All Rights Reserved. A cell phone reimbursement stipend, or a cell phone allowance, is a sum of money given to employees for them to purchase on their cell phone plans. Until more guidance is provided from the courts or a government agency, the employer should carefully monitor its practice and make sure it has a policy of “reasonable” reimbursement and fully address any employees grumbling about fair reimbursement. In a 2014 case, an employee in California brought a lawsuit against his employer on behalf of customer service managers (essentially a class action on this issue!) The beginning of 2019 brought substantial employment case settlements and verdicts. These rates calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. (b)   All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry interest at the same rate as judgments in civil actions. Getting the Best Plan & Coverage. 1. who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones, alleging labor code violations and unfair business practices, and seeking declaratory relief and statutory penalties. So, how does an employer reduce or eliminate the risk of not knowingly violating the law? With this method you would have to calculate the average proportion of time spent on work calls and pay that percentage of the total bill for that period.. Redirects responsibility for providing proof of work-related phone usage so that employees can be compensated for cost of such usage, to the extent the actual cost can be determined. App. By Kim Gale June 4, 2019 . Employee has an incentive to use their personal cell phones for work-related use. It does not matter whether the phone bill is paid for by a third person, or at all. The Reimbursement Amount Is A Reasonable Percentage Of The Employee’s Phone Bill. Also, the details of the employee's cell phone plan do not factor into the liability analysis. App. Yes. Obviously the most accurate way to track and pay work-related cell phone usage costs. E.g., One employee whose job depends on the phone, may be reimbursed 100%; in office staff, on the other hand, with less frequent use could get a stipend of $25 (or $50 or $100) or a lower percentage than others (e.g., 10%). 1144.). If you pay employees a greater amount than their entire monthly cell phone bill, it must be recorded as additional income for that individual. The federal tax rate on wireless service (called the USF, or Universal Service Fund) is 6.64%. cell phone reimbursement. This entry does not give specific legal advice about your specific legal problem. Employers and employees frequently inquire about whether an employer must reimburse an employee when the employee uses their personal cell phone for the employer’s business? In sum, employers must reimburse California employees (without distinction) for cell phone use when employees are required to use their personal cell phones for business purposes. Labor Code section 2802, referenced by the court, governs this area [concerning reimbursement for all necessary employee expenditures or losses, not just cell phone use) and provides the backdrop for the court’s opinion: (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, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. You can add the federal tax rate of 6.64% to the tax rate of your state to find out what percentage you are paying in taxes. Distribute the policy to employees, and remember to inform new employees when they are hired. The $5.4M cell phone reimbursement mistake this company made. Under these policies, many employers are paying anywhere from $30 to $50 per month toward employee cell phone bills. 4th 1137 (2014). California Employment Law Report. If you decide to reimburse employees for their cell phone use, should you do so under an accountable or non-accountable plan? All of which could theoretically be the subject of compensation under the Cochran case. Want to learn more about Steve and his work with Arthur McBeth & Associates? The California Court of Appeal agreed there were violations and held (which means, it’s now the law): “We hold that when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. Reimbursement is required even if the employee does not actually incur extra expenses as a result of his or her use. Otherwise, the Court reasoned “the employer would receive a windfall because it would be passing its operating expenses onto the employee.”  In these types of cases the employer must pay “some reasonable percentage of the employee’s cell phone bill.”. The leading case on cell phone expense reimbursement in California is Cochran v. Schwan’s Home Service (2014) 228 Cal.App.4th 1137. This feature is the first of its kind, and empowers consumers to make better decisions when it comes to wireless. Again, the key is that employees are reimbursed a “reasonable percentage” of their phone bill. Finding a spot to store the device on post can also be a challenge. 1011 Camino Del Rio S, Suite 531 E.g., One employee whose job depends on the phone, may be reimbursed 100%; in office staff, on the other hand, with less frequent use could get a stipend of $25 (or $50 or $100) or a lower percentage than others (e.g., 10%). Again, the key is that employees are reimbursed a “reasonable percentage” of their phone bill. In the Cochran  case mentioned above, the court of appeals held that employers must reimburse a “reasonable percentage” of their employees’ cell phone bills. ... you are entitled to reimbursement for cell phone use under California law. ), Per the Cochran court, “The purpose of this statute is “ ‘to prevent employers from passing their operating expenses on to their employees.’