smartphoneDealing a blow to employers, the California Court of Appeal issued a new ruling on August 12, 2014  requiring companies to reimburse employees for work-related uses of personal cell phones. The decision applies to employees cell phone plans with both unlimited minutes and limited minutes, and requires companies to pay a “reasonable percentage” of the employees’ cell phone bills if the phones or mobile devices were required to make work-related calls.

The case in this instance, was brought by a class-action of approximately 1,500 service managers against Schwan’s Home Service, Inc. , a grocery-delivery service.  In the case, the California Court of Appeal determined that when an employee makes work-related calls on a personal cell phone, they incur expenses that the California Labor Code requires the employer to reimburse. The court determined that employers may not pass on those expenses to employees, even if the employee uses an unlimited plan, or expensive/high cost plans.

According to earlier Court decisions involving employee reimbursements, Courts have permitted both actual and lump sum reimbursements, as long as the employer provides “some method or formula” to identify what payment is being issued to compensate the employee for the expense reimbursement.

The Court’s new ruling has meaningful ramifications for all kinds of wireless data, text, and other plans that employees use, including wireless services that have data caps or throttled services.  The new ruling could potentially eventually spill over into homes wireless services, when work is performed off-site at the direction or convenience of the employer.

Employers or business owners with BYOD policies should take immediate steps to adjust their practices so as to not run afoul of the new rules. Employers should review and update their existing BYOD and/or mobile device policies, and address the following matters as part of adjusting their reimbursement policies:

  • Does the employee’s job require  use of a mobile device?
  • Are employees required to respond to calls, emails, and texts on their mobile devices when out of the office?
  • Do employees use a remote timekeeping system to track time when not physically in the office?
  • If Employer provides lump-sump reimbursement, how should employees be reimbursed for expenses above the lump sum?
  • Are reimbursements for mobile device payments clearly identified on the employee’s wage statements?

Axis Legal Counsel is a labor and employment law firm representing clients in a variety of labor and employment issues, including the requirements of California’s labor laws.  Axis Legal Counsel is experienced in the field of employment and labor law and focused on providing high-quality legal service.  For information on retaining Axis Legal Counsel for any labor or  employment matter, contact info@axislegalca.com or call (213) 403-0130 for a confidential consultation.