Colin Cochran filed a class action lawsuit against Schwann's Home Services, Inc. on behalf of 1,500 customer service managers who were not reimbursed for the mandatory use of their personal cell phones for work. Under California Labor Code section 2802, employers must reimburse employees for necessary expenditures incurred in performing their duties. The trial court denied certification of the class finding that individualized questions of fact regarding each member's cell phone plans and payments would be necessary to determine liability. In making its determination, the trial court assumed that no expense was incurred unless the employee had to pay something out of pocket above and beyond the expense to maintain the cell phone for personal use.
Unfortunately for California employers, the appellate court disagreed with the trial judge and found that Labor Code section 2802 prevents employers from passing operating expenses on to their employees, even to those employees who do not actually incur added charges when they use their personal cell phones at work. The Court of Appeal stated:
[i]t does not matter whether the phone bill is paid for by a third person, or at all. In other words it is no concern to the employer that the employee may pass on the expense to a family member or friend, or to a carrier that has to then write off a loss. It is irrelevant whether the employee changed plans to accommodate work related cell phone usage.
Based on the Cochran ruling, California employers now face potential liability for failing to reimburse employees for a "reasonable percentage" of their personal cell phone bills if they are required to use them for work. The Cochran decision also creates a significant burden for California employers seeking to defeat class certification since the appellate court found that liability for failure to reimburse may be "determined without an inquiry into the specifics of each class member's cell phone plan."
Recommendations For California Employers
Businesses should carefully review their policies, procedures, and expectations regarding the use of cell phones by their employees. If cell phone usage is required, employers who choose not to supply company owned phones must establish a policy and procedure to reimburse employees for a reasonable percentage of their personal cell phone bills.
Moving forward, California employers should also anticipate that the holding in Cochran will be applied in contexts beyond cell phones. Expenses related to an employee's use of their personal internet connection, laptop, tablet and the like could theoretically be the subject of similar claims for reimbursement. Employers should consult with an experienced employment attorney to assist in developing new policies and procedures to address the issues raised by this new decision.
[1]Cochran v. Schwann's Home Services, Inc., B247160 (August 4, 2014)
