No Exceptions: Employers Must Always Reasonably Reimburse Employees’ On-the-Job Use of Personal Cell Phones (California)

Section 2802 of the California Labor Code requires employers to reimburse their employees for any “necessary expenditures or losses” that they incur as a direct result of doing their job.[1] But what if an employee’s work-related activities do not actually generate any expense in addition to that which the employee would have normally incurred otherwise? For example, if an employee is required to use her personal cell phone for business purposes, but her cell phone plan provides for unlimited data and calling, there is arguably no additional expenditure incurred as a result of the work-related use.

However, in an unambiguous opinion issued on Tuesday, August 12, the Second District Court of Appeal held that employers must reimburse all the work-related personal cell phone use of their employees, regardless of the employees’ individual arrangements vis-à-vis the selection, terms, or payment of personal cell phone plans. In Cochran v. Schwan’s Home Service, Inc.,[2] a customer service manager sued his employer on behalf of a class of 1,500 similarly situated employees, alleging the employer’s failure to reimburse class members for the work-related use of their personal cell phones.

The Second District Court of Appeal held: “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.” The appellate court observed that the purpose of section 2802 is “to prevent employers from passing their operating expenses on to their employers.”[3] Therefore, the issues raised by the trial court—the type of service plan the employee has, who pays for the plan, and whether the employee changed plans because of his job—are irrelevant. “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 . . . . [R]eimbursement is always required. Otherwise, the employer would receive a windfall because it would be passing its operating expenses on to the employee.”

Therefore, regardless of whether an employee has a limited or unlimited cell phone plan, the employer’s obligation is the same: “The reimbursement owed is a reasonable percentage of [the employees’] cell phone bills.” Employers have a duty to determine what that reasonable percentage is, and to reimburse their employees accordingly. Employers should take adequate steps to accurately ascertain what level of reimbursement is reasonable for their employees. An employee survey, inquiring into how much employees pay per month for their service plans and what percentage of their cell phone usage is work-related, can be an effective way of finding the right number. As an alternative, employers may also consider avoiding the reimbursement issue altogether by providing company-issued cell phones which employees will be required to use for all business purposes.

[1]  Cal. Lab. Code § 2802(a) (2014).

[2]  Cochran v. Schwan’s Home Serv., Inc., B247160, 2014 WL 3965240 (Cal. Ct. App. Aug. 12, 2014).

[3]  Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554, 562 (2007).