Is Company Required to Reimburse its Employees for Claimed Business Use of Personal Cars, Cellphones, Computers and Other Costs?

This is where carefully crafted workplace policies are crucial.  Cal. Labor Code § 2802 requires employer to indemnity employees for all necessary expenses or losses they incur in direct consequence of discharging their duties or obedience of the employer’s directives.  The key here is on whether these expenses are “necessary” which should be clearly defined in your policies or every employee who chooses to use their personally-owned car, cell phone, home computer, ipad, home phone, and you name it, will be asking for reimbursement because they used it for work. 

In a 2014 California Appellate Court case, Cochran v. Schwan’s Home Services, 228 Cal.App.4th 1137 (2014), the Court held that the employers was obligated to reimburse an employee’s personal cell phone used for work based on the employer’s clear policy requiring service representatives use their personal cell phones for work.

The Court rejected consideration of whether or not the employee actually incurred any costs in situations where the employee, for example, paid a fixed monthly amount for an unlimited plan or someone else paid for the phone).  The Court held that the employer was still liable for some “reasonable percentage” of the employee’s cell phone that was required for work, regardless if the employee actually incurred any costs on their own.

Absent policies, procedures and agreements defining use of technology and devices for your employees, California companies remain exposed to potential liability to all their employees who are using personal devices for “work.” Labor Code § 2802(c) provides that the employees are entitled to attorneys’ fees incurred by the employees enforcing their rights to recovery.  Often times, violations of the Labor Code will be accompanied by a Private Attorney General Act (PAGA) claim which permits an aggrieved employee to stand in the shoes of the state in seeking compliance.

Lisa Sherman
California Labor & Employment Attorney