In the case of Cochran v. Schwan’s Home Service, Inc. (Corchran), a California Court of Appeal held that California Labor Code Section 2802 requires that employers reimburse employees who use their personal cell phones for work-related calls. The court found that “[w]hether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills.” Thus, even if the employee has purchased a personal cell phone plan that provides the employee with “unlimited” minutes and the employee does not incur any additional expense for his/her work-related calls, the employer must still provide a reasonable reimbursement to the employee. Although the Cochran decision remains subject to further appellate activity, California employers should review their cell phone policies in light of this ruling.
The plaintiff in Cochran filed a putative class action on behalf of 1,500 customer service managers who were not reimbursed for expenses incurred as a result of work-related use of their personal cell phones. The trial court denied certification of the class, finding that individualized questions of fact regarding employee cell phone plans and payments would be necessary to determine liability. Among other reasons, the court noted that there was a question as to whether each class member actually paid for his or her own phone bill, and because many people now have unlimited data plans for which they do not actually incur an additional expense when they use their cell phone, some class members would not incur a loss.
In overturning the trial court’s decision, the appellate court instructed that factors such as whether a cell phone bill is paid for by a third person, such as a family member or friend, did not matter for purposes of liability under Section 2802. Additionally, the court found issues concerning whether the employee changed plans to accommodate work-related cell phone usage or details of the employee’s cell phone plan – such as whether it is a limited or unlimited plan – to be irrelevant. Rather, the court held that the only requirement an employee needs to prove for a Section 2802 violation is whether he or she was required to use a personal cell phone to make work- related calls, and whether he or she was reimbursed. Moreover, the court stated that its interpretation of Section 2802 would prevent employers from passing on operating expenses to employees and would also prevent them from “digging into the private lives of their employees to unearth how they handle their finances vis-à-vis family, friends and creditors.” Further, the court specified that regardless of which cell phone plan an employee has, the reimbursement owed is “a reasonable percentage of their cell phone bills.” Significantly, the court did not provide any guidance as to what would constitute a “reasonable percentage.”
In light of this decision, California employers may see an increase in class action filings in this area, and may have a harder time defeating class certification since, as the Cochran court observed, liability for failure to reimburse for cell phone usage may be “determined without an inquiry into the specifics of each class members’ cell phone plan.” Therefore, to the extent employers require employees to use a cell phone for work, employers should review all policies and procedures related to such usage. If employers rely on employees to provide their own cell phone, employers should review and/or implement policies requiring their employees to track and submit expense reports regarding their work-related cell phone usage so that employees can be reimbursed for the actual cost of such usage. If the actual cost cannot be determined, employers should reimburse employees for a “reasonable percentage” of the personal cell phone bill. Further, while the court’s decision, in Cochran, is limited to cell phone plans, California employers with “bring your own device” (BYOD) policies for other types of devices should also review those policies to assess whether employees who are required to use other personal devices for work-related purposes should be reimbursed for the “reasonable percentage” of expenses.