These functions may result in higher reimbursement rates as compared to plans providing only phone and text capabilities.
- What is the current cost of a mobile device and data plan? This should be reviewed regularly because plan prices change from year to year. Multiple plans should be evaluated.
- Will employees be required to track their usage and submit expense reports for reimbursement? Or, will the employees receive a lump sum allocation (for example, a monthly reimbursement) based on a set percentage of their bill? Both options may require an employee to submit their cell phone bills to their employer. It is important to limit what is provided to prevent any intrusion on an employee’s private life.
The above suggestions in no way encompass all the questions to consider when determining a reasonable reimbursement rate. As a final note, Hourly strongly recommends that employers incorporate a mobile device policy with employees, which should be reviewed by an HR or legal professional prior to implementation.