California Labor Code Section 2802 requires employers to reimburse employees “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[.]” According to its legislative history, the purpose of this statute is “‘to prevent employers from passing their operating expenses on to their employees.’”
In Cochran v. Schwan’s Home Service, Inc., B247160 (Aug. 12, 2014), the plaintiff sought class certification in an action filed on behalf of customer service managers who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones. The plaintiff alleged causes of action for violation of Section 2802; unfair business practices under Business and Professions Code Section 17200 et seq.; declaratory relief; and statutory penalties under the Private Attorneys-General Act of 2004.
The trial court denied class certification on the grounds that “many people now have unlimited data plans for which they do not actually incur an additional expense when they use their cell phone,” and therefore concluded that individual questions of liability would predominate, rendering class certification improper.
On appeal, the Court stated:
The threshold question in this case is this:
Does an employer always have 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? The answer is 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.
. . . .
If an employee is required to make work-related calls on a personal cell phone, then he or she is incurring an expense for purposes of Section 2802. It does not matter whether the phone bill is paid for by a third person, or at all. . .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.
Based on these principles, the Court reversed the trial court’s order denying class certification “[b]ecause the trial court relied on erroneous legal assumptions about the application of Section 2802.”
The Cochran decision is significant to not only those California employers that require employees to conduct work-related tasks using their personal cell phones, but could also have implications for employers who require employees to work from home — incurring internet service provider and potentially other expenses on behalf of the employer. California employers that have not already been reimbursing employees for such expenses would be well-advised to reevaluate their expense reimbursement policies in light of this decision.
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