Hello everybody. My discussion this month deals with the topic of whether an apartment owner or management company must pay the cell phone bill of its resident manager who uses a personal cell phone for work-related matters.
In a case of first impression (meaning that no court had previously published an opinion on the issue), on August 12, 2014 the California Court of Appeal addressed that specific question. It reached its decision after the Los Angeles Superior Court judge denied certification of a class action filed on behalf of customer service managers who were not reimbursed for expenses for their work-related use of their personal cell phones.
The Court of Appeal framed the query as follows: “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?”
Before reading further, what do you think? And why or why not?
Here is another way of framing the issue: Assume that an apartment manager owns a personal cell phone and receives a fixed monthly bill for unlimited call time. Should the employer be required by law to reimburse the manager for work-related calls even though those calls do not increase the manager’s bill for personal calls on his mobile phone?
In analyzing the matter, the appellate court first focused on California Labor Code Section 2802 which provides, “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 … .”
That section seems clear and straightforward. As applied to a cell phone, a manager would not, it seems, have any expenditure or loss if the phone were also used in business. In other words, his bill would be the same regardless of whether he uses the phone for work.
So how should Section 2802 be applied when the employee (recall from my prior columns in AOA Magazine that resident managers are employees, not independent contractors) have cell phone plans with unlimited minutes such that extra calls made for employment purposes do not increase the amount of the monthly bill?
In that situation, it does not appear that the employer should have to reimburse the manager for any amount of money. After all, the employee would have received the exact same monthly bill amount based on his personal use whether or not he additionally used the phone for business purposes.
One would not think that something so simple as that would have to be decided by an appellate court of California.
Nevertheless, the Court did decide the case and ruled against the employer based on a terse, and questionable, comment. That is, if the manager were not reimbursed by the employer, then (according to the Court), “The employer would receive a windfall because it would be passing its operating expenses onto the employee.”
Really? And so what if the employer received a windfall? That windfall (if one could call it that) did not cost the manager even one cent. In fact, it seems that the manager would receive the windfall if the employer has to pay any portion of the cell phone invoice.
Nevertheless, the court held that the employer must pay some reasonable percentage of the employee’s cell phone bill.
What would be a “reasonable percentage?” Unfortunately the Court offered no guidance. It left unanswered how an employer should calculate what amount of the monthly cell phone fee it should reimburse the employee when the employee uses his personal cell phone for both personal and work-related calls.
The court merely said that the reimbursement must be some “reasonable percentage” if the manager’s use of the phone is “mandatory” or “required” in the performance of the manager’s duties.
Whether or not individual owners or management companies decide to comply with the new pronouncement of law by reimbursing their managers for such cell phone usage is likely to be a matter of one’s personal choice and willingness to accept risks. For example, the fact that a driver knows that the maximum speed allowed on the freeway is 65 miles per hour, may not prevent him from driving 70 miles per hour while hoping to avoid a citation. Of course, cautious drivers would not exceed the posted speed limit.
Similarly, with respect to cell phone usage, some owners and management companies may choose to violate the law by not contributing to the manager’s cell phone bill each month. Others (particularly large management companies which operate “by the book” so to speak) may now want to implement a policy for some (or full) reimbursement of the cell phone bill which they believe would be reasonable under the totality of the circumstances.
CONCLUDING REMARKS
To be on the safe side, I recommend that AOA members reimburse their manager who conduct business with their personal cell phones by some amount of money on a monthly basis. At a minimum, $5.00 to $15.00 would seem appropriate.
For those employers who wish to fully comply with the court’s decision, undoubtedly it will be difficult to determine a mathematical percentage for contribution. One method (which would surely cause the employer a huge headache) would be to calculate the percentage of the total minutes for work-related calls to the total minutes of all calls (including personal calls) on a monthly basis, and then reimburse the manager for that percentage of the phone bill.
There is no clear method by which to determine a “reasonable” amount, and I suspect that none of the three justices deciding the case own an apartment building.
Also, the newly pronounced cell phone reimbursement rule does not necessarily begin and end with cell phones. Arguably the same rationale for requiring a reasonable percentage reimbursement for mobile phones would be applicable to managers who are required to use their telephone land lines in their job performance.
Lawyers wishing to analyze the issue in more depth should read the Court’s full opinion set forth in Cochran v. Schwan’s Home Service, Inc., Case No. B247160. The case has statewide application throughout California.
Dale Alberstone is a prominent litigation and transactional real estate attorney who has specialized in real property law for the past 37 years. He has been appointed to periodically serve as a judge pro tem of the Los Angeles Superior Court and is a former arbitrator for the American Arbitration Association. He also testifies as an expert witness for and against other attorneys who have been accused of legal malpractice.
Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell. An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity. You may Google “Dale S. Alberstone” for further background.
The foregoing article was authored on September 2, 2014. It is intended as a general overview of the law and may not apply to the reader’s particular case. Readers are cautioned to consult an advisor of their own selection with respect to any particular situation.
Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 1900 Avenue of the Stars, Suite 650, Los Angeles, California 90067. Phone: (310) 277-7300.