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. Depending on the size of the company and the number of employees, paying multiple cell phone bills could get quite costly. If you decide to reimburse employees for their cell phone use, should you do so under an accountable or non-accountable plan? 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. 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. This makes it easier for employers to budget and allocate funds to cover cell phone reimbursement. The following are the policies you can implement: That said, it is not a one-size-fits-all scenario. Employers must protect their legal interests, as well as their integrity. From checking emails and sending text messages to hosting video conferences, many professionals rely on cell phones as their mobile office. 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. We promise to send across some good stuff. 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%). Providing employees with a company cell phone means the expenses are already calculated. Your policy depends on factors like acquisition costs, data security, ease of access, etc. That said, there was no clarity on how to treat cell phone reimbursement of employee-owned phones. Shruti Kesavan leads Content Marketing at Fyle. With over 50% of the world's population owning and using a mobile device, cell phone use has become second nature to most. Even this can take precious time and energy better spent elsewhere. Let’s take these three decisions in order. Policy brief & purpose Our employee cell phone policy outlines our guidelines for using cell phones at work. The proof is in the pudding, and many employers want to see exactly what their employees are claiming as work-related expenses. We recognize that cell phones (and smartphones especially) have become an integral part of everyday life. These laws protect both employees and employers. Earned time, saved costs, improved productivity, happy employees - achieve it all with a single software. 1.1. 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. Scope: The cell phone usage policy applies to all employees, managers and supervisors. Effortless expense management for all business spends. What personal cell phone use is considered "work-related"? We promise to send across some good stuff. The advantage of this approach is that employers are only paying for what employees actually use. 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. Similarly, although COPE takes care of data security and improves productivity, it entails a lot of hidden costs. Fyle is a new-age expense management software that can solve all your expense management woes! Companies must also consider cost when it comes to purchasing phones company-wide. Despite being an integral part of daily work, many companies still do not have an effective cell phone reimbursement policy in place. Notification Technology keeps changing and so should a good company cell phone policy at work. Another controversial aspect of this law is that employees deserve reimbursement even if work-related use didn't cost them a single dime! If you have the manpower, the most accurate way to, If you choose to provide company cell phones, be prepared to. But whatever they choose, they'll know that all of their employees should have access to the same software and features. 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. While these laws vary from state to state, California is leading the way in this growing trend. this policy. Yet, the question still remains, how much of that is for personal use, and how much is work-related? Sit down and crunch numbers before you settle on a solution. With duplicate detection, you can keep fraudsters at bay and rest assured that your expense management is in good hands. But cloud … 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? Something went wrong while submitting the form. The good news is, the employer has access to all cell phone records and can control the associated plans. Some companies prefer not to play the nickel and dime game, and instead, just pay the entire amount. Employers also rest easy knowing their employees have the necessary tools to complete the job. When not convincing people to automate their expense management, she loves to read, travel, and explore the world with her pup. App. Things changed, after the Small Business Jobs Act of 2010.  Cell phones or any mobile devices were no longer a listed property for the tax year starting from December 31, 2009. In this situation, companies create a policy that requires staff to prove any work-related cell phone usage and expenses. The tax regulations of cell phone reimbursement boil down to three questions the company must answer: 1. Such phones should be Some are going as far as banning cell phones in the workplace, to avoid the risk and complications associated with creating policies and stipends. 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. This figure varies depending on the company and the agreed-upon policy.Â. “Cell phone allowances or the use of employer-provided cell phones may constitute taxable fringe benefits which are included in the employee’s taxable income and form part of the remuneration for purposes of employees’ withholding tax. These payments are referred to as mobile stipends. The cell phone policy of a company is merely a list of rules and guidelines that explain the dos and don’ts of using a cell phone in a work environment and during working hours. This is also considered the most accurate way to calculate a reasonable percentage of use – if you have the time and patience to do it. Earned time, saved costs, improved productivity, happy employees - achieve it all with a single software. Employees are not authorized to use personal cell phones in place of company provided phones and radios. Something went wrong while submitting the form. Which of these options makes the most financial sense for your company? Employers exclude the value of the device from the employee's wages. But changes cannot occur in a void. 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. The downside is that this could potentially impact employee productivity and company morale. Offering cell phone reimbursement isn't just about being a kind-hearted boss. By simply paying for your staff's cell phone bills, you're sidestepping any sticky legal issues or long, drawn-out debates over percentages. Cochran v. Schwan's Home Serv., Inc., 228 Cal. How much should you reimburse each employee? Employers consider several factors when drafting accountable policies for candidate reimbursement and determining stipend amounts. 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. The cloud of ambiguity hovering around cell phone usage has put the finance department in a fix, not knowing how to handle them. These changes came on the heels of a controversial court case: Cochran vs. Schwan's Home Services. BYOD, or bring your own device, policies are becoming more common in work environments. You've provided a cell phone specifically for that purpose. This is the question companies across the globe are trying to answer. Additionally, we also discuss how an Expense Reimbursement Software can make cell phone reimbursements effortless for your company.Â. While this is an unpopular solution for many employers, for some, it's more about peace of mind. Your subscription has been received! 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. Here are just a few: But these BYOD policies cover much more than only cell phone bills. For purpose… If the employee chooses to use their personal mobile device, that's on them! Cell Phone Allowance. Without a stipend in place, staff members can sue their employers for associated costs. 