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California Court Makes BYOD More Costly for Companies

Last week, a California court ruled that companies with employees in the state must reimburse those employees who use their personal cell phones to conduct work calls. It did not clearly specify how companies should do this, but it did acknowledge that the ruling stands even for employees with unlimited calling plans. It also did not rule on data usage or apps deployed and used for work purposes, but it seems a fair bet that those would be covered, too. Given that the case, Cochran v. Schwan's Home Service, has now gone to both the California Supreme Court and the Court of Appeal, the ruling will almost certainly stand.

What does this mean for the Bring Your Own Device trend that is so persistent in the modern workplace? Some have suggested it's the end of BYOD, but that seems unlikely; BYOD is so entrenched it would be almost impossible, I think, to turn back the clock. But the ruling will have consequences for California companies--and probably those based in other states, too.

The ruling is vague enough to make it hard to decipher how, exactly, companies will be required to calculate and reimburse usage. It essentially says this should be done on a case-by-case basis, which surely promises to be a massive headache for IT and the office of the CFO. For them, software that lets mobile phone users create two personas--one for work and one for "home"--may become a necessity. Alternatively, using tools that track usage and let employees manually code calls as "work" or "personal" could also be effective when it's time to calculate reimbursement costs.

At that point, the organization could, on a month-to-month basis, add a sum onto an employee's paycheck to cover the correct percentage of time/minutes spent on work-related calls in the previous 30 days. But even with the help of software tools, the system won't be simple. Will employees have to trigger a request for reimbursement themselves, as they would any other T&E report? Will users be willing to allow their employers to load tracking or dual-persona applications onto the mobile devices they technically own and pay for? Will accounting departments be ready to handle the volume of requests and reimbursements, especially within very large enterprises?

If nothing else, the ruling will force companies that have, until now, taken a wait-and-see approach to BYOD to implement a clear and enforceable policy around the use of personal phones for business. Some may decide that it is less costly--when one considers time and manpower as well as hard dollars--to just issue all employees company phones. Others may officially forbid the use of personal devices for business purposes, but it is unclear what would happen if a California employee ignored that rule and continued to use his or her personal phone for work calls.

And therein lies the rub. The case here was related to a company that required its employees to use personal phones for business. (In the ruling, the Court of Appeal wrote, "We hold that when employees must [emphasis mine] use their personal cellphones for work-related calls, Labor Code section 2802 requires the employer to reimburse them.")

But in many organizations, employees aren't required to conduct business on their phones; they simply choose to do so for reasons of convenience or personal preference. Indeed, that is really the true definition of BYOD: it's not that companies demand that employees purchase their own IT tools; it's that employees take it upon themselves to bring the tools they use at home into the office. Frost & Sullivan research shows that in many cases, they will even buy apps and devices with their own money to use at work because they find doing so makes them happier and/or more productive.

Cochran v. Schwan's Home Service doesn't speak to that broader BYOD trend, but it will likely impact it. At the very least, companies with business in California should now be on high alert: they have less than 30 days to figure out how to abide by the new requirement--or whether to put themselves in the position of having to follow it at all.

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