Cochran v. Schwan’s Home Service, Inc.
The great philosopher and poet Alanis Morisette once defined irony as “a free ride when you’ve already paid.” In Cochran v. Schwan’s Home Service, Inc. Cal. App.4th (August 12, 2014), the California Court of Appeal for the Second Appellate District addressed whether an employer is allowed a free ride on unlimited cell phones plans for which its employees already paid. Ironic, huh? No? What exactly is irony anyway?
Plaintiff Colin Cochran filed a putative class action against Defendant Schwan’s Home Service, Inc. (“Home Service”) on behalf of service managers who were not reimbursed for expenses pertaining to the work-related use of their cell phones. Under California Labor Code section 2802, an employer is required to indemnify an employee “for all necessary expenditures or losses incurred by the employee indirect consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” The purpose of the statute, as reflected in the legislative history, is to prevent employers from passing their operating expenses on to employees.
Home Service argued that it should not have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone where the employee would have had the same expense whether or not it was used for business purposes. The Court disagreed, holding that reimbursement is always required: “Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee. Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill.”