Cochran v. Schwan's Home Services, Inc.: Employer Must Reimburse Reasonable Percentage of Employee's Cell Phone Bill

Posted on September 25, 2014

By: Laura C. Hess and Sachiyo Miller

On August 12, 2014, the California Court of Appeal issued a sweeping opinion in Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal.App.4th 1137. The Court discussed the issue of whether an employer must reimburse an employee for the reasonable expense of mandatory use of a personal cell phone for work purposes, or whether the reimbursement obligation is limited to situations in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job. The answer is that partial reimbursement is always required.

In this case, an employee filed an action on behalf of customer service managers who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones. The trial court denied class certification due to the lack of commonality, and because a class action was not a superior method of litigating the claims. Thereafter, the California Court of Appeal held that employees must be reimbursed a reasonable portion of these bills for work-related use, and reversed the denial of class certification.

Labor Code § 2802 states that "[a]n 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...." The ruling noted that the purpose of this statute was to prevent employers from passing their operating expenses on to their employees.

The employer argued that many employees had unlimited plans and did not incur extra expenses due to work-related calls. In addition, the employer pointed out that many employees had phones paid for by third parties, such as family members. The Court rejected both of these arguments, reasoning that that the issue was whether the business should be required to reimburse the expense. The Court held that, to show liability under Labor Code § 2802, "[a]n employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed."

The answer was straightforward. To comply with Labor Code § 2802, employers must reimburse a reasonable percentage of the employee's cell phone bill if the employee has to use his or her phone for work purposes. The Court acknowledged that the issue of damages was more complicated. It therefore ordered the trial court to review how damages might be proven.

This ruling will affect the vast majority of employers. Most employers allow employees to use their own personal cell phones for work purposes. Some employers have Bring Your Own Device (BYOD) policies due to perceived productivity gains and cost savings.

In terms of other devices such as tablets, laptops, and home computers, etc., subsequent similar cases might be affected by this court's ruling. Although this ruling remains subject to further appeal, employers should review their cell phone policies to determine best practices related to expense reimbursements to avoid liability on this emerging issue.

Laura C. Hess is a Partner of Kring & Chung, LLP. She can be reached at (949) 261-7700 or

No Comments

Leave a comment
Comment Information
Premium Av Preeminent 5.0 out 5 Rating Peer Review Rated LexisNexis Martindale Hubbell Avvo Super Lawyers OC Metro Register
Contact

How Can We Help You?

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Locations

Irvine Office
38 Corporate Park
Irvine, CA 92606

Phone: 949-345-1621
Fax: 949-261-8800
Irvine Law Office Map

Los Angeles Office
3435 Wilshire Blvd., Suite 2700
Los Angeles, CA 90010

Phone: 949-345-1621
Phone: 213-232-1633
Map & Directions

Temecula Office
41955 Fourth St., Suite 315
Temecula, CA 92590

Phone: 949-345-1621
Phone: 951-331-4520
Fax: 951-257-0450
Map & Directions

Sacramento Office
2620 J Street #1
Sacramento, CA 95816

Phone: 949-345-1621
Phone: 916-266-9000
Fax: 916-266-9001
Map & Directions

San Diego Office
11682 El Camino Real, Suite 100
San Diego, CA 92130

Phone: 949-345-1621
Phone: 858-436-0268
Fax: 858-436-0279
Map & Directions

Las Vegas Office
1050 Indigo Dr., Suite 200
Las Vegas, NV 89145

Phone: 949-345-1621
Phone: 702-260-9500
Fax: 702-260-9434
Map & Directions