California court mandates BYOD reimbursement

California court mandates BYOD reimbursement

Summary: An appeals court rules that, under CA labor law, employee use of personal cell phones must be reimbursed, even if the employee has an unlimited or flat rate plan.


An appeals court judgment in California could raise havoc among the employer BYOD plans in the state. The ruling states that an employee who is required to use a personal cell phone for work must be compensated "...a reasonable percentage of their cell phone bills." This judgment is based in the court's analysis of California Labor Code section 2802.

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The case is Cochran v. Schwan's Home Service, Inc., a class action seeking such compensation. The appeal concerned a trial court denial of class status. The appeals court decision reverses the denial and orders the trial court to reconsider in light of its interpretation of section 2802.

The most relevant part of Section 2802 follows:

2802(a) 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...

The appeals court weighs the circumstances heavily in favor of the employee. The compensation plan may not consider who is actually paying for the employee's personal cell phone. "To show liability under section 2802, an 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 decision leaves many open questions about the basis for compensation. If the employee has a family plan with several other members using voice data at a flat rate, does the number of members in the plan affect compensation? Some companies offer a flat stipend to employees for BYOD, but the court's use of the term "a reasonable percentage of their cell phone bills" may call this practice into question.

A brief analysis of the decision in The National Law Review notes that the decision does not become final for 30 days and remains subject to further appellate review. Nevertheless, they recommend that employers begin to review their cell phone policies in light of the decision.

Hat tip to Tom Kaneshige on

Topics: Mobility, Government US

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  • Doin' the math

    if (state == "CA")
    pay = hours * hourly_rate + cellphone_allowance;
    pay = hours * hourly_rate * 1.15;
    Robert Hahn
    • What?

      I don't get the 15% up charge outside of the state. (Hi from California where I do things like payroll.)

      And reimbursed expenses are not pay.

      Can we put a lid on silly stuff?

      Down below someone says he declines reimbursement because of privacy. His choice. Employees are not required to submit expenses for reimbursement, but, employers are not allowed to discourage reimbursement.

      From the summary, this ruling applies to employers who require a personal cellphone as a condition of employment and is no more wack-a-doodle than the rules for reimbursing automobile costs when an employer requires the employee use a personal car (as in pizza delivery, and so on.)

      In the article the question was raised "What about family plans?" Before that uncertainty starts up chaos and a zombie apocalypse, if one employee is on a family plan with four others, than 20% as a maximum for reimbursement would be reasonable. Reasonable means it makes sense and there's an understandable connection between reimbursement rates and employer mandated use.

      All uncertainty about reasonableness could be settled with 2015 legislation that outlines safe harbor approaches for employers. While it would be fun to watch the California Chamber of Commerce attack such legislation as "Job-Killer," I stopped reading its publication last decade.
      • It's all money

        "Silly" is pretending that personnel budgets went up because some judge in one state said so. "These dollars are compensation, but those dollars are expense reimbursement," is also silly since money is fungible. Sure, the accountants will put them in separate buckets, and maybe you HR types will pretend that the additional money mandated by the judge will be beamed down by the aliens, but I'm not falling for it.
        Robert Hahn
  • I don't do it

    They'll pay for my phone if I ask, but I don't really want work to have a copy of my personal phone bill.
    Buster Friendly
  • Why

    Why would you want to locate a business in CA? It is one of the most anti-competitive states in the union.
    Rann Xeroxx
    • Because it's a great place to live

      You only have one life. Why live in the desert, or plains, and deal with tornadoes, thunderstorms, high humidity, bitter cold, boring horizons, lack of culture . . . .

      California has a great climate, great geography, cultural diversity that means great restaurants, interesting theater, great Universities, mountains, valleys, shoreline. A talented work force.

      That's why you would locate a business here. Yes it is expensive -- because people want to live here. And yes we are currently in a drought (again).

      You can make a few more bucks if you set up shop in Texas, for example. But then, you'd be in Texas.

      Texas, where sensible regulation is ignored - so the operator of a grain elevator is only required to carry $1 million in liability insurance. When it blows up, the town and the rest of the state gets to pay.
      Wm. Brown
      • You've been living in the California cocoon for too long...

