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Ask Leslie: Do I Need To Pay For My Employee's Smartphone Expenses?

Dear Leslie:

My employee uses his personal smartphone for everything in his entire life, personal and work-related. Should I reimburse him in some manner?

Signed: Wondering


Dear Wondering:

The best practice is to reimburse all employee expenses related to the conduct of your business. Managing smartphone usage is a challenge for employers because of the comingling of personal and work-related use.

The simple solution is to issue an employer-owned phone to an employee with instructions that it is to be used only for work purposes and that the employee not use his or her personal phone for work purposes. That way, you control the costs, the service plan, the phone number, and the security upgrades.

The downside of this approach is that most employees absolutely hate carrying, and keeping track of, two smartphones. Because of this, employers often allow employees to use their personal phones for business use.

Some employers reimburse on a per-use basis, which can pose

administrative and accounting challenges. Some opt for a flat reimbursement every month, no matter the usage. Employers should check with their certified public accountant as to the IRS' rules on reimbursement and taxable income.

Also, check your state's law. In California, for example, the law specifically requires an employer to always reimburse an employee for the reasonable expenses the mandatory use of a personal cell phone entails. This includes any cost for required "apps" or other functions.

Another approach to consider is switching away from cell phone use to save on costs and enhance user flexibility. Some employers are using cloud phone systems that cost less, allow for enhanced monitoring, track call analytics, recording, and even allow you to break into a conversation to voice your viewpoints, referred to as a "call barging" feature. In addition, a cloud-based system keeps employees personal and work lines separate. This can enhance your cybersecurity measures.

Jack McCalmon and Leslie Zieren are attorneys with more than 50 years combined experience assisting employers in lowering their risk, including answering questions, like the one above, through the McCalmon Group's Best Practices Help Line. The Best Practice Help Line is a service of The McCalmon Group, Inc. Your organization may have access to The Best Practice Help Line or a similar service from another provider at no cost to you or at a discount. For questions about The Best Practice Help Line or what similar services are available to you via this Platform, call 888.712.7667.

If you have a question that you would like Jack McCalmon or Leslie Zieren to consider for this column, please submit it to ask@mccalmon.com. Please note that The McCalmon Group cannot guarantee that your question will be answered. Answers are based on generally accepted risk management best practices. They are not, and should not be considered, legal advice. If you need an answer immediately or desire legal advice, please call your local legal counsel.

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