With the increased use of “smart” or cell phones, the question was recently presented to the California Court of Appeal what amount must an employer pay to reimburse an employee for the business related use of their personal cell phone. Generally, it was found that the employer must pay some “reasonable percentage” of the employee’s cell phone bill if the employee is required to use a personal cell phone for work-related purposes.
The court found this requirement applies even when the employee did not incur an extra expense by making the work calls because he/she had an unlimited data plan.
It is well known that an employer must reimburse work-related expenses such as travel, dining and mileage costs for work-related business. But with the use of cell phones and so many plans available where an employee is not charged by the use of their phone as they have “unlimited” plans, it is not as clear what needs to be paid.
The question presented to the court was this: Does an employer have to reimburse employees 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 Court found that an employer must pay “some reasonable percentage of the employee’s cell phone bill.” But what constitutes a “reasonable percentage”?
Unfortunately, the court did not provide guidance on this issue but the case is limited to situations where the employer requires an employee to use his/her personal cell phone for work-related calls.
The Court was not convinced by the defense argument that the employee subscribed to an “unlimited” plan and did not incur extra expenses nor had to increase the plan to cover the work related calls. The Court reasoned that all the employee needs to show is that “he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.”
The case did not address the sporadic use by the employee because he/she wants to use a personal cell phone versus being required to use it.
While the Court of Appeals issued the ruling, this case could be appealed to the California Supreme Court. But, in the meantime, employers should review their cell phone policies.
What Should I do Now?
- Review your policies on expense reimbursements to ensure that you are addressing the issue of cell phone use and not just the traditional expenses incurred by an employee such as mileage.
- Be clear with your employees as to whether they are “required” to have a cell phone for business use and when such use is required.
- Be sure that your policy provides that non exempt employees are not to check their voicemail, text messages or emails during non work hours so that there can be no claim for “off the clock work” or that a vacation day was spent working.
- If use of a personal cell phone is not permitted, expressly state such prohibition in your policy, even if the employee wishes to use their personal phones.
- Establish a policy for reimbursement requests including what documentation is required.
(Cochran v. Schwan’s Home Service, Inc.)