Hello everybody.   My discussion this month addresses the question of whether an apartment owner must pay any portion of his/her manager’s cell phone bills if the manager uses a personal cell phone for work-related purposes.  More broadly, do employers have to pay any part of their managers’ monthly cell phone bills?

The answer depends on whether a manager’s business use portion of a personal mobile phone is or is not required by the owner.

Payment for Personal Cell Phones Required By Owners

The California Court of Appeal in Cochran v. Schwan’s Home Service addressed the overall issue of payment of cell phone bills, but only resolved it as to personal cell phones that owners require managers to use.  

The appellate court reached its decision in the context of a class action filed on behalf of customer service managers who were not reimbursed for expenses for their work-related use of their required personal cell phones.    

The Court of Appeal framed the question 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?”

A simpler way of looking at the issue is this:  If a manager owns a personal cell phone which has a fixed monthly fee for unlimited calls, must the employer pay a portion of the bill if the manager is required to also use her phone for apartment related calls in addition to her personal calls?

Before reading further, what do you think?  Do you think that an employer who hires a resident manager who uses her own personal cell phone must reimburse the manager for any portion of the monthly billing of the phone service?  

Consider this scenario:  Assume that a soon-to-be resident manager purchases a personal cell phone before being hired and she receives fixed monthly bills from Verizon for unlimited telephone calls.  After the manager is hired, should the employer be required by law to reimburse the manager for required work-related calls even though those calls do not increase the manager’s monthly bill?

In resolving that issue, the Court of Appeal 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.  As applied to a personal cell phone, a manager would not, it appears, have any “expenditure” or “loss” if the phone were also used in connection with the apartment’s business.  In other words, the bill would be the same regardless of whether or not the manager also used her personal phone for work.

So how should Section 2802 be applied when the employee (please recall from my prior AOA articles that resident managers are employees, not independent contractors) has a personal cell phone plan with unlimited minutes such that extra calls made for 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 billing amount based on her personal use whether or not she used the phone for business purposes.  

One would not think that something so straightforward as that would have to be decided by a California appellate court.

Nevertheless, the Court did decide the case and ruled against the employer based on a terse, and in my opinion, questionable comment.  According to the Court, if the manager were not reimbursed by the employer, then “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.  

On the other hand, it seems that the manager would receive the windfall if the employer has to pay any portion of the personal cell phone invoice.

My dismay aside, the Court held 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.” 

How Much Is a Reasonable Percentage?
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 her

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 decide to comply with that 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.  By analogy, 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, law-abiding drivers would not exceed the posted speed limit.  

Similarly with respect to cell phone usage, some owners may choose to violate the law by not contributing to the manager’s cell phone bill each month.  Others may want to be legally compliant by implementing a policy for partial reimbursement of the cell phone bill which they believe would be allocable to the business use portion.

For those owners who intend to comply with the law (which everyone should), it will be problematic to determine the exact amount required for the reimbursement.  The precise method (which will surely cause the employer a huge headache) would be to calculate on a monthly basis the percentage of the total minutes for work-related calls, compare that to the total minutes of all calls (including personal calls), and then reimburse the manager for the business percentage of the total phone bill.  

Short of such a mathematical conundrum, there is no exact method by which to determine a “reasonable” percentage.  The appellate court did not provide any guidance on that issue.  

Here is an alternative method, although imprecise, for owners to comply with the law for managers who are required to use personal cell phones in their work:  Try to estimate a “reasonable” amount of money that will be allocable to the business portion of the monthly cell phone bill.  $20 to $25 would seem appropriate in many cases.  Then pay that amount each month. If the manager later claims that the business portion of the phone bill exceeded that $20 or $25, the owner (in order to avoid any lawsuit) would then pay the manager for the additional sum she claimed.

In practice, paying the estimated amount on a monthly basis will probably avoid any future claim by the manager.

Payment for Cell Phones Which Are Not Required

The Cochran case was only decided in the context of a manager being “required” to use a personal cell phone.

But what if the employment contract specifically says that the manager is not required to have or use a personal cell phone, but she uses it anyway in connection with the management?  That answer is not clear.

There is no statute or case exactly on point.  Some lawyers opine that because Cochran said that cell phone reimbursement is mandatory if the manager is “required” by the employer to use a personal cell phone, then conversely, if the manager is not so required, the employer need not pay for any business calls.  After all, they say, communications between owners and managers could be face to face, by correspondence, by fax, or by other methods.  Use of the cell phone would be merely discretionary by the manager.

Other lawyers analogize cell phone reimbursement to overtime pay.  If a manager works overtime even though prohibited by an employment contract, the employer is still obligated to pay overtime wages.

I confess that I do not know the answer to the question of whether an owner must reimburse a manager for any portion of the bill when there is a business use of a cell phone but the use is not required by the employer.  No California court has resolved that question and the Cochran case avoided the issue altogether.

But I can say this:  The majority of my clients who own apartment buildings prefer that their employment contracts specifically negate any requirement of mandatory use of a personal cell phone.  That is because they do not want to pay any portion of the manager’s bill.

Their thinking is that even if some day the law resolves the issue against the owner (or if the manager lodges a claim for reimbursement), the amount past due under the 3 or 4 year statute of limitations is likely to be so relatively little that the employer will pay it at that time, plus any interest and penalties.  

Until then, many owners will not reimburse the employee where the employment contract expressly provides that use of a personal cell phone is not required for the performance of the job.    

CONCLUDING COMMENTS

The law is clear that if the owner requires the manager to use a personal cell phone for apartment-related work, the owner must reimburse the manager for a reasonable percentage of the business calls as compared with the manager’s personal calls.

If the manager is not required to use a cell phone in connection with the performance of his work-related services, it is an unresolved issue as to whether the employer must pay any portion of the cell phone bill.

However, one thing is certain:  All manager employment contracts should contain a paragraph addressing cell phone usage and whether or not a personal mobile phone is required for the job. 

Also, the reimbursement rule covering mandated personal cell phones does not end with mobile phones.  The same rationale for requiring a reasonable percentage reimbursement for cell phones is applicable to managers who are required to use their personal telephone land lines, printer ink, printer paper, etc. in their job performance.

Attorneys wishing an in depth discussion of the “required” cell phone reimbursement issue should read the Court’s full opinion in Cochran (228 Cal.App.4th 1137).  That case is controlling law throughout California.

Finally, I have not addressed in this article possible reimbursement for managers who do not have unlimited monthly cell phone minutes.  Suffice it to say that when the carrier’s cell phone service plan sets a limit on the manager’s monthly minutes, the employer may be obligated to reimburse the manager for the cost of any business minutes that cause the maximum minutes to be exceeded.

Dale Alberstone is a prominent real estate attorney who has specialized in real property and resident manager law for 40+ years.  He also serves as a mediator of real estate disputes and is a former arbitrator for the American Arbitration Association and a former Judge Pro Tem. 

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.

The foregoing article was authored in January 2020.  It is intended as a general overview of only California 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, 269 S. Beverly Drive, Suite 1670, Beverly Hills, California 90212. Telephone:  (310) 277-7300.