There was a time when a work day ended at 5:00.  When the little hand reached 5 and the big hand found its way to 12 two things happened – workers headed home and bosses stopped paying their hourly employees.  How times have changed.   In the age of smart phones and constant e-mail connection a new issue arises – if an hourly employee is performing work from their personal phone does an employer have to chip in on the bill?

A large number of small businesses in California do not have any sort of employee cell phone policy in place and are unaware that they may be required to reimburse their employees for at least a portion of their personal cell phone bills.  As illustrated below, this is quickly becoming yet another issue California small business owners need to start thinking about.

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In the recent decision¹, a California Court of Appeal held that when an employee uses their personal cell phone for work-related calls, Labor Code section 2802 requires the employer to reimburse them.  In reaching this conclusion, the Court of Appeal found that certain provisions of the Labor Code required reimbursement by employers for “all necessary expenditures or losses incurred by the employee in direct consequence” of their work, or in “obedience to the directions of the employer.”   This would be true despite the fact an employee is paying for an unlimited data package.  The Court held that despite the form of cell phone plan the employee selected or is paying for on their own, employers must pay some reasonable percentage of the employee’s cell phone bills – if not they would be receiving a windfall because it would pass on this business expense directly to the employee.

While the dust has yet to settle on the Cochran decision it appears that employers in California are required to compensate employees who use their personal phones for work purposes.  This is true even if they have unlimited data/minutes.

This decision creates the potential for new areas of litigation.  In an effort to avoid this, businesses should take a close look at their cell phone polices to ensure they are in compliance with the Labor Code (or, if you do not have a cell phone policy, prepare one!).  If an employee is expected to be accessible by phone or email outside of work – or if they are required to carry a cell phone as a part of the job – then it is necessary either to provide a work device or to pay a reasonable percentage of their bill.


¹Cochran v. Schwan’s Home Serv., Inc., 228 Cal. App. 4th 1137

California Labor Code § 925 went into effect on January 1, 2017, limiting an employer’s ability to require employees who “primarily reside and work in California” to enter into employment agreements that include out-of-state choice of law and/or forum selection clause.  The section effects employment contracts entered into on or after January 1, 2017.  This section, however, will not apply if the employee is represented by counsel in negotiating the terms of the employment contract.

image004Section 925 may have an immediate impact on employment contracts with covenants not to compete (“non-compete clauses”).  California Business & Professions Code § 16600 generally prohibits such clauses in employment contracts, favoring a public policy of a worker’s right to pursue any lawful trade or profession.  In the past, employers have utilized choice of law and/or forum clauses with selection of states that allow non-compete clauses to protect against competition by ex-employees based in California.

Labor Code section 925 will frustrate those efforts by employers to enforce choice of law and/or forum selection clauses by providing employees with the ability to preemptively challenge those clauses as unlawful.  There is some debate as to the enforceability of section 925 on a court in a different state, but Labor Code section 925 provides employees another tool to undermine an employer’s attempt to prevent competition by ex-employees.

The First Circuit Court of Appeals issued an opinion last week, overturning summary judgment for an employer in a wage and hour case, based on the absence of a comma in Maine’s overtime statute.  An exemption to Maine’s overtime law provides that overtime protections do not apply to employees engaged in the “canning, processing, freezing, drying, marketing, storing, packing for shipment or distribution of …  perishable foods.”   Some dairy delivery drivers, who do not engage in packing of any kind, sued their dairy employer for overtime, contending the exemption was inapplicable because they interpreted the clause “packing for shipment or distribution of” as one related phrase.  The employer successfully argued to the trial court that the clause at issue concerned two distinct activities: 1) packing for shipment; and 2) distribution.  According to the dairy, because delivery drivers engage in distribution, they were exempt from the overtime protections and were not paid overtime.  The Appellate Court found the statute to be ambiguous as it was unclear if distribution was the last in a series (distribution) or a modification of the clause that was last in the series (packing – for shipment or distribution).  Without the comma to make it clear that employees engaged in distribution were exempt, the judgment was reversed and the drivers are now permitted to proceed with their suit seeking millions in back overtime wages.

2000px-Virgola.svgIf you are a punctuation enthusiast, a link to the 29 page opinion with the Court’s analysis of grammar and punctuation is here:

http://media.ca1.uscourts.gov/pdf.opinions/16-1901P-01A.pdf

California Health & Safety Code § 118600 became operative on March 1, 2017, requiring all business establishments and places of public accommodation to have signage which identifies their single user toilet facilities as “all-gender toilet facilities.”

bathroomA single-user toilet facility means one with no more than one water closet and one urinal with a locking mechanism controlled by the user.

This law impacts not only those businesses open to the public but all those with employees. Contact me if you require advice on legal compliance for the proper signage in addition to your labor and employment compliance and litigation needs.