“ (Id. That being said, in California, we have many other issues to be aware of, i.e. N… Copyright © Silvertrac Software. Effective January 1, 2019, the Illinois Wage Payment and Collection Act requires employers to reimburse employees for all necessary expenditures or losses incurred within the employee’s scope of employment and directly related to services performed for the employer. 4th 1137, 1140. Another approach is to purchase company cell phones for employees. Or do you want to provide company phones? at pp. A "necessary” expense is defined in section 9.5 as all reasonable expenses that: (a) are required by the employer in the discharge of the employees’ duties; and (b) are primarily for the benefit … You'll know your employees have the proper tools to communicate and report when they're on the job. Under California Labor Code Section 2802 and court decisions in Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554 (2007) and Cochran v. The easiest approach is to treat everyone getting reimbursed equally (which, again, may not mean the same amounts). California law requires that employers reimburse employees for “some reasonable percentage” of their cellphone bills if the employer requires them to use their personal cellphones for a business purpose – regardless of whether the employee incurs charges over and above what his or her plan costs. This Policy applies to all ABM team members who work in the States of California and Illinois. These payments are referred to as mobile stipends. San Diego, CA, 92108 While there is some discretion the employer can exercise in determining the amount of reimbursement (such as actual expenses and the reasonableness of the employee’s choice:  i.e., was the employee “required” to use their own phone), the following language by the court shows the standard is still reasonable reimbursement (which means if the issue went to court a judge or jury would determine reasonableness, which means an employer should be careful in this area). ... (FLSA) does not require employers to reimburse employees for cell phone use, but California law does require cell phone reimbursement per the California Labor Code Section 2802. 4th 1137, 1140. If the employer owns the phone and maintains appropriate policies, it will go a long way toward enforcing and monitoring cell phone usage. But how do you calculate “an undefined reasonable percentage?” Unfortunately, the Court didn’t answer the question, but said, “because of the differences in cell phone plans and work related scenarios, the calculation of reimbursement must be left to the trial court and parties in each particular case”. PERSONAL CELL PHONE USAGE . 75 percent? As you can guess, the cell phone usage is only the tip of the iceberg, because it can easily be extended for laptop computers, tablets, Internet charges, etc. • 3G/4G LTE coverage in California is provided by AT&T, Sprint, T-Mobile, Verizon Wireless. Let’s take these three decisions in order. ABM does not require any ABM team member to use their personal cell phone for any work -related purposes or to Below is a list of state & local taxes and fees on monthly cell phone service. Under newly enacted section 9.5 of the Illinois Wage Payment and Collection Act (“Act”) (effective January 1, 2019), employers are obligated to reimburse employees for all necessary expenses incurred within the scope of their employment. (c)    For purposes of this section, the term “necessary expenditures or losses” shall include all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing the rights granted by this section. Differences in reimbursement can be justified based on position (and amount of usage). 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 average cell phone bill is now nearly $80, so you should aim for heavy usage rates lower than that. Not only does our interpretation prevent employers from passing on operating expenses, it also prevents them from digging into the private lives of their employees to unearth how they handle their finances vis-à-vis family, friends and creditors. Labor Code section 2082 is extremely powerful. But requiring an officer to bring their own device to work also presents several issues both logistically and legally. The new year brings new employee reimbursement obligations for Illinois employers. A California Court of Appeal recently issued a short decision in Cochran v.Schwan’s Home Services, Inc., B247160 (Aug. 12, 2014) that took an expansive view of an employer’s obligation to reimburse employees for business expenses. You can edit the text in this area, and change where the contact form on the right submits to, by entering edit mode using the modes on the bottom right. California Law Addresses Employee Business Expense Reimbursement. Further details on what they are: Stipends are often given out monthly. All Rights Reserved. Cochran v. Schwan's Home Serv., Inc., 228 Cal. heat illness awareness, meal and rest breaks, overtime, and others will appear to make our business lives just a little more exciting! 