In Cochran v. Schwan's Home Service Inc., the California Court of Appeals posed the following question: "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," according to the Court, "is that reimbursement is always required." In other words, it does not matter if the employee already had a cell phone plan with unlimited minutes. If an employee is required to use his or her personal cell phone for work, the employer must reimburse the employee for a reasonable percentage of the employee's cell phone bills.
The issue regarding reimbursement arises from California Labor Code section 2802, which requires an employer to "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 . . . ."
The Court found that the purpose of California Labor Code section 2802 is to prevent employers from passing their operating expenses to their employees. Thus, even if the employee already had a plan that allowed for unlimited minutes, the employer would receive a windfall because it would be passing its operating expenses on to its employee.
It is important to note that the Court used the phrase "mandatory use" of a personal cell phone. Thus, we expect that there will be future litigation as to whether the use of the personal cell phone, smartphone, or other device was "mandatory." However, the Court's holding in Cochran serves as an important reminder for employers to review their policies to determine whether they are passing anything that could be deemed as an "operating expense" on to employees. Indeed, as illustrated by Cochran, any challenges to such policies will likely come in the form of a class action lawsuit.
What Employers Should Do Now
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Employers should review and, if necessary, revise their policies to ensure that, if employees are being required to use their personal cell phones, smartphones, or other devices for making work-related calls or sending work-related e-mails, they are being reimbursed for a "reasonable percentage" of their bills.
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Employers should examine whether employees are "voluntarily" using their personal cell phones, smartphones, or other devices for making work-related calls or checking work-related e-mails and carefully consider whether the practice would withstand scrutiny that the cell phone, smartphone, or other device use was truly not "mandatory." For instance, among other things, employers should examine what expectations there are for employees to respond to calls and e-mails outside of work. Likewise, the employer should examine whether employees need to use their cell phones, smartphones, or other devices to perform their job functions during work. If it appears that the "voluntary" cell phone or smartphone use is actually "mandatory," employers should revise their policies and practices to ensure that employees are being reimbursed for a "reasonable percentage" of their bills.
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Employers should review their policies and practices to determine whether employees are incurring any other expenses that could be deemed as the employer's "operating expense." If employees are incurring such expenses, the employer should review and, if necessary, revise their policies to ensure that there is a process in place to reimburse employees for those expenses.
