Colin Cochran filed a puntative class action lawsuit against his employer, Schwan's Home Service, Inc., on behalf of customer service managers who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones.  He alleged violations of various statutes, including Labor Code section 2802.  He moved to certify the class, but the trial court denied the motion.  It noted that it had questions regarding whether Cochran's cell phone charges were paid by him or his girlfriend, and that Schwan's Home Service would be entitled to ask whether each employee purchased a different cell phone plan because of their work cell phone usage.  In short, there would have to be individualized inquiries into the class members' cell phone plans and payments in order to determine whether Schwan's Home Service was liable, and therefore common questions did not predominate.  Cochran appealed, and the Court of Appeal reversed.

Labor Code section 2802 provides that an employer "shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer."  The Court of Appeal addressed the question of whether an employer always has to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or whether the reimbursement obligation is limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job.  The Court held that reimbursement is always required.  Otherwise, the employer would receive a windfall because it would be allowed to pass its operating expenses onto its employees.  Thus, an employer must pay some reasonable percentage of the employee's cell phone bill in order to comply with Labor Code section 2802. 

The Court held that the trial court erroneously assumed that it could not determine Schwan's Home Service's liability without inquiring into the specifics of each class member's cell phone plan.  Regardless of who pays an employee's cell phone bill or whether the employee changed plans to accommodate work-related cell phone usage, an employee who is required to make work-related calls on a personal cell phone is incurring an expense for purposes of section 2802.  To show liability under section 2802, an employee only need show that he or she was required to use a personal cell phone to make work-related calls and that he or she was not reimbursed.  Damages, however, will raise more complicated issues.  Thus, the Court held that the trial court erred when it denied Cochran's motion for class certification, and it reversed and remanded. 


It is unclear whether Labor Code section 2802 applies to public agencies.  Labor Code section 2802 does not expressly apply to public entities, and two California Courts of Appeal have held that public entities are not subject to general Labor Code provisions unless expressly included.  In another Court of Appeal decision, In reWork Uniforms Cases, 133 Cal.App.4th 328 (2005), the Court stated that where a public employee's claim for indemnification under Labor Code section 2802 directly conflicts with a public entity's power to set the compensation of its employees, the public entity's authority wins out unless the indemnification claim involves a matter of public concern.  Therefore, while there are strong arguments that Labor Code section 2802 does not apply to public entities, the issue has not been settled.   

Cochran v. Schwan's Home Service, Inc. (2014) 228 Cal.App.4th 1137.