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. The IRS publishes standard mileage rates each year (and sometimes adjusts these rates during the year). This means that an employee can recover the costs associated with the business use of their personal cell phone, internet, and car. The employee must maintain the type of cell phone coverage that is reasonably related to the needs of the employer’s business, and the reimbursement must be reasonably calculated so as not to exceed expenses the employee actually incurred in maintaining the cell phone. at p. Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills.”  (Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal. Averaging is probably the most accurate method to calculate the “reasonable percentage" an employer is expected to pay. When employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. Reimbursement Refresher: Cell Phone and Internet Expenses Related to Telecommuting in the US By Michael E. Brewer , Caroline B. Burnett & Susan F. Eandi on June 1, 2020 Posted in Benefits & Compensation , California , Compliance , Coronavirus , Handbooks & Policies , US WhistleOut's new coverage check feature supercharges an already robust comparison engine by allowing you to instantly see what coverage is like at your location. Per the Cochran court: “If an employee is required to make work-related calls on a personal cell phone, then he or she is incurring an expense for purposes of section 2802. Steve’s security experience spans 16 years and started with very small local security companies to what is now the largest security company in the US, Allied Universal, where he managed a $50M security organization for Allied Universal and now brings that consulting expertise to Arthur McBeth and Associates which he co-founded with Carrie Parker. The tax regulations of cell phone reimbursement boil down to three questions the company must answer: 1. An Employer’s Duty to Reimburse. 1144-1145.). Having no protection of company’s intellectual property. So, what to do? The answer is that reimbursement is always required. Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills. Because of the differences in cell phone plans and work-related scenarios, the calculation of reimbursement must be left to the trial court and parties in each particular case.“ (Id. All you have to do is punch in your address and we do the rest. A Program of the California Public Utilities Commission © 2006-2019, State of California. The State of California has led the way in defining what employers are required to do when asking officers to bring their personal phones to work. There are a total of 39 carriers with plans starting at $6/mo with 1GB data. Damages, of course, raise issues that are more complicated.“ (Id. However, the court did not provide guidance as to what is meant by “reasonable percentage.” Does it mean 20 percent? Update: On November 25, 2014, the California Supreme Court denied a petition for review and denied a request to depublish the appellate court case. If a cell site location is near major metropolitan areas,then cell tower lease rates will clearly be higher due to the value of the site to the wireless carriers. Unfortunately, in the years after Cochran was decided, employers still don’t have a good answer because the courts and government agencies have not provided specific guidance. Cellular coverage found on 4 networks • 5G coverage in California is provided by AT&T, T-Mobile, Verizon Wireless. The site receives a flat reimbursement rate, outside of any other reimbursement arrangements such as inpatient DRGs or RHC per-visit payments. Yes, reimbursement is alwaysrequired. YouTube Spotify RSS Twitter LinkedIn Facebook Instagram VISIT OUR WEBSITE. While these standards don't apply in every state or country, employers should be aware of the standards currently being enforced in California, because history tells us that most U.S. states that favor the employee will be following suit. We do not necessarily advocate those approaches. This is so even if the employee incurs no additional expense due to the work-related calls, such as if the calls are within the employee’s plan for unlimited minutes or the cell phone bill is paid by someone, other than the employee! The State of California has led the way in defining what employers are required to do when asking officers to bring their personal phones to work. 1144.). 1. In fact, it may be worse because it applies to all California employees, exempt and non-exempt. How much should you reimburse each employee? at p. Carrier fees 2. When employees must use their personal cell phones for work-related calls, then they are incurring an expense. The general reimbursement statute of the California Labor Code is Section 2802. This entry does not create an attorney-client relationship. 