Editor's Note
Phone Reimbursements Are Tricky
When employees are required to use their personal phones for work, some states require that the employer reimburse them for at least a portion of the cost of their phone and service plan. The fundamental policy is that employees are not responsible for paying employer's operating expenses.
In creating a reimbursement policy relating to personal devices, it's difficult to figure out what the reimbursement amount actually is because that's not how the services are billed. So employers often just give everyone a set amount to cover phone and any other expenses from working at home like additional utilities and a portion of their internet, all of which will vary by employee and location because the rates are different.
This post by Littler does a great job of explaining approaches to stipends and reimbursement requests.
The other thing to keep in mind is privacy and access issues. Generally, when employees are using employer equipment, networks, or internet, the employer has the right to monitor the employee and view anything the employee does. My house; my rules. But what happens when it's the employee's house, literally. When the lines of ownership and control are clear, so is the law.
But hybrid device use blurs those lines because the same device is used for both personal and work related functions. A court would generally look at what those functions are and try to determine where the lines are, but this is the last thing anyone wants because 1) it's incredibly time consuming and expensive; and 2) it won't solve the problem since every case is a little different.
That's why stipends make sense.
But it's also important to consider when and under what circumstances employers can access employees' personal devices and whether the employer paying for a portion of the use makes a difference. Most employers are fine not having access to employee devices when the work use is purely administrative like clocking in or out. But when employees use the device for substantive communications, the employer should be able to access those communications.
The reasons are both legal and practical. Employers need to have a complete record of what happens inside the organization so that work can get done, especially when someone is in an accident and will suddenly be out for months or someone quits on short notice. Employers also need to be able to access internal communications for investigations. (Although, the attorneys wish they didn't have to read all those sexts and see the attached pics.)
Some employers address privacy and access issues with a policy that says even though the employer is paying for part of the phone or phone plan, it is the employee's device and account and generally not accessible by the employer. However, if there is a claim or investigation that requires information or communications related to the device, the employee agrees to allow the employer to inspect and copy the information needed. (Do not use this language because I was writing for understandability rather than precision here and there are lots of considerations about the logistics of how this works, who does the looking, and what data the employer can see and copy.)
If you're struggling to sort out employee phone and other reimbursement requests, make sure you consider more than the cost. Talk to your friendly employment lawyer about privacy and access issues when there might be important company information on an employee's device.
- Heather Bussing
Dear Littler,
Our company has a few employees who work hybrid positions and some who are fully remote in California. We put in place a remote work stipend a few months ago (covering internet, utilities, and other home office expenses) and that seems to be going well. These employees do sometimes use their personal devices to check their work schedules and to clock in and out at the start and end of their workday. Our company also just started using a new security method that requires employees provide more than one form of identification to log into their work email accounts. Generally, our employees seem content with their hybrid/remote roles, but we have noticed an increase in reimbursement requests for cellphone data plans and some of these requests seem excessive. Is there something we can do to limit these requests? Can we say “no” to paying them?
—Dazed and Confused by Reimbursement Requests
Dear Dazed and Confused,
Great questions! Here are key issues to consider when making decisions about expense reimbursements:
First, you are not alone. Expense reimbursement requests have increased in the age of remote work, especially as employees learn of friends and family members who receive cell phone stipends.
Second, although expense reimbursement law varies from state to state, generally, in California employers are required to pay for “necessary” and “reasonable” expenses. What is a “necessary” and “reasonable” expense, you ask? While that is an individualized inquiry, here are some pointers that may help you determine whether your employees’ use of their cell phone for work is a necessary expense:
- For California employees, Labor Code section 2802 has been interpreted to require that employers reimburse an employee for the reasonable expense of the required use of a personal cell phone even if the employee does not incur any additional expense beyond what they normally would incur for the use of their phone. The legislative purpose behind Section 2802 is to prevent employers from passing their operating costs on to their employees. Illinois law is based on California law and takes a similar approach. Make sure to check other state laws if your business operates in any other jurisdictions.
- If employees are required to use multi-factor authentication (MFA) to log into their email accounts and the employer is not providing a company device to complete the MFA process, the expense is likely to be deemed “necessary.”
- Similarly, if employees use their personal devices to clock in and out at the start and end of their workday via a timekeeping application they download on their personal cell phone, and the employer does not offer any other way for employees to clock in and out, the expense is likely to be deemed necessary. However, if there is a timeclock available to the employee (for example, on their laptop) the use of the personal device to clock in and out is not required, and the expense is less likely to be deemed “necessary.”
- Unfortunately, just what is “reasonable” and how it must be calculated has not yet been expressly defined in California. Labor Code section 2802 requires that employers pay a “reasonable percentage” of an employee’s cell phone bill if the employee uses their phone for work reasons even if such use does not result in any additional expense to the employee. The key is to conduct a reasonable inquiry and have a sound basis to claim that the amount of reimbursement will appropriately reimburse the employee for the use of their personal cell phone for business purposes. Generally, this means determining the cost of a standard cell phone plan in the location where the employee works/lives and estimating what portion of the plan cost can reasonably be attributed to business use. If the phone is used for MFA only, the reimbursement may be quite low—$3 or $4/month—depending on how often MFA is required and how long it takes.
Third, it is a recommended practice to put in place a policy with a stipend for employees who use their phones for work purposes. The policy can outline the terms of the phone usage and the amount of the stipend (using the approach above to determine a reasonable amount based on the employees’ actual usage of their phones). Importantly, the policy should include language stating that the employee will be reimbursed the actual costs of usage if the stipend is not enough to cover the cost.
Requests relating to an employee’s use of their personal device for work are here to stay. Numerous states have laws on the topic and litigation is on the rise. A recommended line of defense is to put in place a clear policy outlining when and how employees can use their personal devices and a stipend to reimburse them for such use.
