Employer Must Pay Portion of Employee’s Unlimited Data Plan for Work-Related Calls

The California Court of Appeal has ruled in favor of employee Colin Cochran on his class action lawsuit on behalf of 1,500 customer service managers against Schwan Home Service for reimbursement for work-related use of personal cell phones. Cochran v. Schwan’s Home Service, Inc. (August 12, 2014). Cochran alleged the company violated California Labor Code Section 2802, which provides:

“An employer shall indemnify [reimburse] his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer….”

Schwan’s Home Service had convinced the trial judge that class members had no claim for reimbursement under section 2802 if the workers had plans for their personal phones providing unlimited minutes for a flat rate or if someone other than the employee paid the bill. (In Mr. Cochran’s particular case, it was unclear whether he or his girl friend had actually paid the bill.)

The Court of Appeal disagreed, ruling that an employer must reimburse the reasonable expense of the mandatory use of a personal cell phone regardless of whether the employee actually incurred extra expense for such calls or not: “To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.”  Otherwise, the court reasoned, the employer would receive a windfall from passing its operating expenses onto the employee.

Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill for all types of cell phone plans and even if someone else pays the bill. The court did not discuss how to calculate that percentage.

California employers should promptly consult with competent legal counsel regarding their reimbursement obligations. For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.