Personal cell phone reimbursement for work use? A California court has weighed in on the issue of whether employers must reimburse employees for work calls made on their personal cell phones. In the case of Colin Cochran v. Schwan’s Home Service, Inc., a state appellate court ruled that employers must compensate their employees for work-related phone calls.

The case involved a customer service manager who filed a putative class action suit against his employer, Schwan’s Home Service, Inc., on behalf of 1,500 of his fellow employees. He alleged that Home Service’s failure to reimburse the employees for the cost of their business calls violated Section 2802 of the California Labor Code. Section 2802 states that an employer must indemnify an 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 Trial Court’s Verdict on Cell Phone Reimbursement

When the case was first heard by a trial court, issues were raised regarding how damages would be tabulated. Would it matter if an employee had an unlimited data plan, and so the work calls didn’t actually add to the employee’s cell phone bill? And if an employee had an unlimited data plan, would it matter if the employee purchased that plan because of his or her work calls?

An expert witness submitted a brief on behalf of Cochran, and asserted that a survey could be used to determine the extent of Home Service’s liability. The witness submitted a draft survey with 22 questions regarding cell phone-related finances that could be distributed to each employee. The witness proposed that the answers to these surveys could be used to tabulate statistics that would indicate Home Service’s total damages.

The trial court refused to certify the employees as a class, holding that statistics from a survey could not be used to prove liability. The court also held that Home Service would be entitled to ask the employees about whether they had purchased their cell phone plans due to their work cell phone usage – and that these individual inquiries, asked of 1,500 employees, would “overwhelm the liability determination.”

The Appellate Court’s Ruling on Cell Phone Reimbursement

The Court of Appeal for the State of California, Second Appellate District, Division Two, reversed the trial court’s ruling and ordered the trial court to reconsider Cochran’s motion for class certification. The court held that an employer must always reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone.

The ruling states that even if an employee does not incur an extra expense due to the cell phone usage, the employer still has the obligation to provide compensation for that usage, by paying a reasonable percentage of the employee’s cell phone bill. The court held that this is a necessary requirement because “otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee.” [Read more…]