Personal Device Reimbursement For Your Workforce

Your employees work from home. Are you required to pay for their cell phones, computers, and other personal devices?

The pandemic hit, and your employees began working remotely. Since then, your team has been in and out of the office. They routinely use their personal cell phones, laptops, and other devices to perform work-related tasks. Have you ever asked yourself who should foot the bill for cell phones and other devices while your employees work from home? You probably should. 

Several states have enacted laws requiring employers to reimburse employees for using their own devices, whether they are in or out of the office. Even if you’re not in one of those states, federal laws might influence your approach. 

This article will dive deeper into these requirements and address practical steps to account for personal devices for your workforce. 

State Requirements 

Ten states plus Washington D.C. have legislation that more or less requires employers to reimburse employees for personal devices. Let’s dive deeper into some of these statutes. 

Illinois

The Illinois Wage Payment and Collection Act governs employee use of personal devices for business purposes. Under the act, an employer must reimburse employees “for necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to the services performed by the employer.” 

What are “necessary expenditures”? The term includes all reasonable expenses required of the employee in the course of their employment duties for the employer’s benefit. In other words, Illinois employers must provide reimbursement for cell phone use, internet expenses, printers, and other home equipment that workers use to carry out their roles. 

California 

According to the California Labor Code, “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. . . .” California court rulings emphasize that employers shouldn’t pass their operating expenses on to their employees. 

How much does the employer need to reimburse? 

How much an employer needs to reimburse an employee will depend on state law and the practice’s operations. Using the California law as an example helps analyze this question because several court cases elaborate on this exact point. In Cochran v. Schwan’s Home Service, Inc., the court clarified that if an employee is required to make work-related calls on a personal cell phone, they are incurring an employer expense. Thus, to be compliant with the California Labor Code, this situation requires reimbursement, and “the employer must pay some reasonable percentage of the employee’s cell phone bill.” 

Under California law, when calculating the reimbursement amount, the employer may consider the actual expense that the employee incurred when using their own device. The employer may also consider whether the expenses were necessary. Whether an expense was necessary depends on the reasonableness of the employee’s choices when using the device. 

Of course, whether a device or expense is “necessary” lies at the heart of any dispute between employees and employers on this topic. Take, for example, an optional work-from-home environment. What if an employee can work in the office using the employer’s equipment but chooses to work from home on their personal device? In this scenario, reimbursement is likely not “necessary” because the employee has other options.

Let’s consider a more complicated example. Imagine your employee buys a new video camera because they regularly use video communication for telehealth sessions. The employee buys the latest edition, which happens to be the most expensive option. Is that specific video camera truly “necessary” under state law? The answer depends on your state statutes, whether you have policies in place to address these scenarios, and other facts specific to your practice operations.

Federal Law 

Generally, federal law does not require employers to reimburse employees for work-related expenses. However, both the Fair Labor Standards Act (FLSA) and the Americans With Disabilities Act (ADA) create exceptions to this general rule. 

Under the FLSA, employers may not require employees to pay for work-related expenses if it would cause the employee’s pay rate to fall below the required minimum wage for hourly employees or the salary threshold for salaried employees. Thus, if your employees earn close to the minimum wage and work from home, you should closely monitor their expenses and consider how they affect their overall pay.  

The ADA is also implicated in the employer reimbursement equation. Certain qualified individuals with disabilities may telework as a form of reasonable accommodation. Employers may not require employees to pay or reimburse them for their remote work costs in this scenario. 

What can employers do to meet their obligations? 

A common way to address reimbursement obligations is to institute a Bring Your Own Device Policy (BYOD). A BYOD explicitly allows employees to use their own devices for work-related activities such as emails, connecting to the corporate network, and accessing corporate data. Notably, a BYOD can set a cost-reimbursement policy for using cell phones and data plans while on company time. Instituting a BYOD may have other benefits as well, including: 

• Defining what constitutes proper use of personal devices for business activities; 
• Creating an exit plan when employees leave your practice or no longer wish to use their personal devices; 
• Instituting security measures and other password requirements; and 
• Clarifying types of devices approved by IT. 

Get Legal Support 

Are you in a state that requires employee reimbursement for necessary business expenses? Perhaps you feel strongly about instituting a BYOD as your practice continues to expand into telehealth. Or maybe you need advice on what constitutes a “necessary expense” given your particular practice operations. If you are in one of the states where we practice, we can help you navigate these questions. Schedule a free consultation to learn more.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.