State Appeals Court Says California Workers Must Be Paid for Cell Phone Expenses

California courts can’t seem to burden employers enough. Last month it was mandatory provided and paid for meal and rest breaks for truck drivers. This month it is cell phone use and expenses. What’s next?

In an August 12th decision, a Los Angeles based State Appeals Court ruled that employers must pay their employees a “reasonable” reimbursement for the business use of the employees’ cell phone.

This will be a big deal in the trucking industry here because most employee truck drivers use their own cell phones for work – for all dispatching, job site mapping to the locations, even traffic etc., which is key to their jobs. Some receive a basic minimum service reimbursement fee from their employers. Some get little or nothing. If you’re an employer you better take notice.

In Cochran v. Schwan’s Home Service, Inc., a class action certified lawsuit, the court decision said in part, “We hold that 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.”
The appeals court justices found that reimbursement is always required and that questions such as the particulars of an individual’s cell phone plan or who pays the actual bill or actual phone damages may or may not be an employer’s liability. The court’s reasoning focused on the benefit to the employer instead of the actual expense to the employee. “Otherwise the employer would receive a windfall because it would be passing its operating expenses onto the employee.”

Increased Employer Liability

As demonstrated by this case, failure to reimburse California employees for required use of personal cell phones for business purposes can give rise to liability, including possible class action litigation.

This decision as usual, left a number of questions unanswered, like “what is ‘reasonable reimbursement.’” Cochran also does not address what “mandatory” use of personal cell phones for business purposes actually means.
But, employers now know that duties and policies that require employees to make or take calls, receive or send emails and texts, check-in by phone while on the job, receive a dispatch, or otherwise use their personal phone where no other device is available, will require employer reimbursement for personal cell phone use.

Most employees already possess their own personal device and are on some type of complex family cell phone plan with one of the four or five cell phone service providers and many employers have opted to allow employees to use those devices for business purposes as well. The major problem in the past has been information and device security. However, with this ruling, reimbursement becomes just as important for all employers with workers in California.

Reimburse or Provide Phones

Two reimbursement methods that many employers have used are payment of a lump sum based on average use or the cost of an average call/data plan. The second is payment of actual expenses of a phone and usage plan. If reimbursement is your choice, employers should make certain there is also a method by which employees can claim additional reimbursement if their actual expenses exceed the usual reimbursement amount.

The other choice of course to avoid reimbursement issues and matters regarding device and information security is to provide all employees with company cell phones and enact policies prohibiting the use of personal phones for company business.

Although the August decision remains subject to further court action and clarifications, it became final September 12th and therefor effective that date. All employers should begin to review their cell phone policies and other business expense reimbursement plans now to assess this emerging liability as there may even be a retroactive element hiding out there.

Whatever method is chosen, employers should take care to ensure that their employees’ actual expenses are adequately documented, reimbursed and arguably all of this clearly defined within a company policy.

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