In a ruling that may spawn a wave of California employment-related class action litigation, a California Court of Appeal has ruled that employers must always reimburse employees for “some reasonable percentage” of their cell phone bills if the employer requires them to use their personal cell phones for business purposes—regardless of whether the employee incurs charges over and above his or her plan costs. Cochran v. Schwan’s Home Services, Inc., B247160 (Aug. 12, 2014).
The plaintiffs sued their employer in a class action, alleging that the employer failed to reimburse them for mandatory work-related use of their personal cell phones. The plaintiffs claimed that their employer’s failure to reimburse violated California Labor Code section 2802, which provides that employers must indemnify employees for “necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”
The Court of Appeal ruled that “to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill.” The court stated that “[t]o 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.”
Other than the court’s directive to pay a “reasonable percentage” for mandatory use, the ruling does not provide employers with guidance on how much employers should pay or how to figure that out. Thus, employers will likely presume that a “reasonable percentage” is the percentage of the mandatory business use of the personal cell phone, as compared to optional business use or personal use. In other words, if the employee’s mandatory work-related cell phone use amounts to 10 percent of total use, the employer should reimburse 10 percent of the cell phone bill.
The Cochran decision could have broad ramifications for employers. Unless reversed or narrowed, the ruling could be considered to apply to other devices and service plans such as personal laptops, iPads, and even home telephones. The decision also may create a new theory of liability flowing from newly popular “bring-your-own-device” policies.
What should an employer do?
At this point, the decision could still be reversed. But there are steps that employers should consider taking now. Employers that do not require employees to use personal cell phones for business should review their cell phone policies and practices to be sure they make clear that business use of personal cell phones is not mandatory and that listing a cell phone number as a means of contact is optional. To that end, employers may also wish to write “optional” next to any request for contact information. Although employee waivers of rights under section 2802 are not valid or enforceable, an agreement in which an employee acknowledges that the use of his or her personal cell phone for business purposes is optional could be a valuable tool in defending against class action litigation.
If personal cell phone use is mandatory, employers should consider either reimbursing employees for the percentage of cell phone costs that reflects the percentage of mandatory business use or providing employees with company cell phones and/or cell phone plans for business purposes.