A Wakeup Call for BYOD
Last August the California Court of Appeals ruled that companies must reimburse employees who are required to use their personal cell phones for work related calls. The court held that reimbursement was required even if the employee had an unlimited voice plan or if someone else, such as a family member or friend, was paying for the voice plan. The court mandated that employers were required to compensate employees for a reasonable percentage of the mobile bill.
The California Court didn’t introduce any new laws as part of their decision—they simply reaffirmed existing California Labor Code section 2802 and asserted that this code already addressed employer responsibilities for BYOD reimbursement.
The case that triggered the California ruling was Cochran v. Schwan’s Home Service. Colin Cochran, a consumer service manager who worked for the Schwan food delivery service brought a suit against his employer on behalf of some 1500 Schwan’s employees. Colin’s job required the use of a cell phone but Schwan’s wasn’t reimbursing him for the calls he was making. The company’s argument in court was that Colin had an unlimited voice plan, and on top of that his friend was paying for the voice plan.
The Court pushed back: “Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills.”
They also asserted a bright boundary between personal and private use. In the words of the Court: “The details of the employee’s cell phone plan do not factor into the liability analysis. Not only does our interpretation prevent employers from passing on operating expenses, it also prevents them from digging into the private lives of their employees to unearth how they handle their finances vis-a-vis family, friends and creditors.”
The Appeals Court simplified the landscape for employees who were seeking company reimbursement. The court wrote: “To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.”
It’s that simple. Or is it?
What about mobile data?
On the surface, the California Court’s decision in Cochran v. Schwan’s was focused on voice calls, but there was nothing in the ruling—or existing Labor Code, Section 2802—that limited a company’s obligation to compensate employees for other work related costs. As Kelly O. Scott, head of the Employment Law Department at Ervin Cohen and Jessup observed: “If employers apply the logic of Cochran and the language of 2802 to this new world, the implications are far reaching. Home Wifi, cell phone apps such as Waze or Evernote, office programs on a home computer or laptop; all of these can be considered necessary expenditures depending on the nature of use.”
David Johnson of Forrester research echoed that sentiment by noting that the ruling probably didn’t stop with voice: “just about anything an employee has to spend money on should be included, including software, file sharing services, and even Skype.”
Although mobile data costs are falling, data is becoming the more costly component of mobile plans. And of course, the costs of business mobile data are even greater when you factor mobile business application subscription fees, integration, support, access, and security—not to mention the amount of employee time working with mobile data. Companies have made massive, albeit not well-understood, investments in mobile. Anytime access to mobile business data is now mission critical to the success of many companies.
What’s Reasonable Compensation?
Most businesses don’t compensate employees for their business use of personal devices. Forrester reported “54% of U.S. information workers pay their entire mobile phone data bill for phones they use for work, while 19% say their company pays the bill directly, 7% say they are reimbursed and 13% receive partial reimbursement.”
The California Court’s ruling didn’t address the issue of “reasonable reimbursement,” and that has put some California companies in a quandary. As the California Employment Law Report pointed out, it’s both “a blessing in that it leaves many options available to employers and employees to structure a reasonable reimbursement plan, but it is a curse because the ambiguity could still lead to future challenges to the agreed upon reimbursement plan.”
There are multiple ways to reimburse employees in BYOD programs. Many companies just write a generous monthly check between $75 and $125 to cover mobile costs. That’s a challenging check to write since it’s estimated that business use is only 20-30% of a typical BYOD mobile bill. At an $85 a month stipend, for example, a company with 1,000 employees is probably over-spending by $64,000 a month or $750,000 each year. Businesses could still meet their obligations to compensate employees, but invest that overage to advance company initiatives.
The other common method of compensation is to have employees go through their mobile plan line-by-line, demarcating work vs. personal use, and manually submitting an expense report. That’s problematic. There hasn’t been a way to split business data use from personal use, so it’s largely guesswork, perhaps even generously tilting in favor of the employee. Unlike a voice call or text message, where there’s an identifiable phone number and minutes that can be attributed to business use, the application source for mobile data is not easily identifiable. It appears on mobile operator bills as a long list of kilobytes by date and time but without any clear attribution to specific content. Was that a Salesforce inquiry or an employee prelude to party with friends on Facebook? Moreover, expense reporting takes employee time away from their job to infer their mobile data usage. Then there’s the overhead of processing the BYOD expense report, estimated by Aberdeen to cost $29 per submission, per employee, each month. Whew.
