The issue of expense reimbursement in the workplace is not a new one. Most employers are aware that they must reimburse an employee for certain expenses. In accordance with California Labor Code §2802, an employee is entitled to be reimbursed by an employer for all expenses or losses incurred in the direct consequence of the discharge of the employee’s work duties. These can include training, business travel, and uniforms. The rationale? Employers are not to pass operating expenses on to employees.
With the increased use of personal smartphones in the professional context, it is probably no surprise that the topic recently landed before the California Court of Appeals. In their decision, the court held that employers must reimburse employees for a “reasonable portion” of their cell phone use if they are required to use those phones for work. In the case of Cochran v. Schwan’s Home Service, Inc., the plaintiff represented a class of customer service managers who were not reimbursed for expenses for “work-related use of their personal cell phones.”
The court sided with the employees, holding that “when employees must use their personal cell phones for work-related calls, Labor Code Section 2802 requires the employer to reimburse them.”
The court asked “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 answer is that reimbursement is always required.” The court cautioned that a contrary result would result in the employer “passing its operating expenses to the employee.”
The takeaway from an experienced business and employment lawyer’s perspective? Even if an employee has a plan with “unlimited” minutes, and an employer could therefore argue that the employee incurs no additional expenses by using that phone for work, the employer is still required to pay some percentage of the cell phone bill.
In California, therefore, an employer is obligated to reimburse a reasonable portion of the cell phone costs if the employee uses his or her cell phone for work. The question of what is “reasonable” still exists, as the court did not address this issue. Perhaps one approach is to determine the average monthly cost of a “plan”, and then offer to reimburse the employee 20-30% of the plan’s cost, as a means to ensure that all appropriate costs are being reimbursed.
Nevertheless, it is best to consult with a business attorney to determine how to ensure the employees are properly reimbursed. Litigator and RPNA managing partner Drew E. Pomerance can be reached here.