California Court of Appeal Maintains Employers Must Reimburse Employees for Required Cell Phone Use

Following an unprecedented decision, California’s Second District Court of Appeal has ordered that employers must reimburse employees for certain job-related expenses, including cell phone bills, even if the employee did not incur an extra expense by using their cell phone.

In Cochran v. Schwan’s Home Service, Inc., Colin Cochran (on behalf of 1,500 customer service managers for Schwan’s, a food delivery company) alleged that the managers working were ultimately not reimbursed for the costs they incurred using their personal cell phones for work-related business. The trial court initially denied the allegation on the grounds that some individuals had incurred no additional expense, such as those having an unlimited data plan.

The court of appeal disagreed, holding up Labor Code Section 2802 as their ultimate reasoning behind the ruling. The three-judge panel noted in their finding that “when employees must use their personal cell phone for work-related calls, Labor Code Section 2802 requires the employer to reimburse them. Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills.”

The ruling is now forcing business owners to develop Bring Your Own Device (BYOD) policies in an effort to make sure that a blind eye is no longer turned to personal devices being used for work-related activities. In other words, the ruling is forcing businesses to invest in a mobile device management system.

Some in the business community are speaking out against the decision.

“While I understand the intent of this court ruling, I believe that there will be many unintended consequences associated with it,” said Weston LaBar, founding Partner of Long Beach-based PEAR Strategies. “First, I believe the definitions need to be cleaned up. Who determines if a cellular device is required to perform the tasks associated with a job? I use my cell phone for convenience in many cases. However, like many people, I could wait until I get to my computer to answer emails or research data.”

The implications of the Cochran ruling are vast, with some business owners fearing that reimbursement requirements will go beyond voice calls and dip into data service and home internet service.

“I believe employees required to use cell phones should be properly compensated,” LaBar said. “However, I truly feel this should be something agreed upon between the employer and employee. Whereas we are doing our best to ensure fairness to the employee, we need to do our best to ensure fairness to the employer as well. My biggest fear is the increase of frivolous litigation and labor claims over BYOD expense disputes.”

The ruling can still be appealed to the California Supreme Court.

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