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Employers may owe for employees’ personal cell phone use

April 2, 2015

expensive billBYOD — “bring your own device” — policies have gained quite a bit of popularity among employers. These policies acknowledge the ubiquitous possession of cell phones and other mostly mobile devices by employees, and encourage or sometimes require employees to use their devices to do their jobs.

That’s a problem in California. The reason is California Labor Code section 2802, which says:

“An employer shall indemnify 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….”

So employees who use their cars to do the employer’s business need to be reimbursed by the employer for that use. But it goes well beyond that, as the court held recently in Cochran v. Schwan’s Home Service, Inc.

In Cochran, a class of customer service managers sought reimbursement for their personal cell phone use on the job. Cochran sought damages for violation of section 2802. The trial court denied certification of the class (which for these cases generally means the case is over), holding that there were too many individual questions relating to employees’ personal usage plans, etc.

The court of appeal reversed. According to the Court of Appeal, the trial court mistakenly assumed that (1) an employee does not incur any expenses if the cell phone charges are paid by a third person or if the employee did not purchase a different cell phone plan because of work-related cell phone usage, and (2) liability could not be determined without examining the specifics of each class member’s cell phone plan.The Court of Appeal determined that the details of a cell phone plan are essentially irrelevant. When cell phone use is mandatory, an employer must always reimburse an employee for “some reasonable percentage” of the personal cell phone bill, whether or not the employee incurred extra fees or changed plans to accommodate work-related cell phone usage.

The California Supreme Court turned down Schwan’s appeal in late 2014. So this is the law of the land, employers.

Here are the big takeaways for employers:

  1. Employees must be reimbursed for expenses necessarily incurred on the job. Not terribly controversial, but important from the standpoint of the terms and limits of your BYOD policy. If employees are using their own phones for their own purposes, no reimbursement. If they’re using them to do things the employer requires them to do, and doesn’t provide an alternative way of doing without fishing their own phone out, it’s a problem.
  2. How much an employee must be reimbursed is an open question. The court said “some reasonable percentage.” That’s court-speak for, “Don’t bother us with facts, ask a jury.” Which for most employers is a troubling prospect, since it means you don’t know what you owe until two years after the fact, when it’s well too late to do anything about it. This aspect of the decision is likely to spawn a mini-wave of suits to bring some clarity to what is essentially a completely meaningless phrase.
  3. Employee expenses must be reimbursed even if the employee can’t point to any “extra” expense he incurred. Most cell phone plans today come with unlimited or extremely liberal usage plans that are rarely exceeded. And thus, most employees won’t see — and employers won’t be able to quantify — any additional amount due on their bills for the work calls made on the employees’ phones. Doesn’t matter. Employers owe their share, whatever that may be.
  4. It’s helpful for employers to give employees the tools they need to do their jobs. If an employer can show the employees are using their own devices for their own convenience, it will be easier to avoid reimbursement. Employers who try to save a little bit by counting on employees’ devices are looking at a fairly open-ended obligation.
  5. Process counts. Regardless of the expense or how the employer reimburses it (mileage? percentage of personal/business use? flat percentage per month?), it’s a good idea to give employees an opportunity to argue that they are out more than the employer thinks. That idea works for automobile use, anyway, and might be useful to at least minimize penalties or attorneys’ fees if the process is there but the employee doesn’t use it.

Employers need to act to make sure the meter’s not running on their employees’ cell phone bills. Have your HR rep or lawyer check your reimbursement and BYOD policies in California. Otherwise, you’re apt to get an expensive surprise.

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