Employers Must Reimburse Employees for Work-related Use of Personal Cell Phones
The California Court of Appeals issued a sweeping opinion regarding whether employers need to reimburse employees for work-related use of personal cell phones.
California Court CaseIn the case Cochran v. Schwan's Home Services, Inc., Mr. Cochran filed a class action lawsuit on behalf of all customer service managers who worked for Schwan's Home Services. He claimed that the managers were not reimbursed for expenses pertaining to work-related use of their personal cell phones. Schwan argued against the class action, stating that the expenditure element of the claim was subject to whether employees had unlimited service plans for which they would not actually incur an extra expense. The trial court agreed with Schwan's and did not allow the class certification for the service managers. Mr. Cochran then appealed this case to the California Court of Appeals.
California Labor LawIn its decision, the Court of Appeals cited Section 2802 of the California Labor Code, which states that "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. ... The term 'necessary expenditures or losses' shall include all reasonable costs." The ruling specifically noted that the purpose of this statute was to prevent employers from passing along business operating costs to employees. Schwan's had argued that many of its employees had unlimited plans and, as a result, did not incur extra expenses for work calls. In addition, Schwan's pointed out that many employees didn't pay their phone charges anyway, that other people, like their family members, paid the bill. The court rejected those arguments and stated that the true issue of the case was whether the business should be required to reimburse the expense. The Court of Appeals held that, in order for an employer to be liable under Section 2802, "the 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."
Effects on EmployersThe court's ruling in this case could affect a large number of employers in California. Most employers allow their employees to use their personal cell phones for work purposes and, in fact, some employers have even instituted a "bring-your-own-device" policy in order to increase productivity and reduce costs. Employers must now consider which is more cost effective--paying employees for using their personal phones or buying work phones for every employee who needs one. This ruling could also have tangential effects on employees' workplace use of other personal devices like tablets, laptops, and computers. While the court still has to determine how to assess damages for the case, employers should expect to see similar cases soon.