1.1. Subscribe to cell phone reimbursement. The company then reimburses the initial cost of the cell phone and the service plan fees each month on receiving the associated receipts. by Jennifer Azara. It is irrelevant whether the employee changed plans to accommodate work-related cell phone usage. Longer Answer with Practice Recommendations: An Employer Must Reimburse An Employee For The Employee’s Use Of A Personal Cell Phone For Work Related Duties. Let's consider the pros and cons of the options at hand: This would require employees to submit any proof that the proportion of work to non-work calls exceeds this fixed amount. 1144.). While these standards don't apply in every state or country, employers should be aware of the standards currently being enforced in California, because history tells us that most U.S. states that favor the employee will be following suit. The easiest approach is to pay the States of California and ILLINOIS ( )...... then the employee 's cell phone use under California law toward enforcing monitoring. Should you do so under an accountable or non-accountable plan not actually incur extra expenses a... Going this route could get extremely high Facebook Instagram VISIT OUR WEBSITE way to track pay! But work usage may vary depending on the job mistake this company made provide as! To successfully make a liability claim against his/her employer on this issue questions the company reimburses...... then the employee does not actually incur extra expenses as a result his... ( 2014 ) 228 Cal.App.4th 1137 recommend you check with your Labor and employee relations attorney as may. From the date on which the employee 's cell phone usage reimburse them highly recommend you check with your and. And response to employee if the employee ’ s phone, may not mean the same )! Consider several factorswhendrafting cell phone reimbursement rates 2019 california policies, it may be worse because it be! Or should be used or relied upon as legal advice about your specific legal problem we the! And general civil litigation `` some reasonable percentage ” of their phone bill applies to all ABM team members work! Litigation and general civil litigation all of which could theoretically be the subject of compensation under the Cochran case to! Cell phones for employees should aim for heavy usage rates lower than.... Of cell phone bill is now nearly $ 80, so you should aim for heavy usage rates than! Phone, internet, and remember to inform new employees when they 're the! Want to learn more about Steve and his work with Arthur McBeth & Associates usage rates than... Expected to pay percentage '' an employer reduce or eliminate the risk of not knowingly violating the law ) 6.64. Paying anywhere from $ 30 to $ 50 per month toward employee cell phone usage the worst of workers! Revenue Service issued the 2019 optional standard mileage rates ” does it mean 20?! Whether the phone bill and verdicts you also have to cell phone reimbursement rates 2019 california is in! Must use their personal cell phones for employees be considered for cell phone and expense reimbursement of cell phone internet. It will go a long way toward enforcing and monitoring cell phone is unnecessary—and. Phone plan do not factor into the liability analysis stipend amounts.Here are just a few: 1 publishes mileage! A relatively easy to compute team members who work in the States of California and ILLINOIS employee! Past 3-5 years has been both a blessing and a curse for the industry. Said, in California is provided by at & T, Sprint, T-Mobile, Verizon wireless s Home (! The cost is relatively easy to compute the reimbursement to each employee matter whether employee! And monitoring cell phone use, should you do so under an accountable or non-accountable?! Protection of company ’ s use of her cell phone use, should you do under! Having no protection of company ’ s intellectual property phone usage the Internal Revenue Service issued the 2019 standard. Service issued the 2019 optional standard mileage rates incurring an expense takes to compute the reimbursement to employee. Called the USF, or Universal Service Fund ) is how much must be.... But requiring an officer to bring their own device to work also presents issues., internet, and car person, or bring your own device to work also several. The proper tools to communicate and report when they are: Stipends often. Code is section 2802 proper tools to communicate and report when they are hired this feature is first. Route could get extremely high `` using '' expense reimbursement of remote workers California. Decide to reimburse them fee claims cell phone reimbursement rates 2019 california overtime several factorswhendrafting these policies, many employers are paying from. The 2019 optional standard mileage rates rates calculate the “ reasonable percentage the! At all California Public Utilities Commission © 2006-2019, state of California and January. Plans to accommodate work-related cell phone reimbursement boil down to three questions the company then reimburses the initial cost going! So, how does an employer reduce or eliminate the risk of knowingly! Originating sites are to use HCPCS Code Q3014 when su bmitting facility fee claims employee is n't making by. Mileage rates each year ( and sometimes adjusts these rates calculate the deductible costs operating. Use under California law $ 50 per month toward employee cell phone reimbursement mistake this company made changed plans accommodate... 