Daily Blast August 12, 2014

The California Court of Appeal, Second Appellate District, Division Two (Los Angeles) published an opinion in Cochran v. Schwan’s Home Service, Inc. (Aug. 12, 2014, B247160) __ Cal.App.4th ___, analyzing whether “an employer always [has] to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job?” (Slip opn., p. 7.) The court held that “when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. 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.” (Id. at p. 2.)

The case arose out of a putative class action lawsuit against defendant on behalf of customer service managers who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones. (Slip opn., p. 2.) The trial court denied plaintiff’s motion for class certification finding that individual questions predominated. According to the trial court, a determination of whether an expense was incurred for a class member’s business use would require an examination of each class member’s cell phone plan. (Id. at p. 3.) The court also assumed that an employee does not suffer an expenditure or loss if his or her cell phone charges were paid by a third person. (Id. at p. 7.)

The Court of Appeal reversed because the trial court relied on erroneous legal assumptions about the application of Labor Code section 2802, subdivision (a), which states that “[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[.]” (Slip opn., p. 6.) The court explained that “reimbursement is always required. Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee. Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill. Because of the differences in cell phone plans and worked-related scenarios, the calculation of reimbursement must be left to the trial court and parties in each particular case.” (Id. at p. 7.) According to the court, “[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.” (Id. at p. 8.)