August 2014

Legal Update: Employers on the Hook for Employee Cell Phone Costs


The California Court of Appeal, in a decision published on August 12, determined that employers are required to reimburse employees who must use their personal phones for work-related calls. Cochran v. Schwan’s Home Service, Inc.  The court held that whether the employees have cell phone plans with unlimited or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills.

How this issue came about:   Under California Labor Code Section 2802(a), an employer of any size is required to indemnify employees for “all necessary expenditures” incurred by the employee in “direct consequence of the discharge of his or her duties.”  The plaintiffs in this case claimed that despite the fact that they did not have to incur extra expense on their personal cell phone plans when using the phone for work-related purposes, reimbursement for some part of their personal costs was required.  Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee.  The court agreed.

What this means for you and your business:  If you do not provide an employee with a cell phone and pay all of the costs associated with its use, but expect employees to check email and respond to work-related phone calls, you must reimburse the employee for a reasonable percentage of the cost of their personal monthly plan.  In the wake of this decision, you should evaluate whether to convert some employees to the company’s plan, or reimburse for work-related usage of personal phones.  Employees on personal plans who are using their phones for work should be asked to provide documentation in the form of monthly bills so they can be reimbursed.  Be aware, however, that employees have a right to privacy and that they should be permitted to redact portions of the bill that contain information about personal use of the phone.

Want to know more?  Contact Wendy Tice-Wallner at 415.733.3976 or email her

This publication is for informational purposes only and is not intended to provide legal or tax advice, or to create an attorney-client relationship.

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