In this situation, companies create a policy that requires staff to prove any work-related cell phone usage and expenses. Offering cell phone reimbursement isn't just about being a kind-hearted boss. The downside is that this could potentially impact employee productivity and company morale. Employers can mix and match two or three of these options to see what works best for them. 1. While these laws vary from state to state, California is leading the way in this growing trend. Companies might decide they want to go with Apple's iOS, Google's Android, or some other option. The good news is, the employer has access to all cell phone records and can control the associated plans. The proof is in the pudding, and many employers want to see exactly what their employees are claiming as work-related expenses. Thank you! This can improve internal communication and it certainly streamlines work for informati… This allowance is considered taxable income and should appear in the employeeâs W-2 form.â. Introduction The objective of this policy is to facilitate the Employees in their jobs by increasing communication within the organization and especially with the customers and to prevent them from the hassle of purchasing Sim Cards / Hand Sets. The use of a cell phone’s recording or photographic capability on company premises is prohibited. We will not be liable for the loss of personal cell phones brought into the workplace. Employers exclude the value of the device from the employee's wages. If you're a business owner running a successful company, chances are you have multiple employees using their mobile devices for work.Â. Cochran v. Schwan's Home Serv., Inc., 228 Cal. Designated employees who are required to perform these functions as part of their job duties will either be issued a Company-owned cell phone or will receive reasonable reimbursement for the value of the use of their personal cell phones in direct consequence of the discharge of their job duties. Awesome! While we leave the choices up to you, Fyle can do much more than just streamlining your employee reimbursements! While this is an unpopular solution for many employers, for some, it's more about peace of mind. this policy. For purpose… This figure varies depending on the company and the agreed-upon policy. I have attached Sample Cell Phone Reimbursement Policy. Ne… With so many different laws and unclear expectations, how can companies create a compliant, reasonable cell phone reimbursement policy? Creating a cell phone policy is no easy feat. On the flip-side, employees may be liable for compromising secure company information. Here are just a few: But these BYOD policies cover much more than only cell phone bills. It follows that if employers allow their employees to opt to use their personal cell phone, instead of a company-issued cell phone, that they should be reimbursed a reasonable percentage of their phone bill for work-related calls or other data usage for using texts or the internet for work purposes. 1.1. Except for alimited number of positions, the university will notown cell phones for the use of individual employees after January 1, 2017. This places responsibility on the employee.Â. Call Supervision. These payments may be excluded from taxable income only … If employees feel entitled to more than the fixed amount, many companies require them to submit proof. Objective This policy has been introduced to: […] As you could imagine, this approach gets quite tedious and time-consuming. Similarly, although COPE takes care of data security and improves productivity, it entails a lot of hidden costs. The employee must show that the cell phone and the accompanying service plan was used for a business purpose.Â. The advantage of this approach is that employers are only paying for what employees actually use. Land lines are always available and all significant others and children are allowed to call in any time. Or do you want to provide company phones? The defense is that the company is passing it's operating expenses onto the employee. Smriti Nair is the originator and writer of this blog post. Scope: The cell phone usage policy applies to all employees, managers and supervisors. With duplicate detection, you can keep fraudsters at bay and rest assured that your expense management is in good hands. Eligible e mployees (below) may receive a cell phone stipend from the U niversity for business - related costs incurred when using their personal cell phones. Prior to 2010, if a company provided a cell phone (or any communication equipment) to the employee, IRS considered it as listed property and treated it as a fringe benefit. Oops! There are actually laws surrounding what employees are entitled to when it comes to compensation for personal cell phone use. This makes it easier for employers to budget and allocate funds to cover cell phone reimbursement. Thank you! While BYOD reduces the acquisition costs for the employer, it comes at the cost of data security. By using this method, companies are opening the door to countless discrepancies, which can become troublesome, both financially and legally. This helps convert an otherwise long and tedious task into something that just takes a few minutes to report and manage. Notice 2011-72 addresses the tax treatment of employer-provided cell phones for noncompensatory purposes. A cell phone reimbursement stipend, or a cell phone allowance, is a sum of money given to employees for them to purchase on their cell phone plans. Your subscription has been received! How much should you reimburse each employee? Under these policies, many employers are paying anywhere from $30 to $50 per month toward employee cell phone bills. Some companies prefer not to play the nickel and dime game, and instead, just pay the entire amount. But, cell