Cochran v. Schwan's Home Service, Inc. Bring Your Own Device Programs Just Got Better – For Employees

In a decision that will have far-reaching consequences for all Bring Your Own Device (BYOD) programs, the California Court of Appeal reached a decision finding that employers must reimburse employees when those individuals were required to use personal cell phones for work-related responsibilities. The court determined that this applied even if the employee did not incur any actual out-of-pocket expense as a result of the work-related use, based on the specific phone plan that the person had.

The case of Cochran v. Schwan’s Home Service, Inc., 228 Cal.App.4th 1137 (2014), was commenced by Colin Cochran, who worked as a consumer service manager for a food delivery provider. Cochran was required by his employer to use his personal cell phone to make work-related calls. His employer, Schwan’s Home Service, Inc. (Schwan’s), did not reimburse him for any expenses relating to the use of his personal cell phone for work-related calls. Cochran commenced a class action lawsuit, asserting that the putative class included all customer service agents. In bringing the case, Cochran claimed a violation of California Labor Code Section 2802 (hereinafter referred to as “Section 2802”). That section of the Labor Code 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.” Cochran argued that when employees are required to participate in BYOD programs and use their cell phones for work-related purposes, Section 2802 of the Labor Code mandates that they be reimbursed for the costs associated with that use.

Schwan responded to Cochran’s claim for reimbursement by first attacking the class certification. Schwan contended that class certification was not appropriate because putative class members’ reimbursement claims differed. Specifically, Schwan argued that there were some employees who incurred no actual expense for the work-related use due to the structure of their individual cell phone plans that included unlimited minutes. In addition, there were some employees who incurred no actual expense because they were on a family member’s plan. Finally, Schwan conceded that there were some employees who did incur actual expenses. The point made by Schwan was that the potential class members were not similarly situated in the way that class members need to be for certification. The trial court agreed, ruling that an employer had no liability under Labor Code Section 2802 unless an employee incurred actual expense. Cochran appealed the decision.

The California Court of Appeals disagreed with the trial court’s interpretation of Section 2802 of the Labor Code. Instead of focusing on whether an employee incurred actual expense, the Court of Appeals shifted the inquiry to whether an employee was required to use a personal cell phone to make work-related calls for which he or she was not reimbursed. In refusing to base the reimbursement requirement on the issue of actual expense, the Court discussed the intent of Section 2802, noting that it was meant not only to reimburse employees for incremental out-of-pocket expenses, but also to prevent employers from transferring their costs of doing business to employees.

The Court of Appeals allowed class certification. It did not, however, decide the issue of how to calculate an employer’s actual monetary liability. This ambiguity has positive and negative consequences for employees, since it leaves open the possibility of different types of reimbursement plans, but also makes likely future litigation regarding whether these plans constitute sufficient and appropriate reimbursement.

Cochran v. Schwan lays the foundation for BYOD program reimbursement in several key steps. The first step is by placing BYOD programs and cell phone use squarely within Labor Code Section 2802 and its mandate for reimbursement. The second step is the Cochran Court’s focus on the fact that the use of a personal device for work-related purposes must be required by the employer in order to be reimbursed. With the focus on whether the personal device is required, the court’s third step is to remove the inquiry regarding whether or not an employee incurs actual cost. This allows the details of individual employees’ phone plans to become irrelevant, allowing for class certification. It also prevents the employer from passing on business expenses to the employee, the fourth step. Finally, the actual calculation of claims – reimbursement – was not defined, but left up to employer and employee negotiations, or failing that, a trial court.

If you use your own cell phone or other mobile device for work-related purposes and have not been reimbursed or have been insufficiently reimbursed by your employer, contact the employment attorneys at Nassiri Law Group. We will work with you to get the compensation that you deserve and ensure that your employer is in compliance with the law. Nassiri Law Group practices in Orange County, Riverside and Los Angeles. Call (949) 375-4734 to schedule an appointment today.