Expenses

California Labor Code section 2802 requires an employer to “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 ….” (§ 2802, subd. (a).) “[T]he term ‘necessary expenditures or losses’ shall include all reasonable costs.” (Id., subd. (c).) Section 2802 is designed to prevent employers from passing their operating expenses on to their employees.

Common examples of expenses that companies may have to pay for are:

• Cell Phones
• Vehicles
• Wi-Fi

Pursuant to Section 2802, an employer must reimburse employees for the use of their personal cell phones for work related purposes under the following circumstances: (1) The employer knew or had reason to know that employees were using their personal cell phones for work related purposes; (2) Employees made expenditures or incurred losses as a result of using their personal cell phone in direct consequence of their duties and in obedience to the directions of their employer; and (3) it was necessary under the circumstances for employees to use their personal cell phones when discharging their duties. (See Castro v. ABM Industries, Inc. (N.D. Cal. 2018) 325 F.R.D. 332, 338, modified (N.D. Cal., May 14, 2018, No. 17-CV-3026-YGR) 2018 WL 2197527 citing Stuart v. RadioShack Corp. (N.D.Cal. 2009) 641 F.Supp.2d 901, 903 [when an employer “either knows or has reason to know that the employee has incurred a reimbursable expense . . . it must exercise due diligence to ensure that each employee is reimbursed.”], Cassady v. Morgan, Lewis & Bockius LLP, (2006) 145 Cal.App.4th 220, 230, and Sinohui v. CEC Entertainment, Inc. (C.D. Cal., Mar. 16, 2016, No. EDCV142516JLSKKX) WL 3475321, at *11.)

The important case of Cochran v. Schwan’s establishes that employees who make work-related calls on personal cell phones incur losses under Section 2802. (Cochran, supra, 228 Cal.App.4th at p. 1144.) “It does not matter whether the phone bill is paid for by a third person, or at all.” (Ibid.) Several courts have relied on Cochran to certify classes in similar circumstances. For example, in Richie v. Blue Shield of California, the court certified a class regarding a claim for failure to reimburse for cell phone expenses under Section 2802 based on Cochran. The court noted that Cochran’s holding applied “even when the employee did not incur an “extra expense” as a result of that call (for example, when the employee had an ‘unlimited minutes’ plan).” (Richie v. Blue Shield of California (N.D. Cal., Dec. 9, 2014, No. C-13-2693 EMC) 2014 WL 6982943, at *17; see also Bowerman v. Field Asset Services, Inc. (9th Cir. 2023) 60 F.4th 459, 467.)

In Castro, a case brought by the attorneys at Hunter Pyle Law, the court found that the plaintiffs could establish that class members incurred losses by showing that they used their personal cell phones for work-related duties using expert analysis and testimony. The court noted that the plaintiffs could determine whether class members used their personal cell phones by “comparing the list of Putative Class Members’ cell phone numbers with defendants’ phone bill records which show inbound and outbound calls and texts from phones which ABM issued to Supervisors.” (Castro, supra, 325 F.R.D. at 338.)