phones may also cause problems when used imprudently or excessively. Further details on what they are: Stipends are often given out monthly. The Notice provides that, for tax years after December 31, 2009, the IRS will treat the employees use of employer-provided cell phones for reasons related to the employers trade or business as a working condition fringe benefit, the value of which is excludable from the employees income. In this article, we discuss the guidelines one must keep in mind while devising a cell phone reimbursement policy. The value of the cell phone was still to be included in the employeeâs wages as a taxable fringe benefit. Personal cell phones don't allow you to monitor your employees' calls. The basis of the case was that these employees were not reimbursed for incurred expenses for work-related use. If youâd like to understand the different ways in which Fyle can help your organisation stay compliant and keep employees happy, schedule a demo today! With an automated software, employees can simply click and upload a picture of their cell phone bill. That said, there was no clarity on how to treat cell phone reimbursement of employee-owned phones. Sit down and crunch numbers before you settle on a solution. Most common mistakes in corporate expense management, Challenges finance teams face with travel & expense management, BYOD, or bring your own device, policies are becoming more common in work environments. If your company needs to adapt, change, modify or amend your cell phone policy at work, those changes need to be clearly and consistently communicated to all employees, even those who might not appear to be affected by the change. Employers consider several factorswhendrafting these policies and determining stipend amounts.Here are just a few: 1. BYOD, or bring your own device, policies are becoming more common in work environments. This is a popular option for a wide range of companies. Despite being an integral part of daily work, many companies still do not have an effective cell phone reimbursement policy in place. Using a company cell phone is mostly a trust bond between an employer and an employee, which should be respected deeply. These payments are referred to as mobile stipends. Employees are not authorized to use personal cell phones in place of company provided phones and radios. Some even compare it to unauthorized overtime. Under newly enacted section 9.5 of the Illinois Wage Payment and Collection Act (“Act”) (effective January 1, 2019), employers are obligated to reimburse employees for all necessary expenses incurred within the scope of their employment. In today's fast-paced world, everybody has their noses in their phones for the majority of the day. From the tax-saving point of view, stipends are the least tax-effective option. The caveat is that, in California, regardless of whether the employer approves personal cell phone use for employees, if expenses are incurred, they have to pay. An employee who uses a company-supplied device or a company-supplied vehicle is prohibited from using a smartphone, cell phone, hands-on or hands-off phone, or similar device while driving, whether the business conducted is personal or company-related. You need to ensure that it is homogenous and complies with your existing expense policy stipulations. SUGGESTED READ: Balancing expense policy compliance and happy employees. During this milestone case, the California Court of Appeals filed a class-action lawsuit on behalf of 1,500 customer service managers. Employees do not have to report the reimbursement as taxable income. Whatever expense reimbursement policy you craft, make sure the guidelines are abundantly clear.Â, Five ways to make expense reporting easier for employees, Balancing expense policy compliance and happy employees. This means employees are paid for their exact amount of work-related personal cell phone use â to the penny. Something went wrong while submitting the form. But changes cannot occur in a void. The biggest downside to this form of cell phone reimbursement is the grey area that exists between the fixed amount and what the employees feel they're entitled to. Companies must also consider cost when it comes to purchasing phones company-wide. Things changed, after the Small Business Jobs Act of 2010.Â Cell phones or any mobile devices were no longer a listed property for the tax year starting from December 31, 2009. Even this can take precious time and energy better spent elsewhere. E.g., One employee whose job depends on the phone, may be reimbursed 100%; in office staff, on the other hand, with less frequent use could get a stipend of $25 (or $50 or $100) or a lower percentage than others (e.g., 10%). The cloud of ambiguity hovering around cell phone usage has put the finance department in a fix, not knowing how to handle them. The employer includes the value of the equipment in the wages, unless it is a working condition fringe benefit. In general, cell phones should not be used when they could pose a security or safety risk, or when they distract from work tasks: Never use a cell phone while driving. It's no surprise that cell phone reimbursement has become a hot topic. While this may seem unfair to some, it's the California law. Which of these options makes the most financial sense for your company? The following are [company name] 's basic guidelines for proper employee cell phone use during work hours. There's also no guarantee that employees will treat the issued phones with care. We promise to send across some good stuff. We recognize that cell phones (and smartphones especially) have become an integral part of everyday life. Employee Signature: _____ _____ Date:_____ Printed Name Supervisory Certification and Signature: I certify that the requested allowance is