Do Employers Must Reimburse Employees For Work-Related Cell Phone Use?

Boss wants me to use personal cell phone for work.

Both employees and employers frequently ask whether an employer must reimburse an employee for work-related calls on their personal cellphones.

The answer is yes; an employer must reimburse their employees for any work-related calls on their personal cellphone. 

If your employer is not reimbursing you for work related cell phone use, call us or write to attorney for employees, Brad Nakase, for free legal advise.

Yes, An Employer Must Reimburse Employees for Personal Cell Phone Use

In 2014, a California employee brought a class-action lawsuit against their employer on behalf of customer service managers who were not being reimbursed for the costs of work-related calls on their cellphones. The case was based on unfair business practices and labor code violations. The California Court of Appeal agreed with the case and held that employers could not pass their operating expenses onto employees.

“We hold that when employees must use their personal cell phones 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.”  (Cochran v. Schwan’s Home Services, Inc. (2014) 228 Cal. App. 4th 1137, 1140.)

The court referenced Labor Code section 2802 in their decision. This section says that employers must reimburse employees for ALL necessary losses or expenditures. The law is as follows:

  1. An employer shall cover all employee losses and costs in performing their duties. Also, an employer must cover all expenses and losses that come from obeying the employer’s directions. Unless the employee knew at the time of obeying the direction that they were illegal, this also applies to illegal directions.

  2. Any Division of Labor Standards Enforcement awards for reimbursement will be paid with interest. The interest will be calculated at the same rate as in civil actions and be accrued from the date the necessary expenditure was incurred.

  3. Necessary and reasonable expenditures and losses also include attorneys fees that the employee incurred in enforcing their rights.

  4. The commissioner may also issue a citation against the employer or the person acting on behalf of the employer who has failed to reimburse their employee. These are to be handled as per Section 1197.1, and the penalties shall be paid to the affected employee.

In the 2014 case, the Cochran Court ruled that Labor Code section 2802 includes reimbursing employees for work-related calls on their personal cellphone. The penalties to the employer include reimbursing fees plus interest, and the employee’s attorney fees. Since this case, the employee’s burden of proof in a liability claim regarding the employer’s failure to reimburse is relatively easy. The court also ruled that it is irrelevant if the bill is being passed onto a third party for payment or the details of the employee’s cellphone plan. Any work-related costs must be paid. This ruling was made to stop employers from passing business costs onto employees and to prevent them from digging into the handling of employee’s expenses.

What is the Cell Phone Reimbursement Rate for 2020, 2021, and 2022?

In the 2014 Cochran case, the court ruled that employers must reimburse a reasonable percentage of the employee’s cellphone bills. However, no guidance was given as to what a reasonable percentage is. In the years since, no further case law has established exactly how a reasonable percentage is calculated.

The court did say in the Cochran case that the employer may consider if the expenses an employee incurred was necessary, thus questioning the reasonableness of the employee’s choice. However, the use of the word “reasonable” means that if the case goes to court, a judge and jury will rule as to whether the employee needed to use their personal phone or not. Therefore, the employer should be thorough in their calculations and be prepared to show how they came to their conclusion.

The court also stated that if an employee has a cellphone plan that means they incurred no additional cost for using their personal phone, the employer must still pay a reasonable percentage of their cellphone bill. Otherwise, the employer would save money by passing operating costs onto employees. When they held the decision, the court specifically said that calculating the reimbursement amount was down to the parties and trial court as cellphone plans and scenarios would differ widely.

How Do I Apply Cell Phone Reimburse Policy To My Workplace?

Many people recommend either paying the entirety of an employee’s phone bill or purchasing company phones. However, we recommend a more measured approach.

Pay a flat monthly stipend based on the history of usage. This could be a percentage of cellphone bill or a set dollar amount. Put this policy in writing with the help of an employer defense attorney. Your policy should clearly state that if the monthly stipend does not cover the total expenses for the month, they may submit expense requests. Distribute the policy in writing to all employees and include it in the hiring paperwork for new employees.

All employees must be treated equally in your reimbursement policy. However, depending on the employee’s role and position, their phone usage may vary. If your sales team relies heavily on the phone, their position may be reimbursed 100% of their phone bill. If an office position uses the phone rarely, then they may have a flat fee or low percentage of reimbursement (such as 10%.) Using percentages is the easiest way to reimburse people equally but not the same amounts.

The employer should monitor this policy closely and make adjustments as necessary to ensure they are getting the stipend correct. All employees must be reimbursed for using their personal phones for work-related matters, even if they do not make a fuss about it.

Brad Nakase, Attorney

Email Brad

I’d like to hear your story. What happened?