California Cell Phone Reimbursement Law: All You Need to Know

Cell phones and other mobile devices are an integral part of many people’s lives. They allow users to easily maintain contact with others and provide a simple means of accessing necessary information. Over time, they have become tools for personal and professional use. Many employers allow, or even encourage, the use of cell phones as part of an employee’s work, whether it is for making phone calls or looking up information quickly. If your employer requires the use of a mobile device as part of your work, you may be entitled to compensation.

What Is Cell Phone Reimbursement?

The use of personal mobile devices, like cell phones for work-related tasks, has become a fairly common practice in recent years. Many workers rely on their personal cell phones to make business phone calls, maintain electronic communication with clients and coworkers, or make edits to important documents while they are away from their computers. Using a personal device may seem like second nature to some, but it is important that you are compensated fairly for the use of your personal device.

Cell phone reimbursement is the process of receiving additional funds from your employer as compensation for the use of your personal device. Like mileage reimbursement, cell phone reimbursement is a way for employers to provide the necessary compensation to employees who must use personal time or property to do their job successfully.  If you are required to purchase, use, or maintain your own cell phone to complete business-related tasks, employers are required to reimburse you for that usage. The specific reimbursement amount will vary from one company to another.

How Does Cell Phone Reimbursement Work?

There is no single way to determine how cell phone reimbursement will be distributed. Most companies will analyze how much time their employees spend using their personal mobile devices and determine their reimbursement based on that. There are several ways that the reimbursement can be distributed.

Some companies choose to offer a monthly stipend to offset the cost of cell phone bills. Other companies offer a specific amount of money each quarter that can be used for cell phone expenses or other things. Some organizations choose to offer additional benefits, particularly for employees working from home, in addition to their regular cell phone reimbursement. The specifics of reimbursement are left up to each company individually, but all employers are required to provide additional compensation.

The purpose of using a personal cell phone for work tasks must be clearly defined. Cell phone reimbursement, like any type of reimbursement, is not considered income because it is not taxable. This is only true when an employee is being compensated for the use of a personal cell phone that is directly related to the successful completion of their work. Any misuse of these reimbursement practices could lead to significant legal problems for the business.

When Should Employees Receive Cell Phone Reimbursement?

Employees should receive a cell phone reimbursement stipend any time they are required by their employer to use a personal mobile device for work tasks. This could include making calls to clients, using cell phones for email and other written communication, or any number of other uses.

The specific dates and times that reimbursements are distributed are determined by the employer. This decision is often made based on how often personal devices are required and what will work best for the company. Some employers choose to offer reimbursement monthly, while others choose to reimburse employees quarterly or annually.

Employees will not receive any cell phone reimbursement if the company they work for provides a mobile device. In some instances, the employer will offer the use of a company device, but an individual employee can choose to maintain their own device instead. In these cases, employees who choose not to accept the company-provided cell phone will not be eligible for cell phone reimbursement.

FAQs

Q: How Much Should You Reimburse Employees for Cell Phone Use?

A: While the use of cell phones and other mobile devices is common for many workers, the amount they receive in reimbursement is determined by their employer. Many companies offer stipends between $30-$50 each month, with the average falling around $40.20 monthly. To determine what the proper reimbursement amount is, employers should consider how often employees use their devices for work-related tasks and plan accordingly.

Q: Are Cell Phone Reimbursements Taxable in California?

A: Any form of reimbursement from an employer, whether it is for driving mileage or cell phone usage, is considered non-taxable. It is important, however, that the purpose of using a personal device for work tasks is very clearly stated. Cell phone reimbursements will only be considered non-taxable if they are provided for what the IRS refers to as “substantial non-compensatory business reasons.”

Q: How Does Cell Phone Reimbursement Allowance Work?

A: The specifics of cell phone reimbursement allowances may differ from company to company. In most cases, the reimbursement should be equivalent to how often the mobile device is used for business purposes. Once the usage amount is determined, the company can plan its reimbursement. Some companies choose to provide monthly stipends to cover bills, others provide quarterly stipends, and some may cover the cost of a new phone.

Q: Is Cell Phone Reimbursement Considered Income?

A: Since cell phone reimbursements are not taxable, so long as they are categorized properly, they are not considered income. Reimbursement is not intended to replace your wages but rather to provide additional compensation for business-related cell phone use. Again, this only remains true so long as the employer has a valid and provable reason to require the use of a personal cell phone for work-related tasks.

Using personal mobile devices for work-related purposes is sometimes necessary, but it is important that you are compensated fairly for that time. If you think that you may be eligible for cell phone reimbursement but are not receiving it, contact the Law Offices of Corbett H. Williams. We will work with you to ensure you receive the compensation you deserve