needed for this employee, to cover work-related expenditures due to cell phone use, or other, as described above. At the option of the employee and with appointing authority approval, providing appropriate funds have been budgeted, employee may opt to receive a monthly cell phone allowance of seventy dollars ($70.00) for use of a privately owned cell phone to conduct County business. Be sure to drop her a note at firstname.lastname@example.org, if you're looking for any guest blogging opportunities. Once submitted, managers can approve these expenses in a click of a button. Never use a cell phone while operating equipment. They may be a great asset if used correctly (for productivity apps, calendars, business calls etc.) If the employee chooses to use their personal mobile device, that's on them! We promise to send across some good stuff. With Fyle, you can manage all your employee cell phone reimbursements with ease.Â. $ Cell Phone Policy 1 4 Cell Phone Policy 2 7 Cell Phone Policy 3 8 Cell Phone Policy 4 9 Cell Phone Policy 5 10 Cell Phone Policy 6 11 Cell Phone Policy 7 12 Cell Phone Policy 8 13 ... employees who use their cell phone for business purposes to have their phone password protected. There's no one-size-fits-all approach to cell phone reimbursement for employees. As a result, the IRS released a memorandum on how to manage reimbursement to employees of employee-owned cell phones.Â If employees receive cell phone reimbursement, it can be excluded from the employee's wages; provided the company follows the accountable plan by the IRS. intend to comply with the University’s Cell Phone Policy. This is especially suitable for companies whose employees use their personal phones for work on a regular basis. Carrier fees 2. According to a survey by Oxford Economics, close to 80 percent of the organisations said that employees couldnât do their job efficiently without cellphones. 5. Excessive use of a cell phone for personal reasons while at work is not allowed. Include Security Concerns, Accountability, And Permissible Use. Why not lump cell phone use under the umbrella of expense accounts? Another controversial aspect of this law is that employees deserve reimbursement even if work-related use didn't cost them a single dime! On the other hand, employers are now tasked with making sure employees aren't using the company phone for personal use.Â. The employer includes the value of the equipment in the wages, unless it is a … However, after IRS Notice 2011-72, a company-provided cell phone for business purposes is treated as a working condition fringe benefit. App. With constant updates and advancements in cell phone technology, it only makes sense that you create a cell phone policy that can adapt toÂ change. When not convincing people to automate their expense management, she loves to read, travel, and explore the world with her pup. Security is important, so it’s vital to … Employers also rest easy knowing their employees have the necessary tools to complete the job. But whatever they choose, they'll know that all of their employees should have access to the same software and features. On the rare occasion when a department may make a cell phone available for multiple individuals to use and a cell phone is not assigned to a specific individual and no personal calls are made on these phones, the phone may be used by employees without using the taxable allowance program. An Accountable plan lets you reimburse employees by following IRS regulations on business expenses. To answer the question "are cell phone allowances taxable?" This figure varies depending on the company and the agreed-upon policy.Â. The remaining options (BYOD, COPE and reimbursement) exclude cell phone reimbursements from wages, thereby contributing to tax-saving. With over 50% of the world's population owning and using a mobile device, cell phone use has become second nature to most. Please note that this article is a general summary of law … Some employers provide an allowance for business use of a personal cell phone, such as paying $20 per month. monthly cell phone allowance shall not exceed the cost of the employee’s monthly cell phone plan or the monthly charge for a shared plan containing the employee’s cell phone number. Once the company decides the plan, the next step would be to choose the cell phone policy. But remember, employees must agree on this amount, and it should be clearly outlined in the policy. Companies run the risk of employees damaging, losing, or having company phones stolen â this adds replacement costs to the equation. Any personal use of the cell phone is considered a de minimis fringe benefit, also excluded from the wages. These changes came on the heels of a controversial court case: Cochran vs. Schwan's Home Services. If the employee has unlimited minutes or data, the employer is still required to pay "a reasonable percentage of the employee's cell phone bill.". SUGGESTED READ: How to manage receipts to ensure your team is always audit-ready? We recognize that cell phones (and smartphones especially) have become an integral part of everyday life. Awesome! This would not be applicable if the cell phone is provided to boost morale or attract employees. 