We recently reported on various types of policies employers have adopted concerning cell phone use in California. California employers are required to reimburse a “reasonable” percentage of their employees’ cell phone, data and internet usage bill when said employees are required or expected to use their cell phone, data or internet connection for work-related purposes. This legal obligation arises from Labor Code Section 2802, which requires employers to reimburse their employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” One form of policy employers use to comply with this obligation is a “bring your own device policy” (“BYOD”). However, BYODs require diligent oversight to minimize risk of noncompliance. Different forms of BYOD exist that employers can implement, and each has its own benefits, administrative burdens, and risks.
An individualized BYOD is specific for each employee. The employer requests and reviews each employee’s redacted cell phone and internet bills and proof of payment of those bills each month, and asks each employee what percentage of their monthly use was for work-related purposes. The employer then reimburses each employee a percentage of the bill corresponding to each employees’ estimated percentage of work-related use for that month. However, not every employee has the requisite attention to detail to submit sufficiently redacted bills. By implementing this form of BYOD, an employer risks violating its employees’ privacy rights by collecting personal information without proper notice. Moreover, this form of BYOD assumes each employee provides a true and accurate estimate concerning the percentage of their respective monthly work-related use. And on the one hand, it can mitigate risk because the reimbursement amount is based only on an employee’s input. But on the other hand, in the event of a wildly inaccurate estimate or a dishonest employee, any intervention by the employer, even if to question and interactively come to a more sensible percentage, could result in a claim of coercion by the employee. Obviously, the employee-chosen percentage should be documented each month for each employee, to better insulation the employer from liability, This form of BYOD imposes a high administrative burden on the employer, as it results in different treatment of employees based on their answers and contains no uniformity, which could lead to claims of unfair or improper treatment, while attempting to create some uniformity or intercede in the employee’s estimate of a reasonable percentage could result in similar claims.
Average by department percentage of work-related usage
Alternatively, an employer may implement a BYOD based on the average “reasonable” percentage of its employees’ work-related use. An employer could audit existing vendors to determine an average monthly amount charged for cell and internet services and send a questionnaire to its employees to determine how much their employees believe they use their personal cell phone monthly for work-related purposes on average over a twelve-month period. The employer would then categorize each response by department and determine a by department average based on the questionnaire and vendor audit. Employers who chose this option should send such questionnaires at least annually to ensure their employees are being sufficiently reimbursed because their employees’ plans could change. However, by paying the average amount, employers risk underpaying some employees whose “reasonable” percentage of work-related use is greater than the average.
To lessen such risk, employers could reimburse a flat amount to each departmental employee based on the highest average by department obtained from their employee questionnaires. In doing so, the employee handbook should state, and policies and procedures should be adopted, that each employee will be reimbursed a flat amount based on that by department average, and if an employee believes this amount to be insufficient for the amount or percentage of their particular usage, the employer will increase the amount after a written request by that employee. Each request and each response should be documented and kept with the employee’s files. An employer should review this BYOD with each new hire during its onboarding process. Under this model, the employer should reserve its right to review a redacted copy of the employee’s bills to verify the requested increase in reimbursement. However, this form of BYOD also requires an employer to ensure its employees who are making such requests redact private information from such bills. Otherwise, the employer risks violating its employees’ privacy by obtaining and reviewing unredacted bills.
It is important to note that employees may claim they didn’t know they could request an increase, were too afraid to ask for an increase or assumed management was so disrespectful generally of its employees that it wouldn’t really consider such a request, and on that basis never asked for an increase, and claim they were insufficiently reimbursed. To lessen the risk of such claims, in addition to maintaining a provable culture of respect, an employer could periodically email a reminder to its employees that should they feel they are being insufficiently reimbursed for their work-related use, they can request an increase and should see the employer’s Human Resources manager for more details. Employers will also want to document all such requests and grants and denials of such requests separately, so it can prove that it gave due consideration to such requests.
Hybrid individualized BYOD
Alternatively, an employer can adopt a hybrid of an individualized and departmental average-based BYOD. Using this method, the employer could send each of its employees a monthly questionnaire inquiring: (1) whether they have a single user cell phone and data account; (2) whether their monthly cell phone and data bills are a flat amount, and if so, what that amount is; (3) what their monthly internet bill is; (4) whether their monthly cell phone, data and internet bills are a variable amount, and if so, what the twelve-month average is; and (5) how much each employee believes they use their cell phone, data and internet for work-related purposes each month over a twelve-month period.
If an employees’ bills are a flat amount, the reimbursement could be based on the employee’s perceived work-related use each month. If an employee’s bills are a variable amount, the reimbursement could also be based on the employee’s perceived work-related use averaged out over a twelve-month period. However, and again, average based reimbursements could risk insufficient reimbursements to an employee for a certain month. An employer could minimize such risk by reimbursing a “reasonable” percentage based on the employee’s highest estimated work-related usage over a month over a twelve-month period of that employee’s highest paid bill over a twelve-month period. Like the individualized BYOD discussed above, this option also lessens the employer’s risk because the BYOD is formulated with input from the employees. Additionally, it lessens risk by removing the possibility of a privacy breach, since the employer does not collect phone bills to determine the reimbursement amounts. The employers policies should, however, reserve the employer’s right to request and audit redacted employee cell phone bills periodically to confirm accuracy of the amounts it reimburses its employees.
Flat monthly reimbursement
By far, the administratively easiest method of calculating cell phone, data and internet reimbursement policies is to set a flat amount for reimbursement that is provably more than any employee would reasonably pay. This requires, however, that the number chosen bears a logical relation to the potential costs for monthly cell phone, data and internet usage. This can be done by an audit of the providers of such services in the area and can be coupled with a questionnaire asking each employee what service provider they use and what type of plan they have. This questionnaire may or may not include a question about the percentage of their usage is work-related. A departmental trend may become apparent in the survey responses, at which point an employer armed with this data can determine a reasonable reimbursement flat monthly rate. This method, while easy to administer after the initial determination, may lead to liability in the event an employee is not reimbursed the entire amount of usage on any particular month. Additionally, if the amount is set high enough to insulate the employer from this type of claim, it can be the most costly implementation of a BYOD plan on a monthly basis.
The aforementioned BYODs only are some of the BYODs employers may implement to minimize risk of individual, class, or representative actions under the Labor Code’s Private Attorneys General Act. Whichever BYOD an employer implements, an employer must document its methods for determining a “reasonable” percentage of reimbursements, and payment of such reimbursements to its employees. Such documentation should substantiate: (1) the amounts reimbursed; (2) the “work” or foundation for the amounts reimbursed; and (3) its relation to the amount of usage the employee made of their cell phone or data plan for each pay period and month.
Employers who implement BYODs should audit their BYODs, at the very least, annually, to ensure their employees are being adequately reimbursed a “reasonable” percentage of their cell phone and data bills for their work-related use.