Re: Recent California Appellate Court Decision Requiring Reasonable Reimbursement for Mandatory Use of Personal Cell Phones for Work

On August 12, 2014, the California Court of Appeal decided in Cochran v. Schwan’s Home Service, Inc. that California Labor Code Section 2802 obligates an employer to reimburse a reasonable share of an employee’s personal cell phone bill where the employer required the employee to use the personal cell phone for work. The employer, Schwan’s Home Service, may petition for California Supreme Court discretionary review. Review, if granted, would suspend the decision until a Supreme Court ruling.

Schwan’s Home Service required certain employees to use their personal cell phones for business calls. It unsuccessfully contended that employees who purchased unlimited call plans, set up their phone under a family member’s or other responsible third party’s account, or otherwise did not purchase a special plan or usage for work were not entitled to reimbursement because they incurred no expense of their own for work. The court rationalized that Section 2802’s purpose was to prevent the employer from passing on employer costs to an employee, and since the employer enjoyed the benefit of leveraging the employee’s personal cell phone for work, the employer should share in the cost, even absent proof of additional work-specific cost.

While the Cochran court ruled that employers must reimburse employees a reasonable percentage of employee personal cell phone bills for mandatory work usage, it did not define or clarify what is considered “reasonable.” Instead, the court consciously avoided any guidance, noting that the work-related scenarios made the determination fact-specific. As a result, clients should review their mobile device policies with their legal advisors to assess the most appropriate course of action for addressing the decision, depending on the client’s specific circumstances and business needs. At one end of the spectrum, employers may supply their employees who are required to use a cell phone for work with company phones. At the other end, employers may detail in policies that personal cell phone use is discouraged or not required and implement corresponding measures to ensure personal cell phone usage is not mandated in practice. There are other potential alternative strategies within the spectrum, depending on the situation, including adoption of a “reasonable” reimbursement rate for work-required personal cell phone use. Determination of a reasonable reimbursement rate is a fact-specific issue that clients would need to decide in consultation with their legal advisors.

For any questions about this alert, you may contact:

Scott Bishop
Senior Labor Counsel

Molly McLucas
Corporate Counsel