Wait, Who Pays for BYOD to Work?

By Robyn McKibbin, Esq.

A California Court of Appeal recently ruled that when an employee “must” use their personal cell phones for work-related calls, the employer is responsible for reimbursing the employee a “reasonable percentage” of his/her cell phone bill — regardless of whether the employee or a third party ultimately pays the bill.

In Cochran v. Schwan’s Home Service, Inc., customer service managers filed a putative class action seeking reimbursement for work-related use of their cell phones. Labor Code Section 2802 requires employers to indemnify employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge or his or her duties, or of his or her obedience to the directions of the employer.” The statute’s purpose is to “prevent employers from passing their operating expenses on to their employees.” In addition to avoiding a “windfall” for employers, the Cochran Court’s interpretation prevents the employer from “digging into the private lives of their employees to unearth how they handle their finances vis-à-vis family, friends and creditors.”

This decision impacts other employment practices such as the “costs” for allowing employees to work from home. Under the same rationale, employers must pay a reasonable portion of the employees’ internet access and personal computer equipment when used for business purposes.

Unfortunately, the ruling did not provide guidance on what constitutes a “reasonable percentage.” Because various cell phone plans differ, and each work-related scenario must also differ, the “reasonable percentage” reimbursement must be determined on a case-by-case basis. Two conservative approaches include eliminating the company’s BYOD policy and providing cell phones for employees, or paying employees’ entire cell phone and Internet bill. A more moderate approach is to pay a significant portion of the employees’ bills. The greater the percentage is, the less likely a judge or jury will find it unreasonable. Another option is to have employees submit their monthly bills and allocate which portion is work-related vs. personal calls. This approach, however, greatly increases the employer’s administrative costs.

Moreover, employers must decide whether to reimburse current and former employees for past expenses or whether employers should modify their practices moving forward.