Employees Entitled to Compensation for Business Use of Personal Cell Phones Regardless of Plan Terms -- Cochran v. Schwan's Home Services, Inc.
California law requires that employers must reimburse workers for all "necessary expenditures" incurred in performing their jobs. But what if the employee has already purchased an item for his own personal use and can continue using it for his employment at no extra cost. Does the employer still have to pay for the benefit of using the employee's property?
In Cochran a group of employees claimed that they were owed reimbursement for business-related calls made on their personal cell phones. In opposing class certification, the employer argued that “many people now have unlimited data plans for which they do not actually incur an additional expense when they use their cell phone." As a result, the employer claimed that "determin[ing] whether an expense was incurred . . . will require an examination of each class member's cell phone plan.” The appellate court rejected this argument.
Instead, the court explained:
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. Not only does our interpretation prevent employers from passing on operating expenses, it also prevents them from digging into the private lives of their employees to unearth how they handle their finances vis-a-vis family, friends and creditors. 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. Damages, of course, raise issues that are more complicated.
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.
The exact calculation of reimbursement amounts was left to the trial court on remand. But the ruling suggests that dividing the total plan cost by the proportion of minutes devoted to business use would be a proper rate of reimbursement.
Of course, the logic of Cochran could be applied to any personal items that an employee may use for both personal and work purposes -- for example, tools, car insurance, computers, Internet access, or even a home office. Cochran thus strongly suggests that employers may have a duty to reimburse the "reasonable percentage" of such costs which corresponds to the proportion of their use for work.