The Duty to Reimburse in the Digital Age
Reimbursing Tech Expenses in California
As discussed in my companion post, “You Want Me to Pay for What?” California law has long required employers to reimburse their employees for expenses reasonably incurred while working, so as to prevent employers from passing on their operating expenses to employees. A recent California Court of Appeal ruling helps to define the scope of an employer’s obligation to reimburse expenses related to technology.
In many workplaces, employees are expected (at least on occasion) use a cell phone for work, whether to make work-related calls, text a coworker or client, check work email, or look up directions to a worksite or event. Some employers have, formally or informally, adopted a BYOD (bring your own device) plan—that is, they permit, expect, or require employees to carry personal cell phones, and sometimes laptops or tablets, and use them for work purposes. BYOD plans have been celebrated as a win-win, giving employees the satisfaction of being able to choose their own electronic devices, thereby increasing productivity and encouraging employees to remain more closely connected with the office, while reducing the employer’s costs of maintaining and supporting devices by shifting the costs, in whole or in part, to the employees.
Personal Cell Phone Use and Reimbursement
Because an employee’s use of her personal cell phone for work purposes often does not result in an easily measurable additional expense to the employee, many employers have assumed that they have no obligation to reimburse their employees for related expenses. That assumption is mistaken, according to a recent California Court of Appeal decision. In Cochran v. Schwan’s Home Serv., Inc., B247160, 2014 WL 3965240 (Cal. Ct. App. Aug. 12, 2014), the court addressed the question “Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation 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 answered that “reimbursement is always required,” reasoning that “Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee.” Id. at *3. Based on this reasoning, the court held that to comply with California law, “the employer must pay some reasonable percentage of the employee’s cell phone bill.” Id.
What Constitutes a Reasonable Percentage of an Employee’s Cell Phone Bill?
What constitutes a reasonable percentage of an employee’s cell phone bills may vary widely and is open to debate. However, the Court of Appeal elaborated that the employer’s obligation to reimburse applies even if an employee has an unlimited cell phone plan, and even if the employee’s phone bill is paid by someone else (such as the employee’s parent or friend) or not at all. The particulars of an employee’s cell phone plan do not affect the employer’s duty to reimburse, nor does it matter whether an employee changed her cell phone plan to accommodate worked-related cell phone usage. Id.
The court’s reasoning in Cochran reinforces the traditional rule that an employer is required to reimburse an employee for anything that could be classified as an “operating expense,” applying it to digital devices, with potentially broad implications. The principle on which the Cochran ruling rests—that an employer must pay a percentage of an employee’s expenses for work regardless of whether the employee incurs an extra expense that she would not otherwise have incurred—could have implications for employees’ use of personal computers, laptops and tablets, and internet service, among other things.
In light of this ruling, employers should review and update their reimbursement policies, taking into account the different ways in which managers and supervisors communicate with employees and the expectations that they set, formally or informally, with respect to employees’ use of cell phones and computers for work. If an employer requires its employees to use a cell phone, computer, or tablet away from its premises, there should be a clear policy in place regarding reimbursement of any related expenses.
Employees whose employers’ reimbursement policies are unlawful may be entitled to reimbursement for past expenses and civil penalties.