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Business Expenses - Personal Cell Phones and Home Computers

Posted by Jon A. Dieringer | Apr 08, 2020 | 0 Comments

Rrrring.  Just another sales call to your salesman's personal cell phone.  But wait, that cell phone your salesman used for work-related calls requires reimbursement to the worker.  

Tap-tap-tap-click. Your Work-at-Home worker just logged in on his home computer to start work. But wait, your worker's home computer and printer/scanner, including internet access, requires reimbursement, too.

When a California worker is required to use his personal devices like these for work-related activities, then he/she is entitled to reimbursement for those costs.   

Labor Code section 2802 requires employers to pay its workers for all necessary costs they incur in direct consequence of the discharge of their duties, or for costs associated with following the employer's directions. The reason for this rule is to prevent employers from passing their business operating expenses on to employees, and this includes work-related devices and connection costs.     

May an employer avoid this reimbursement?  - NO!   For example, a few years ago the court ruled that reimbursement to an employee for his business use of a personal cell phone “is always required.” *

There is no exception.  As for cell phones, to show liability for this expense, an employee only needs to show that he was required to use a personal cell phone to make work related calls, and that he was not reimbursed.   “Always” means always!, as the court addressed in a few scenarios:

1.        What if the cell phone bill is paid by a friend or family member, or is on a combined plan?  YES, even under this circumstance the employer must pay for the work-related use of the cell phone.   Employers cannot go “digging into the private lives of their workers to unearth how they handle their finances vis-à-vis family, friends and creditors.”

2.       What if the cell phone plan does not charge for calls, like unlimited calling plans?   YES, the employer must still pay the employee for the work-related use of his personal cell phone. 

3.       What if there is no additional cost for the work-related calls?   YES, the employer must still pay some amount for the use of the worker's personal cell phone. 

How much should the employer pay a worker for the business use of personal devices?   It depends.  In this case, the court was not very helpful by explaining, “the employer must pay some reasonable percentage of the employee's cell phone bill.”    Since many cell and internet connection plans and work scenarios differ, the calculation is left to the parties in each particular case – unless your worker sues you, then the courts may decide the expense reimbursement rate, along with the attorney fees and litigation costs – OUCH!  

What is the correct reimbursement to pay your worker, or what is “necessary” or “reasonable,” are questions that lawyers fight about in court every day.   A worker's Cadillac device plan may be too expensive and not ‘necessary', but an employer's offer to pay on a cheaper plan may be too little and unreasonable.   Between these extremes lies varying shades of grey and legal uncertainty. 

So, you may wonder:   “How can a good and careful business like mine avoid ugly litigation over an employee's cell or internet bill?”  

There is no substitute for sound preventative legal advice based on a review of your employment practices by a good attorney.   An expense reimbursement policy should take into account business use of personal devices, among other policy requirements like. “hands-free” use of cell phones while driving or proper use of personal devices while on company time (like no-gaming or no ‘sexting' policies). And don't forget to balance these policies against privacy issues (like employee personal communications, etc.). 

A few possible options to address payment of business expenses include one or a few of the following:

  • Provide business cells and computers, with access, with those bills paid by the company  

  • Reimburse a “per-minute” device use cost for employees' use of personal devices.  

  • Pay the actual costs for the devices and connections.   

  • Pay your employee a flat “lump-sum” for work-related devices, like a fixed allowance.  

  • Reimburse a pro-rata share of the employee's device and connection bills.  

  • Punt?  Let the worker suggest a reimbursement formula.     

  • Other methods?   Of course!  Other calculating methods for fair expense reimbursement may be “left to the parties in each particular case.”

Careful review by an attorney would be helpful in developing sound preventative policies to avoid unnecessary litigation. Also, consider a policy to address disputes on these issues to avoid costly litigation. Generally, doing the right and lawful thing by your employees avoids problems and litigation. 

Make sure you stay updated on the latest news and legal alerts on our Resources section here.

About the Author

Jon A. Dieringer

Jon believes in keeping a strong focus on preventive law; developing policies and practices to avoid costly disputes, and litigating only when required. Since the beginning of his law career in 1992, Jon has successfully litigated cases from intake through appeals, including discovery and deposit.

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