Hello everybody. My discussion this month deals with the topic of whether an apartment owner
must pay all or any portion of the cell phone bill of the owner’s resident managers who use their
own personal cell phones when performing their work-related services.
In a case of first impression (meaning that no court had previously published an opinion on the
matter), the California Court of Appeal in Cochran v. Schwan’s Home Service (hereafter
“Cochran”) addressed the broad issue of whether California employers must pay a portion of
their employees’ cell phone bill if the employees use personal cell phones not only to make
personal calls, but also to make work-related calls.
The appellate court fashioned the question like 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?”
Before reading further, what is your opinion? Do you think that an apartment building owner or
the management company which employs a manager and requires the employee to use his/her
own personal cellular device for business calls must reimburse the manager for any portion of
the monthly bill for the phone?
Here is another way of framing the issue: Assume that an apartment manager owns a personal
cell phone (meaning that it is the mobile device he owned before he was employed as the
manager) and he receives a fixed monthly bill from Verizon, AT&T, Sprint or some other carrier
for unlimited call time. Should the apartment owner who requires the manager to use a personal
cell phone for work-related purposes be required to reimburse the manager for work-related calls
even though those calls do not increase the manager’s monthly bill over and above the cost for
his personal calls?
In resolving that issue, the appellate court relied 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 appears straightforward. As applied to a personal cell phone, a manager would not
normally have any additional expenditure if the phone were also used in business. In other
words, the invoice would be the same regardless of whether the manager used the phone for
work or continued to use it solely for personal calls.
So how should Section 2802 be applied when the employee (please recall from my prior articles
in this magazine that resident managers are employees, not independent contractors) has a cell
phone plan with unlimited minutes such that any mandated extra calls made for apartment
management purposes do not increase the amount of the monthly bill?
In that situation, common sense suggests that the employer should not 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.
It seems that the employee should not receive a windfall of reimbursement just because the
owner required the manager to also start using the phone for apartment business purposes.
One would not think that something so simple as that issue would have to be addressed by the
appellate court of California.
Nevertheless, the court did decide the case and ruled against the employer based on a terse, and
in my opinion 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? It would be like telling an employee that he has to wear clothes to work and then make
the employer pay a portion of the cost!
And so what if the employer received a windfall? That windfall (if one could call it that) did not
cost the manager even one extra cent.
On the other hand, it seems that the manager would receive the windfall if the employer has to
pay any portion of the manager’s cell phone invoice.
Nevertheless, the court ruled that the employer must pay some reasonable percentage of the
employee’s cell phone bill “if the employee is required to make work-related calls on a
personal cell phone.”
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 phone fee it should
reimburse the employee when the employee uses his personal cell device 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.
There is no clear method by which to determine a “reasonable” amount. The most technically
accurate way of apportioning the amount of the reimbursement of any given monthly invoice
would be to add up all the minutes the personal calls consumed and compare them with the time
consumed by the business calls. Then have the employer reimburse the manager for the
percentage usage of business calls each month. But that would be ridiculously time consuming.
A more efficient way to handle it would be for the employee to estimate the percentage of his
average monthly minutes for business calls as compared with all total calls. Then reimburse the
manager for that percentage of the estimated monthly bills.
An even better way to address the matter would be for the owner to not require the manager to
have or use any cell phone when performing his services. The Cochran case only insisted on
reimbursement when the employer requires the use of the employee’s personal phone.
In fact, the very first sentence of the case so provided: “We hold that when employees must use
their personal cell phones for work-related calls, Labor Code section 2802 requires the employer
to reimburse them.” (emphasis added)
Thus, it would likely follow that if the employee was not required to use a personal cell phone,
no reimbursement would be compulsory. To my knowledge, no appellate or Supreme Court case
has held otherwise.
Accordingly, for owners who do not want to reimburse the manager for any portion of the cell
phone bill, a provision should be drafted into the employment contract stating that the manager is
not required to have or use a cell phone in the performance of the manager’s duties.
As a practical matter, the manager is likely to use the cell phone for business purposes anyway,
particularly when communicating with the owner. But because use of the mobile device is not
required, it seems that the owner would not have to pay any portion of the bill.
Indeed, there are other legitimate means of communicating with the employer as well as
maintenance personnel, vendors, etc., such as by face to face discussions, by email, and by letter
writing.
So by not mandating the use of a personal cell phone (and in fact expressly negating that in the
employment contract), it seems probable that if ever challenged, the employer would be able to
successfully defend against a claim for reimbursement.
CONCLUDING REMARKS
It is probable that an owner who provides in the employment contract that a cell phone is not
required will never be challenged if he does not reimburse the manager for the business portion
of the bill.
In Cochran, the employer was sued in a class action by 1,500 customer service managers. With
that many manager claims, it would warrant a class action.
But most owners employ a very small number of managers. It is unlikely that any of those
managers (or their lawyers) would file suit for reimbursement of a cell phone bill particularly
where success is doubtful let alone certain.
So overall it is a safe bet that if owners state in their employment contracts that personal cell
phones are not required, owners would be in compliance with law if they do not reimburse
managers who voluntarily use their mobile devices during the performance of their work.
Note to attorneys: If you wish to fully analyze these issues, I recommend that you read the Court
of Appeal’s entire opinion in Cochran v. Schwan’s Home Service, Inc. (228 C.A.4 th 1137).
That case has statewide application throughout California.
Next month, I will provide a mid-year update on Resident Manager laws. Many of them will
again change on July 1, 2019. So be prepared. Resident manager employment contracts will
need to be consistent with those new laws.
BREAKING NEWS: I have just been notified that an attorney for a landlord of a 71 unit
apartment building in Sunland, California has filed a Class Action lawsuit against WASH
Multifamily Laundry Systems, LLC, for improper charges of TSRE and Adjustment fees.
Filing such a class action was precisely what I recommended be considered in my article
appearing in the February 2019 issue of this AOA magazine. I encourage AOA members
who believe that they may have a claim against WASH to contact the landlords lawyer to
discuss it: Mr. Michael Lieb; [email protected]; tele: 310-281-6338.
Dale Alberstone is a prominent real estate attorney who has specialized in real property and
resident manager law for 40+ 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.