UPDATE: Cochran v. Schwan’s Home Service: Reimbursement of Personal Cell Phone Expenses for Work-Usage

By lfsuser on March 08, 2015

You may recall our discussion of the ambiguous Cochran v. Schwan’s Home Services, Inc., the class action cell phone reimbursement case (you can read about it here). In Cochran, Colin Cochran filed a class action against his employer on behalf of himself and 1,500 customer service managers who sought reimbursement for expenses relating to the use of their personal cell phones for work. Among other alleged statutory violations, Mr. Cochran claimed that his employer, Schwan’s Home Service, violated Labor Code section 2802. The appellate court held that employees who are required to use their personal cell phones for work are entitled to reimbursement for “some reasonable percentage” of their personal cell phone bill.

The Court did not offer guidance as to what “some reasonable percentage” means. However, this requirement applies regardless of whether (1) the employee incurs additional charges for the work-related portion of his/her total cell phone use; (2) a third party pays the employee’s phone bill; or (3) the employee has changed his/her data plan to a flat rate plan in order to accommodate work-related usage. In other words, the details of each employee’s cell phone plan do not determine liability. Despite this lack of clarification, the ambiguity of “some reasonable percentage” offers an advantage to both employers and employees in that it keeps many options available to structure a reasonable reimbursement plan.

Although we have not had any cases addressing employer reimbursement for personal mobile device usage since Cochran, a number of class action cases similar to Cochran have arisen. In one such class action case, Araiza v. The Scotts Company, LLC, Los Angeles Superior Court Case No. BC570350 (filed on January 26, 2015), the plaintiffs allege a failure to reimburse employee business expenses in violation of Labor Code section 2802. The plaintiffs cite to Cochran for the proposition that the employer is required to “maintain an expense reimbursement policy and/or practice stating that Defendant will affirmatively reimburse Class Members for a reasonable portion of their monthly personal cell phone bills and expenses necessarily incurred in their discharge of their duties.”

This case and other class actions invoking Section 2802 are raising concerns among employers as to how they can ensure compliance with Section 2802 and reconcile their expense reimbursement practices with their Bring Your Own Device (BYOD) policies. Employers should review their practices and policies with counsel in light of Cochran and cases that have followed it. In the meantime, we will continue to follow developments related to this case and keep you updated.

This document is intended to provide you with general information about legal developments. The contents of this document are not intended to provide specific legal advice. If you have questions about the contents of this alert, please contact Hannibal Odisho at 415-697-3463 or at hodisho@aghwlaw.com. This communication may be considered advertising in some jurisdictions.