        California is losing population because it's very expensive to live in, and it's too liberal, and it's business climate is horrible.

        Texas is getting a lot of the businesses which are migrating from the liberal states, and so is Florida and other business-friendly states.

        You need to leave California once in a while, in order to smell the reality.
      • BTW, how quickly do you hit the ground when a tremor or earthquake strikes?

        And earthquake can be more deadly and a lot more damaging than a tornado or a hurricane.

        Where will you seek refuge when half of California gets dumped into the ocean after "the big one" strikes?
  • Company Phone

    If the employee needs a phone for company business the company should give him the phone to use. That should pretty much takes care of the legal payment complications. It's how my mid-sized Midwestern company does it.
    • Also

      BYOD is a pretty darn silly way to do business.
    • Choice

      Some employers give the employee the choice. Carry another device, or use your personal device and we'll cover part of the cost. It works well for both employer and employee.
      Wm. Brown
      • Works well...

        And then you start to question your personal usage on your own device. Buddy sends lewd pictures and jokes, wife/gf/mistress send you a sexy message.

        Employees really don't want their personal tech managed by work - thus the two phone model lives on and will for some time until the privacy issues can be resolved. This merely touches on the financial aspect of BYOD.
    • You have to carry two phones then

      That's the traditional way but it really is a pain to carry two phones around all the time. Since my phone is flat rate, I don't really care if they call me on it. It was a different story when it was 50 cents a minute.
      Buster Friendly
  • BYOD is done

    And just like that BYOD is dead.

    You can bet similar lawsuits will be filed in every state. So good for employees on this one but BYOD is going to lose ground to corporate liable as the rate is likely cheaper to provide a corporate phone as you get scale and wireless carrier incentives when you have thousands of lines of service. I know our rate is much cheaper than what a subsidy will be not to mention we have unlimited data still.

    If companies keep BYOD it will be with a flat rate, the whole thing was to save money so things like this fly in the face of that. With more people working from home you'll likely see similar lawsuits around broadband and other things used in home offices.

    Now the downside is more people are going to need to declare all this for tax purposes so it becomes a big mess. This is one of the reasons we never wanted BYOD as it's just a big freaking mess.
  • BYOD is not dead just evolving

    I have watched BYOD / MDM change drastically over the last 10 plus years, and this is nothing more than an evolution of the field.

    I think the flat rate reimbursement of 50% of the users cell phone plan is the way to go, with additional reimbursement for business calls that go outside the plan. The only reason some company's have a big mess with BYOD is because of poor planning on what and how to implement a good working BYOD system. I think the biggest problem is that there are too many BYOD players making false clams as to what they can do.

    I do have a question for a TAX person, if I get a reimbursement check for my cell phone bill is this considered taxable, since I have already paid a tax on it?

    Former BYOD sales and services engineer.
    • BYOD is not dead just evolving

      I read this article from Maas360 and it is a good road map to follow

      Ten Commandments of Bring Your Own Device (BYOD)

      Create Thy Policy Before Procuring Technology
      1. Create Thy Policy Before Procuring Technology
      ( create the plan design before building the house)
      2. Seek The Flocks’ Devices
      (know what your users have for device first)
      3. Enrollment Shall Be Simple
      (Good BYOD software makes this simple)
      4. Thou Shalt Configure Devices Over the Air
      ( Good BYOD software makes this simple also)
      5. Thy Users Demand Self-Service
      ( If your BYOD software does not have a top notch self service dump it)
      6. Hold Sacred Personal Information
      ( Just import as corporate information)
      7. Part the Seas of Corporate and Personal Data
      ( A secure container for corporate Data is a must )
      8. Monitor Thy Flock—Herd Automatically
      ( Another no brainer for a good BYOD package )
      9. Manage Thy Data Usage
      ( again the right BYOD package should do a great job of this or else dump it)
      10. Drink from the Fountain of ROI
      ( The right BYOD Policy and software package can produce a healthy ROI and the lack of a corporate policy or wrong BYOD software will produce no worthwhile ROI and angry customer (users) )