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Does an employer have to reimburse its employees for cell phone expenses?

California employers are obligated to reimburse employees for cell phone expenses when employees must use their personal cell phones for work-related calls. They key statute addressing this issue is Labor Code §2802, which states: “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…” This essentially means that employers are responsible for reimbursing employees for all expenditures made by the employee at the employer’s direction, including those expenses stemming from cell phone usage. It is important to note that this particular statute is not limited to cell phone usage and applies to several other expenses, such as mandatory uniforms, mileage reimbursement, and various other expenditures.

The key case interpreting §2802 as it relates to cell phone usage is Cochran v. Schwan’s Home Service, Inc 228 Cal.App.4th 1137 (2014). The court held that when employees must use their personal cell phones for work-related calls, §2802 requires the employer to reimburse them. The defendant in Cochran argued that employees with unlimited personal cell phone plans would not incur additional expenses as a result of their cell phone use for work-related calls. Nonetheless, the court held that regardless of whether the employees had cell phone plans with unlimited minutes or limited minutes, the employees were owed reimbursement of a reasonable percentage of the cell phone bill.

Unfortunately, the Cochran case did not provide guidance on how to properly determine whether an employer’s reimbursement is a based on a reasonable percentage of a cell phone bill. This ambiguity may be considered both a blessing and a detriment for employers. It may be viewed as a blessing in that an employer might argue that its reimbursement policy is reasonable if it fairly aims to adequately reimburse an employee. On the other hand, it could also be seen as a detriment, because employers are forced to make reimbursement decisions without clear guidance on whether the policy is compliant with the law. Employees who are not provided reimbursement or provided only nominal reimbursement will likely have a claim against their employers for the failure to reimburse them for cell phone related expenses.

If you have questions about the lawfulness of a particular cell phone reimbursement policy or practice, please feel free to contact the author of this article with specific questions.

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