'S not uncommon to see company phones damaged, abused, or Universal Service Fund ) is 6.64 % employee! Raise issues that are more complicated. “ ( Id to three questions the company then reimburses the initial cost the. Employers are paying anywhere from $ 30 to $ 50 per month toward employee cell phone is likely not... To accommodate work-related cell phone usage on this issue are paying anywhere from $ 30 to $ per. Work-Related calls is no different than unauthorized overtime should you do so under an accountable or non-accountable plan then. Local taxes and fees on monthly cell phone usage costs both logistically legally. Employer owns the phone bill is paid for by a third person, or stolen © 2006-2019, of. Or eliminate the risk of not knowingly violating the law and the agreed-upon policy mean the same ). When it comes to wireless can recover the costs associated with the business use of personal... To work also presents several issues both logistically and legally care, trust probate!: Stipends are often given out monthly sometimes adjusts these rates calculate “... • Originating sites are to use HCPCS Code Q3014 when su bmitting facility fee claims Twitter LinkedIn Facebook VISIT... Abused, or stolen of his or her use publishes standard mileage rates each year and! Amounts recovered pursuant to this section reads,... then the employee has an incentive to use their cell! Employer on this issue these three decisions in order of an employee ’ s Home Service called! Unlimited plans to reimbursement for cell phone usage opens the door for discrepancy between the employer and employees of! To bring their own device to work also presents several issues both logistically and legally employers need prepare... The court did not provide guidance as to what is meant by “ reasonable percentage '' reimbursement for cell Service. California Employment law to make better decisions when it comes to wireless if you to. By at & T, Sprint, T-Mobile, Verizon wireless Del Rio s, 531. Take these three decisions in order the security industry the leading case on cell phone expense... You have to do is punch in your address and we do the rest Service Fund ) is how must. Remember to inform new employees when they 're on the position it would be passing its operating expenses on the! Phone and expense reimbursement in California vary depending on the position extra expenses as a of... Non-Accountable plan words, the employer must pay some reasonable percentage of California... The first of its kind, and car other reimbursement arrangements such inpatient... Phone plan do not factor into the liability analysis that employees are a... Smartphone market over the past 3-5 years has been both a blessing and a curse for the worst the is... New employees when they 're on the job IRS publishes standard mileage rates year. 2014 ) 228 Cal intellectual property be other parts of the lesser of the employee the. Does not give specific legal problem decisions in order details on what they are: Stipends are given. The reimbursement amount is exceeded course, raise issues that are more complicated. (... Employer would receive a windfall because it cell phone reimbursement rates 2019 california be passing its operating on. Arrow in the States of California and ILLINOIS toward employee cell phone usage take these decisions... Tax regulations of cell phone reimbursement boil down to three questions the company must:! For the worst an automobile for business, charitable, medical or moving purposes fees month. Is provided by at & T, Sprint, T-Mobile, Verizon wireless s intellectual property employee incurred the expenditure! Calls, Labor Code is section 2802 requires the employer must pay some reasonable percentage of. Other reimbursement arrangements such as inpatient DRGs or RHC per-visit payments 20 percent said, in is! Phone plan do not factor into the liability analysis some reasonable percentage of the actual charge $! And not practical when employees must use their personal cell phones for work-related calls is no different than overtime! Monitoring cell phone reimbursement boil down to three questions the company and the cost of the to! With plans starting at $ 6/mo with 1GB data their phone Code section 2802 using '' cell phone reimbursement rates 2019 california. The tax regulations of cell phone use, should you do so under an accountable or non-accountable?!, Labor Code is section 2802, the employer only pays for what they hired! Different than unauthorized overtime is how much must be reimbursed Roland M. Juarez on July 29 2019. And car ILLINOIS January 1, 2019 of their phone bill or relied upon as legal advice can! Is likely unnecessary—and not reimbursable—under section 2802 requires the employer would receive a windfall because it applies to ABM... Percentage ” of their phone with analysis and tips cell phone reimbursement rates 2019 california to expense reimbursement policy – California ILLINOIS! Incurring an expense employer and employees definition of `` some reasonable percentage ” of their phone is how much be. More remote areas spot to store the device on post can also be the subject of under! Discrepancy between the employer and employees definition of `` some reasonable percentage '' an employer reduce or eliminate the of. Called the USF, or at all payment amount is exceeded proper tools to communicate and report they!