Over-compensated or onerously guessed and submitted, mobile data compensation has been messy, and now the courts are obligating businesses to wade into this foggy territory.
What Happens in California Stays in California
Well, not really. As David Johnson of Forrester pointed out in a interview with Matt Hamblen of Computerworld, right now Massachusetts may be the only other state that has a law that is similar to California’s 2802: “however, it is still a reasonable policy for companies to reimburse employees for their expenses to do their job.” Mobile reimbursement obligations will undoubtedly spread to the other 48 states. Christine Ekman wrote on SAP’s Business Innovation blog, “the precedent is set.”
Can’t we just return to yesterday?
Turning Back the Clock
Cochrane vs. Schwan’s has prompted a wave of tongue-in-cheek chatter about putting the brakes on BYOD. While mobile phones have been used for business purposes for over 20 years, it’s only been during the last five years that businesses have developed foundational dependencies on mobile data.
Gallup estimates that 80% of full-time U.S. workers have a smartphone with Internet access. They went on to report that 79% of U.S. employees were upbeat about using their computers and mobile devices for work outside of work hours. It’s not just a productivity benefit: as Cisco reported for BYOD—employees derive greater job satisfaction because of the flexibility mobile access affords.
We live in 2015, and there’s no turning back from the advantages mobile technology has brought to company operations. Over the last ten years mobile data has become indispensable to business operations. Many businesses are now highly dependent on mobile devices. In today’s interconnected world of business, the workforce of many companies is no longer bound to a physical location. Mobile enablement has revolutionized the way we work.
BYOD is here to stay. The question to ask is not whether it’s right to compensate employees who are obligated to use their mobile phones for work, but whether there are new intrinsic business benefits that compel BYOD investments.
The Greater Value of BYOD
There are a number of reasons why businesses should consider staying ahead of BYOD legislation. Fairness to employees, increased productivity, and greater job satisfaction are just a few considerations to embrace BYOD. While the cost to reimburse employees for work-related mobile data is significant, the value—and five new benefits listed below for managed BYOD programs—completely outstrip the marginal costs of employee reimbursement.
- BYOD split billing is no longer unmanageable It’s easy to split employee personal and business use with Syntonic DataFlex’s mobile platform services. Businesses can now confidently compensate employees for business expenses—regardless of device, operating system, or mobile operator. There’s no need to over-pay through generous stipends. Companies can reduce mobile data costs by as much as 80%. Syntonic DataFlex directly ties into expense management systems to automate reimbursement, obviating the need for employee manual accounting. Syntonic DataFlex can directly provide reimbursement through the carrier or through expense management.
- Businesses can protect employee privacy by maintaining separation between personal and business use. With Syntonic DataFlex, companies don’t ever see or have access to the employee’s personal mobile data.
- Business intelligence, analytics, and reporting using Syntonic DataFlex on personal devices makes mobile data transparent, so businesses can forecast, budget, and direct company mobile data investments—everything from application subscription investments to provisioning employees individually, by departments, or geographies. By embracing BYOD with Syntonic DataFlex, businesses can acquire the insight into what they’re spending, where they’re investing, and the return on their investment. It’s time to understand the tremendous dependencies businesses have on mobile data and optimize appropriately.
- Regulatory compliance requirements are now easily realized using Syntonic DataFlex’s modern BYOD services. Companies can satisfy the demands of everything from PCI and HIPAA to FERPA, SOX, and GLBA.
- Business intelligence paired with enhanced security, using Syntonic DataFlex, helps to better protect business operations and intellectual property by providing last mile security and network threat detection.
The ruling of Cochran v. Schwan’s Home Service has reaffirmed the responsibility businesses have to reimburse mobile charges when businesses require employees to use their personal mobile devices for work purposes. It has also opened an opportunity for businesses to reduce costs, increase workforce productivity, increase business intelligence and enhance security. An investment in BYOD is an investment in the business. It’s time to make employee mobile devices a better place to work.
Contact firstname.lastname@example.org to learn more about how Syntonic DataFlex can make BYOD work for you.