California Court Accepts Claims from Employees for Business Use of Personal Cell Phones

September 8, 2014

Bring Your Own DeviceIn recent weeks, a California court accepted a claim made by a group of employees that their employer should be required to compensate them for business use of their personal cell phones.  Presently, many businesses require or permit employees to use their personal mobile devices for work activities.  This California case suggests that employers involved in this type of arrangement may be held legally responsible for business costs associated with employee use of personal communications devices.

Many businesses use a strategy often referred to as, “bring your own device” (BYOD), for computer and communications operations. Under the BYOD approach, employers permit, and sometimes require, employees to use their personal information and communications devices, such as smartphones and computers, for business purposes.  In many instances, the BYOD system is used instead of employer-provided communications and computing equipment or as a supplement to such equipment.

In the case, Cochran v. Schwan’s Home Service, the California court of appeal was asked to consider the issue of employer compensation to employees for business use of personal cell phones.  Reversing the lower court, the California court of appeal certified the Cochran case as a class action suit and concluded that California labor law requires employers in the BYOD environment to compensate employees for at least a portion of their personal mobile service costs.

California labor law requires employers to compensate their employees for necessary expenses incurred as the employees perform their work duties.  Reimbursement to employees for those necessary expenses must be set at a reasonable level.  The California court indicated that cell phone expenses may be included as necessary expenses incurred by employees for the benefit of their employers and that reasonable reimbursement for those expenses is required.

As a result of this case, employers operating in California must now be prepared to cover at least part of the costs to employees associated with mobile device use for business purposes.  In this environment, some employers may opt to require use of employer-provided information and communications devices, instead of using the BYOD approach.  Other employers may require employees to report their cell phones use for business purposes and reimburse those expenses directly to the employee.  When service plans used by employees apply set fees instead of usage-based rates, employers may reimburse employees for a specific percentage of the flat service fee provided that the pre-set percentage can be justified as a reasonable sharing of the costs.

At present, California is reportedly the only state to have ruled specifically on this issue.  It is likely, however, that the California action will encourage employees in other states to attempt to obtain reimbursement from their employers for at least a portion of the costs they incur for business use of their personal devices in the BYOD environment.

Professionals in the field of business information and communications technologies have long cautioned that the BYOD approach has serious flaws.  One of the most commonly referenced of those flaws is the significant challenge the BYOD environment poses for computer and data security.  The Cochran case indicates that an additional challenge posed by BYOD is effective management of business operating costs.

It is now difficult to separate personal and business activities involving communications and computing devices.  Individuals routinely blend their personal and business activities involving smartphones, tablet computers, and other equipment.  Both employees and employers can benefit from at least limited use of the BYOD strategies, however, effective management of those strategies is a major challenge.