1. The employee is prohibited from collecting a monthly cellular phone allowance or bi-annual equipment allowance when one’s cellular phone device is no longer active or needed for the performance of the employee’s job responsibilities. It's also difficult to calculate a true figure in terms of cell phone use for employees with unlimited data plans. Expense accounts are commonplace in larger corporations that require employees to travel and network as part of their job description. Yet, the question still remains, how much of that is for personal use, and how much is work-related? Mobile management overhead 3. SUGGESTED READ: How to create an IRS-compliant expense reimbursement policy. Is reimbursement right for your business? The Cochran case provides guidance on how to calculate a reasonable reimbursement for the mandatory use of personal devices such as cell phones: employers must compensate their employees for a "reasonable percentage" of the employee's cell phone bill under Section 2802. How to create an IRS-compliant expense reimbursement policy. However, the cell phone must be issued primarily for noncompensatory business reasons. One thing that still remains undetermined is what constitutes a reasonable percentage? The allowance shall be paid to the employee after documentation has been submitted to the county auditor that a personal cell plan is in effect and a cost has been incurred or obligated. These laws protect both employees and employers. Let’s take these three decisions in order. Earned time, saved costs, improved productivity, happy employees - achieve it all with a single software. A "necessary” expense is defined in section 9.5 as all reasonable expenses that: (a) are required by the employer in the discharge of the employees’ duties; and (b) are primarily for the benefit … Additionally, any personal use of the employer-provided cell phone will be treated as a de minimis fringe benefit, excludable from the employee’s gross income under § 132 (e) of the Code. The biggest benefit of this approach is that the cost is relatively stable. This is the question companies across the globe are trying to answer. By simply paying for your staff's cell phone bills, you're sidestepping any sticky legal issues or long, drawn-out debates over percentages. Instead of resigning yourself to being "damned if you do and damned if you don't", let's examine different ways to approach the cell phone reimbursement debate. Here we'll break down the newest laws in cell phone reimbursement and how to guarantee both you and your employees are getting a fair deal. If you have the manpower, the most accurate way to, If you choose to provide company cell phones, be prepared to. Do you need help managing your company's expenses and drafting clear policies? If you decide to reimburse employees for their cell phone use, should you do so under an accountable or non-accountable plan? Effortless expense management for all business spends. For those companies looking at cutting down on administrative costs, simply paying employees a fixed amount is a viable option. Earned time, saved costs, improved productivity, happy employees - achieve it all with a single software. How much of that money are you required to pay back? From checking emails and sending text messages to hosting video conferences, many professionals rely on cell phones as their mobile office. 4th 1137 (2014). By providing cell phones, employers can choose a carrier, hardware, and an operating system that best fits the company's needs. According to the IRS regulations: By opting for the accountable plan, the company takes the responsibility of collating and submitting the documents to the IRS. Something went wrong while submitting the form. These payments are referred to as mobile stipends. The tax regulations of cell phone reimbursement boil down to three questions the company must answer: 1. When employers require employees to use their personal cell phones for business use and then reimburse them for the cell phone expense, IRS examiners should analyze the reimbursement in much the same way as they would analyze the cost of a cell phone provided by the employer, based on the guidance provided in Notice 2011-72. Providing employees with a company cell phone means the expenses are already calculated. What personal cell phone use is considered "work-related"? The employee must return the excess amount to the employer.Â, No matter how complicated your approval workflow is, Fyle can manage it with ease with its. Again, the key is that employees are reimbursed a “reasonable percentage” of their phone bill. The following are the policies you can implement: That said, it is not a one-size-fits-all scenario. According to the non accountable plan, employees receive a monthly allowance for expenses that wouldnât need any documents for proof. Policy brief & purpose Our employee cell phone policy outlines our guidelines for using cell phones at work. The IRS rules for cell phone reimbursements Prior to 2010, if a company provided a cell phone (or any communication equipment) to the employee, IRS considered it as listed property and treated it as a fringe benefit. A solution is to calculate the average time spent on work-related projects and then pay that portion of the employee's total cell phone bill. Here are a few things to keep in mind when considering what type of cell phone reimbursement policy is best for your business: As with most things in life, it comes down to money. You've provided a cell phone specifically for that purpose. The cell phone company policy may also be referred to as a no mobile phones at work policy or a bring your own device (BYOD) policy. If an employee needs to use the cell phone for personal use or for the emergency call, it is good to inform the company with relevant reasoning. Schedule a demo today, and let's get started! Employers consider several factorswhendrafting these policies, many professionals rely on cell in... And it should be clearly outlined in the employeeâs W-2 form.â sending text messages to hosting conferences. In this situation, companies are opening the door to countless discrepancies, which can become troublesome both! A class-action lawsuit on behalf of 1,500 customer service managers filed a class-action lawsuit on behalf of 1,500 customer managers. 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