On August 12, a California appellate court held that when employees must use their personal cell phones for work-related calls, California Labor Code Section 2802 requires the employer to reimburse them. The decision reversed a trial court ruling that denied class certification for a group of employees who were seeking compensation for work-related charges that they had incurred on their personal cell phones.
In Cochran v. Schwan’s Home Service, Inc., the Second District appellate court disagreed with the various assumptions made by the trial court when it denied class certification for 1,500 customer service managers. Specifically, the court rejected the trial court’s conclusion that:
- employees are not entitled to reimbursement if a third person pays their cell phone bills;
- employees are not entitled to reimbursement if they did not purchase a separate cell phone plan because of their need to use a cell phone at work; and
- liability for failure to reimburse cannot be determined without an inquiry into the specifics of each employee’s cell phone plan.
Pursuant to Labor Code Section 2802, subdivision (a), “[a]n 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[.]” The court noted that the purpose of this statute is “‘to prevent employers from passing their operating expenses on to their employees.’”
The court then asked the core question about the applicability of Section 2802 to cell phone reimbursement: “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 court was unequivocal:
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.
The court continued, holding that the details of the employee’s cell phone plan are irrelevant as is whether a third-party pays the cell phone bill:
If an employee is required to make work-related calls on a personal cell phone, then he or she is incurring an expense for purposes of section 2802. It does not matter whether the phone bill is paid for by a third person, or at all. In other words, it is no concern to the employer that the employee may pass on the expense to a family member or friend, or to a carrier that has to then write off a loss. It is irrelevant whether the employee changed plans to accommodate worked-related cell phone usage. Also, the details of the employee’s cell phone plan do not factor into the liability analysis…To 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.
California employers may need to reconsider their current policies regarding employee cell phone use (if they have a policy at all) and may need to either issue certain employees company-owned phones or ensure that employees keep and submit accurate records regarding their work-related calls on their personal phone such that an employer can determine the “reasonable percentage” of the cell phone bill that is now their responsibility under Section 2802.
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