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Personal Cell Phone Use for Work Must be Reimbursed

Photo of the building housing the court that decided a case about reimbursing personal cell phone use by employees

California Court of Appeal for the Second District (Los Angeles)

This post discusses a 2014 case (Cochran v. Schwan’s Home Service, Inc.) which held that California employers must reimburse employees who use a personal cell phone for work.

Plaintiff Colin Cochran, as class representative, brought a class action lawsuit against Schwan’s Home Service (“Home Service”) on behalf of 1,500 service managers employed by Home Service. The suit sought, among other things, reimbursement of the managers’ work-related personal cell phone expenses.

California Labor Code

The Court of Appeal for the Second District in Los Angeles noted that Labor Code Section 2802(a) governs reimbursement of employer costs incurred by employees.

An employer shall 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….

Interestingly, Sections 2802(b) and (c) state that if an employee receives an award under Section 2802(a) from a court or the Division of Labor Standards Enforcement (the “DLSE”), the employee also is entitled to interest on the amount awarded plus recovery of attorney’s fees and other costs.

The court noted that the purpose of the statute is to prevent employers from passing their operating costs on to employees.

Personal Cell Phone – Threshold Question

The court then characterized the threshold question as follows.

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?

Here is the court’s answer to that question (emphasis added).

The answer is that reimbursement is always required. Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee. Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill. Because of the differences in cell phone plans and worked-related scenarios, the calculation of reimbursement must be left to the trial court and parties in each particular case.

No General Guidance

For the moment, there is no general guidance for what constitutes a “reasonable percentage”. Indeed, if an employee must use a personal cell phone for work, it might be easier and more cost-effective to pay the employee’s entire monthly cell phone bill.

Perhaps, during the next few years, court and DLSE decisions, and industry practices, might give some idea of which percentages have been found reasonable and which have not. Until that happens, employers should go out of their way to be generous in determining a reasonable percentage reimbursement for personal cell phone use.

Dana H. Shultz, Attorney at Law  +1 510-547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

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Employment