Hidden Legal Risks in Your Company Cell Phone Reimbursement Policy

Update Your Company’s Cell Phone Reimbursement Policy With These In Mind

Business news buzzes with the latest California legislation and its potential implications for companies in the rest of the country. Yet, there are other emerging risks that may already impact employers. The growing adoption of Bring Your Own Device (BYOD) culture and lawsuits tied to under-reimbursing employees is high among them. Here are five recent lawsuits in which employees sued companies over cell phone reimbursement policies (or lack thereof).

Delivery: Schwan’s Home Services

Sometimes, you need to use your personal phone for your job. On August 12 of 2014, California ruled in favor of the plaintiffs in Cochran V. Schwan Home Service Inc, requiring employers reimburse employees for business use of their personal devices. This landmark case set the tone for several lawsuits to follow.

Facility Management: ABM

Similar to the case against Schwan Home Services, this lawsuit is specific to using personal devices and not being compensated for that time. On February 15 of 2019, ABM paid out $4.5 million to settle claims from staff who sued for compensation after allegedly being made to use their personal devices for work-related duties. Litigation began in 2014, so consider legal fees of five years when adding up the costs of this settlement.

Retail: Tilly’s

This case, while not directly related to reimbursing employees for the business use of their personal assets, widens the interpretation of business use of personal devices. On February 4th of 2019, California’s second Appellate District Division 3 Appeals court reversed a decision in favor of the plaintiff. This case dealt more specifically with on-call employees having to phone in to find out if they needed to work a potential shift. But the decision impacts employers, and will lead to a change in company cell phone reimbursement policies.

Coffee: Starbucks

Companies have often relied on de minimis doctrine when arguing lawsuits. This essentially means “it’s so little, it doesn’t really matter.” Troester V. Starbucks Corp. set a new precedent with its decision in favor of an employee who performed tasks for the company after clocking out. Arguments like “my employees might use their phones for work, but not in a way that really matters/not long enough to be a measurable amount of time” hold less water when looking at this decision.

Investment Banking: Morgan Stanley

Plaintiffs brought a lawsuit against Morgan Stanley Smith Barney LLC for, among other things, labor law violation on May 14, 2018. Morgan Stanley came to the table with a $10.2 million settlement in June, which was agreed to, though the financial adviser plaintiffs in a similar case

(Chen V. Morgan Stanley Smith Barney LLC) argued this is not enough to cover the associated claims.

What does this mean for my company?

As represented in the examples above, it doesn’t matter what industry your company exists in. Does your company have a cell phone reimbursement policy? Does it adequately compensate all your employees for the business use of their personal assets? If not, you could be violating labor laws. While many know California for its labor laws, those laws are expanding. States like Illinois have adopted similar laws and others have similar regulations in progress.

Your company can implement a BYOD policy that avoids unnecessary complexity, cost or time. But you certainly don’t want to leave your company exposed to the risks of being out of compliance with labor laws. Contact us to see what we can do for your company.

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The Author

Alex Mordach

Alexander Mordach is the Director of Technology Solutions. Prior to his current role, Alex worked as an engineer for Phoenix Technologies, bringing UEFI BIOS solutions to the mass marketplace. He is an advocate of groundbreaking technology and is a key player in helping us stay on the forefront of all mobile technologies.

Read more by Alex Mordach

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