Do employers have to reimburse cell phone use in California?

What does Labor Code section 2802 require?

It requires an employer to indemnify employees for all necessary expenditures or losses they incur in direct consequence of doing their job or following the employer's directions (Labor Code 2802(a)). The California Supreme Court described its purpose as preventing employers from passing their operating expenses on to employees (Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554).

Interest

An award for unreimbursed expenses carries interest at the civil judgment rate from the date the employee incurred the expense (2802(b)).

All reasonable costs

Necessary expenditures include all reasonable costs, including attorney's fees the employee incurs to enforce the section (2802(c)).

Citations

The Labor Commissioner may cite an employer that fails to reimburse, and amounts recovered go to the employee (2802(d)).

No waiver

Under Labor Code 2804, an agreement to waive 2802 is void. Gattuso applied this to agreed rates and lump sums: agreeing to an amount does not stop the employee from challenging whether it covers the real cost.

What did Cochran v. Schwan's decide about cell phones?

It held that when employees must use personal cell phones for work-related calls, section 2802 requires the employer to reimburse them, and that whether the plan has unlimited or limited minutes, the reimbursement owed is a reasonable percentage of the bill (Cochran v. Schwan's Home Service, Inc. (2014) 228 Cal.App.4th 1137). The court said reimbursement is always required, or the employer would get a windfall by passing an operating expense to the employee.

• No extra cost needed. The employee does not have to show the job added anything to the bill or that they changed plans because of work.
• Who pays the bill does not matter. It made no difference whether a family member, a friend or nobody at all paid it.
• What liability takes. An employee need only show they were required to use a personal phone for work calls and were not reimbursed. Damages, the court said, are more complicated.
• No formula. Because plans and work uses differ, the court left the calculation to the trial court and the parties in each case.

When is a personal phone required for work?

When the job cannot be done as instructed without it, whether or not a written policy says so. Cochran turned on employees who "must use" their phones for work calls. On a construction crew, these are the usual signs that a phone has become a job requirement:

• The only way to clock in or out is an app on the worker's own phone.
• The foreman sends next-day assignments by text and expects an answer.
• Daily photo reports, delivery tickets or safety forms must be submitted from the field.
• The office calls workers' personal numbers for dispatch during the shift.
• Workers are told to use navigation on their phone to reach the next jobsite.

Do not rely on the hand tool exception. Wage Order 16 section 8(B) requires employers to provide tools and equipment the job requires, but lets employees earning at least twice the minimum wage supply hand tools customarily required by the craft, in conformity with section 2802 (Wage Order 16). A phone is not a hand tool in the ordinary sense of that rule.

What counts as a reasonable percentage of the bill?

A share that matches how much of the phone's use the job actually requires. No statute or appellate case sets a number. Gattuso adds one limit in the employer's favor: in deciding what is owed, an employer may consider whether each expense was necessary, which depends on the reasonableness of the employee's choices. A premium plan the worker chose for personal reasons does not make the whole bill a work expense.

Gattuso also described three lawful ways to reimburse, and the same logic carries over to phones:

If you fold reimbursement into higher wages instead of paying it separately, Gattuso says you need a way to identify the reimbursement portion, must tell employees how it is apportioned, and should consider itemizing it on wage statements. Most contractors find a separate line simpler.

Worked example: checking a $10 stipend against real bills

A drywall contractor requires its 30 field workers to clock in on a phone app, take daily photos and answer the foreman's texts. It pays a $10 monthly stipend. To test it, the office asks two workers to estimate their work share from one sample month, then compares. The work shares below are illustrative assumptions, not legal standards.

If a third of the crew looks like Worker 1, the gap is 10 workers x $33.00 = $330.00 a year before interest and any attorney's fees. Small money, but it is owed, and a flat amount that is short for some workers is exactly what Gattuso says the employer must make up. The fix is either a higher stipend, a bill-based option for workers who are short, or removing the phone requirement. To price the whole program, use the phone stipend calculator.

What are an employer's options?

Reimburse properly, provide the device, or stop requiring a personal phone. Each is lawful when done well.

What should a written phone reimbursement policy say?

• Which work uses are required: clocking in, calls, texts, photos, navigation.
• How reimbursement is calculated and how the amount was set.
• That a worker whose real cost is higher can submit a bill and be paid the difference.
• How and when reimbursement is paid, shown as its own line on the wage statement.
• That no agreement to a stipend waives the right to full reimbursement (Labor Code 2804).
• What happens to company apps and data when someone leaves.
• A review date, since plans and work uses change.

How ZeroBadge handles this

ZeroBadge takes the worker's phone out of timekeeping. Each worker wears a company-issued badge with its own cellular connection; it never uses the worker's phone, data plan or the site's Wi-Fi password, and no app or login is required of the worker. Power on starts the shift and power off ends it.

That removes timekeeping from the list of required phone uses. It does not settle reimbursement for other required uses such as dispatch calls or photo reports, which your policy still has to cover.