Court Declares Employers Must Pay for Work-Related Calls Made on Employees’ Personal Cell Phones

In a decision that may have wide-reaching implications, the California Court of Appeal ruled that, if an employee’s job requires him or her to use a personal cell phone for work-related activities, the employer must reimburse the employee a reasonable amount for that usage. The court’s decision concluded that employers have this reimbursement obligation even if the employee’s cell phone service plan gives the employee unlimited minutes of cell phone usage time or the employee did not pay the bill for the cell phone.

The case arose after Colin Cochran, a customer service manager for Schwan’s Home Service, Inc., filed a proposed class action on behalf of himself and 1,500 other Schwan’s employees. The employees were customer service managers and route managers, whose job duties required them to maintain frequent telephonic interaction with customers of Schwan’s food delivery service. The employer did not provide cell phones to its customer service managers and route managers, instead requiring them to use their personal devices. Cochran filed his suit after the employer refused to provide reimbursement for the use of the personal cell phones.

The manager’s central argument was that Cal. Labor Code Section 2802 required Schwan’s to provide reimbursement. That law mandates reimbursement 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.”

In its defense, the employer argued that the case was not appropriate for class action because each manager’s circumstance was unique. For example, some (but not all) of the managers included in the class had “unlimited” plans with their cell phone providers, which meant that they paid no more to use their personal phones for business calls than if they used the phones for personal matters only. Still others were part of a “friends and family” plan and paid nothing out-of-pocket for their cell phones.

The trial court agreed with Schwan’s and refused to allow the case to proceed as a class action. The appeals court, however, reversed that ruling. The appeals court reasoned that the fundamental question in Cochran’s case was whether Section 2802 requires employers to reimburse employees in all situations when the employee’s job requires him or her to use a personal cell phone for business purposes, or only when that business use forced the employee to incur an added expense he or she would not have paid if not for the mandatory business calls.

The appeals court concluded that the law required the employee to reimburse in all circumstances, and that the specifics of the employees’ cell phone plans “do not factor into the liability analysis.” Ruling otherwise, the court decided, would give the employer a “windfall” benefit. Section 2802 was enacted to prevent employers from passing operating costs onto their employees. Allowing employers to escape reimbursement in some situations would permit them to engage in precisely that forbidden conduct simply by virtue of having employees whose personal cell phone plans were of the unlimited or “friends and family” varieties.

In short, to hold an employer liable, the law requires the employee only to show that he or she was required, as part of his or her employment, to make work-related calls on a personal cell phone, and that the employer did not reimburse him or her for that usage. The court stated that liable employers must pay a “reasonable percentage” of the employee’s cell phone bill, but it did not elaborate regarding what a “reasonable” percentage would be, sending that issue back to the trial court.

This ruling could have very broad implications, forcing many employers to rethink their policies regarding how they plan for employees to make business-related telephone calls. This issue is one that both employers and employees should continue to monitor. If you have questions about your business use of your personal cell phone, and whether your employer should be reimbursing you, talk to the experienced Oakland employment law attorneys at the Law Offices of Stephen M. Fuerch. Our employment law attorneys can help you assess your situation and decide what action is appropriate in your case. Contact us through our website or call our office at (925) 463-2575 to schedule your confidential initial consultation today.