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. 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. They also address security measures that keep both the employee and the company information safe and confidential. The employee must show that the cell phone and the accompanying service plan was used for a business purpose.Â. Employers can mix and match two or three of these options to see what works best for them. One thing that still remains undetermined is what constitutes a reasonable percentage? 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. We recognize that cell phones (and smartphones especially) have become an integral part of everyday life. As a result, the IRS released a memorandum on how to manage reimbursement to employees of employee-owned cell phones.  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. 1.1. We implemented a phones in your car policy and now allow 2-15 min breaks at 10 am and 3 pm.for employees to check their phones and smoke if needed. Be sure to drop her a note at shruti.kesavan@fyle.in, if you're looking for any guest blogging opportunities. Your subscription has been received! These payments may be excluded from taxable income only … 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. Oops! Once the company decides to reimburse employees for business expenses, it should decide whether to follow the Accountable plan or the Non-Accountable plan. 5. Again, the key is that employees are reimbursed a “reasonable percentage” of their phone bill. During this milestone case, the California Court of Appeals filed a class-action lawsuit on behalf of 1,500 customer service managers. The basis of the case was that these employees were not reimbursed for incurred expenses for work-related use. Excessive use of a cell phone for personal reasons while at work is not allowed. SUGGESTED READ: How to create an IRS-compliant expense reimbursement policy. 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 you're a business owner running a successful company, chances are you have multiple employees using their mobile devices for work.Â. In today's fast-paced world, everybody has their noses in their phones for the majority of the day. Is reimbursement right for your business? There's no one-size-fits-all approach to cell phone reimbursement for employees. With constant updates and advancements in cell phone technology, it only makes sense that you create a cell phone policy that can adapt to  change. 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. In this article, we discuss the guidelines one must keep in mind while devising a cell phone reimbursement policy. Companies might decide they want to go with Apple's iOS, Google's Android, or some other option. Thank you! The biggest benefit of this approach is that the cost is relatively stable. Employees do not have to report the reimbursement as taxable income. The employee must produce an expense report, along with the receipts. The following are [company name] 's basic guidelines for proper employee cell phone use during work hours. Mobile management overhead 3. This is a popular option for a wide range of companies. With an automated software, employees can simply click and upload a picture of their cell phone bill. According to a survey by Oxford Economics, close to 80 percent of the organisations said that employees couldn’t do their job efficiently without cellphones. Call Supervision. 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. SUGGESTED READ: How to manage receipts to ensure your team is always audit-ready? Security is important, so it’s vital to … Simply put, any company that does not follow the rules mentioned under the Accountable plan, comes under the non-accountable plan (aka Allowance plan). I have attached Sample Cell Phone Reimbursement Policy. Never use a cell phone while operating equipment. The remaining options (BYOD, COPE and reimbursement) exclude cell phone reimbursements from wages, thereby contributing to tax-saving. This figure varies depending on the company and the agreed-upon policy. While BYOD reduces the acquisition costs for the employer, it comes at the cost of data security. Awesome! They may be a great asset if used correctly (for productivity apps, calendars, business calls etc.) Employers include stipend as additional wages in W-2 and it is subjected to income tax and employment tax withholding requirements. 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. Effortless expense management for all business spends. Once submitted, managers can approve these expenses in a click of a button. By using this method, companies are opening the door to countless discrepancies, which can become troublesome, both financially and legally. Why not lump cell phone use under the umbrella of expense accounts? How to create an IRS-compliant expense reimbursement policy. There's also no guarantee that employees will treat the issued phones with care. 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. The use of a cell phone’s recording or photographic capability on company premises is prohibited. This places responsibility on the employee.Â. Notice 2011-72 addresses the tax treatment of employer-provided cell phones for noncompensatory purposes. According to the non accountable plan, employees receive a monthly allowance for expenses that wouldn’t need any documents for proof. Expense accounts are commonplace in larger corporations that require employees to travel and network as part of their job description. Ne… 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. 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. 4th 1137 (2014). Further details on what they are: Stipends are often given out monthly. Companies run the risk of employees damaging, losing, or having company phones stolen – this adds replacement costs to the equation. From the tax-saving point of view, stipends are the least tax-effective option. The employer includes the value of the equipment in the wages, unless it is a working condition fringe benefit. With Fyle, you can manage all your employee cell phone reimbursements with ease.Â. Any personal use of the cell phone is considered a de minimis fringe benefit, also excluded from the wages. Smriti Nair is the originator and writer of this blog post. The employer includes the value of the equipment in the wages, unless it is a … It's also difficult to calculate a true figure in terms of cell phone use for employees with unlimited data plans. This means employees are paid for their exact amount of work-related personal cell phone use — to the penny. While this may seem unfair to some, it's the California law. 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. 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. On the other hand, employers are now tasked with making sure employees aren't using the company phone for personal use.Â. Under these policies, many employers are paying anywhere from $30 to $50 per month toward employee cell phone bills. By providing cell phones, employers can choose a carrier, hardware, and an operating system that best fits the company's needs. The defense is that the company is passing it's operating expenses onto the employee. intend to comply with the University’s Cell Phone Policy. An Accountable plan lets you reimburse employees by following IRS regulations on business expenses. But, cell phones may also cause problems when used imprudently or excessively. 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. And how do you measure these factors? Under these policies, many employers are paying anywhere from $30 to $50 per month toward employee cell phone bills. Carrier fees 2. 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