In August, in Cochran v. Schwan’s Home Service, Inc., a California appellate court held employers who require California employees to use personal cell phones to make work-related calls must reimburse those employees for a reasonable percentage of their cell phone bills under California Labor Code § 2802. Section 2802 requires employers to indemnify employees for necessary expenses and losses incurred as a direct consequence of discharging their duties.

In Cochran, a service manager for Schwan’s Home Service filed a putative class action seeking reimbursement costs for the work-related use of the employees’ personal cell phones. The trial court denied certification due to a lack of commonality of claims, ruling that in order to determine commonality a court would have to inquire as to what type of cell phone plan each employee purchased, whether that plan was purchased because of their work usage, and who paid for the cell phone plan.

On appeal, the California Court of Appeal overturned the trial court, holding that employees are entitled to reimbursement for making work-related phone calls on a personal cell phone under Labor Code § 2802, regardless of whether the phone bill is paid for by a third person or at all. The Court of Appeal also held that it is irrelevant whether the employee changed plans to accommodate work-related cell phone usage, or whether the employee has an unlimited calling plan. The Court of Appeal held that the details of the cell phone plan do not factor into the liability analysis; rather, “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.”

ACTION ITEM

Employers that require California employees to use a cell phone for work related purposes must implement an expense reimbursement policy to indemnify employees for those costs, or should consider providing company-issued phones or company-sponsored phone plans.

Employers that permit, but do not require, employees to use their personal cell phones (e.g., BYOD) may still need to consider this same expense reimbursement requirement.