Recently, the Internal Revenue Service (“IRS”) submitted a public notice stating that cell phones issued by employers as a working condition are no longer includable in the employee’s taxable income as a fringe benefit. Employees will now be happier to receive a tax free cell phone and it is quite possible that more employers will be encouraged to issue cell phones to their employees. While some employees may be happy to receive free cell phone service, most employees will find that these cell phones cause them to perform work away from the office that they may never get credit for performing. For non-exempt workers, employer issued cell phones likely result in significant unpaid wages and may result in substantial violations of state and federal minimum wage and overtime laws.
The general rule under the Fair Labor Standards Act (“FLSA”) is that all employees are entitled to overtime compensation if they work more than forty hours in a workweek. 29 U.S.C. 207(a). Compensable work time is roughly defined as time spent performing an employee’s core job duties or time spent performing activities that are integral and necessary to those principle job duties. For example, a cook’s principle job duties are likely to prepare and cook food for the restaurant’s guests. However, incidental to those principle job duties, the cook may be required to set up the kitchen in the morning, place orders for groceries, clean the kitchen, organize the walk-in refrigerators and train new cooks. Obviously, when a cook arrives at the restaurant in the morning, setting up the kitchen is an integral and necessary activity to complete in order to perform the principle activities of cooking food. Therefore, in this example, the cook should be paid from the moment he or she arrives at the restaurant and begins performing these preparatory activities until the end of the shift when the cook completes the clean-up activities.
In the context of a cell phone that is issued to an employee, if such person is required to accept and respond to calls outside of his or her paid work hours, then the person is performing compensable work and must be paid at legal wage rates (i.e., minimum wages and overtime). For exempt workers who are not entitled to overtime, this is not a big deal (although, it may be a significant intrusion on an employee’s personal time), but for an hourly employee whose earnings depend upon the number of hours worked in a workweek, unless that time is properly recorded and paid for by the employer, the hourly employee will not be paid for all time spent performing compensable work.
If your employer has issued you a cell phone and requires you to accept and respond to calls outside of normal business hours, you should contact an experienced wage attorney at Osman & Smay LLP for a free consultation to determine whether you are being properly compensated.