Employers Must Reimburse for Work-Related Use of Personal Cell Phones 

While logic might suggest no need to reimburse an employee with unlimited minutes for business use of her or his phone, California follows different reasoning.

Labor Code 2802 directs employers to compensate a worker for “all necessaryexpenditures or losses incurred … in direct consequence of the discharge of his or her duties” (emphasis supplied).  “Necessary” expenses include all “reasonable” costs.  Even if a worker does not incur any greater cost by using his or her mobile for employer-related calls, a California appeals court has found reimbursement owing for a reasonable percentage of cell phone bills.

In Colin Cochran v. Schwan’s Home Service, a customer service manager brought a class action on behalf of some 1,500 others seeking employer reimbursement for mandatory work-related use of their personal cell phones.  Schwan’s contended it should not have to pay people with unlimited data plans or who had others paying the phone bill as they did not actually incur an additional expense for such use.

The appeals court disagreed.  Labor Code 2802 directs reimbursement regardless of whether the employee incurs extra expenses or no matter if someone else actually pays the bill. “Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee … the employer must pay some reasonable percentage of the employee’s cell phone bill.”

Take-Aways:

● Adopt a compliant written policy for repayment to employees for reasonable and necessary business-related expenses, including a reasonable percentage for necessary work-related use of personal cell phones;
● Implement reimbursement forms consistent with that policy to enable workers to apply for such repayment, including calculation of that reasonable percentage;
● Assign an appropriate finance manager to review and direct payment of such percentages; and
● Mindful that Labor Code 2802 includes “attorney’s fees incurred by the employee enforcing” his or his reimbursement rights, promptly resolve in writing any disputed use calculations.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Happier and Healthier – Workplace Policy Handbook & Forms for 2022 (April 29, 2022)
• Are Shoes Reimbursable Business Expenses? (August 6, 2019)
• Wage Deductions – When California Employers May Subtract from Earned Compensation (August 26, 2016)
• Employee Road Trips and Other Work Related Expenses – California Businesses Must Reimburse for Employment-Related Use of Personal Vehicle, Phones and More (July 23, 2012)

Tim Bowles
June 10, 2022