Permitting Employees to Clock In and Out on Personal Cell Phones

January 6, 2021

We have a new payroll system that will allow employees to clock in from their phones. Are there any concerns about having nonexempt employees clock in and out from personal mobile phones?

The first concern that may jump to mind is whether you can require the employee to use her personal cell phone from a financial or compensation standpoint. There’s no Wisconsin state law or federal requirement to reimburse for the phone or otherwise provide another phone for clocking in and out. (Some states such as California and Illinois do require employers to reimburse an employee at least a “reasonable percentage of the employee’s cell phone bill” if the cell phone is used for work.)

The U.S. Department of Labor (DOL), however, recently issued an opinion letter related to reimbursing minimum (or near-minimum) wage nonexempt employees’ use of personal vehicles for business-related expenses that may present a theory for recovery because it relates to personal cell phones. In FLSA2020-12, dated August 31, the DOL issued an opinion about reimbursing expenditures when a nonexempt employee uses her personal vehicle for company use (in this case, a personal vehicle for delivery drivers).

Specifically, the DOL opinion letter noted that costs of “‘other facilities’ that are primarily for the benefit or convenience of the employer”—such as uniforms or required personal vehicle use—cannot be counted as wages. If the costs of such items cut into the wage and cause it to dip below the minimum amount required by law, the employer then may be subject to a wage claim.

The letter went on to note that the employer can reimburse to cover the expenses if the reimbursement “reasonably approximates the expenses incurred.” The amount doesn’t necessarily have to be the exact amount incurred, but rather, the regulations permit a reasonable approximation. The letter provided examples and methods for how an employer could calculate the amount to reimburse an employee.

Although the opinion letter specifically dealt with the use of a personal automobile, it wouldn’t be difficult to imagine the theory being applied to the use of other personal items, including cell phones. Therefore, an employer with nonexempt employees near the minimum wage mark may want to carefully evaluate whether to issue some sort of approximated reimbursement to avoid any potential liability.

What if the employee doesn’t have a phone capable of running the application to clock in and out? Or, what if she refuses to download the application to her personal phone? There are no Wisconsin statutes that would prevent you from refusing to hire an individual (or terminating her position) if she refused to comply with a company policy, such as a requirement to clock in and out on a phone. Indeed, under Wisconsin law, an at-will employee’s employment can be terminated for any reason (so long as it isn’t discriminatory). A good practice to avoid any potential conflicts, however, would be to simply permit such employees to clock in and out using alternative methods, such as an internet browser accessible on a computer or tablet.

In addition to the concerns about the application itself, there are always concerns with nonexempt employees performing tasks on their personal devices. Assuming the employee is only accessing a program to clock in and clock out, the security risk may be minimal. But, if she is also using her personal phone for other work-related activities, such as checking e-mails or accessing client or company materials, the risk may be higher. There are privacy concerns with the information on her phone or risk of hacking because her personal device may not have the same rigid security as you may otherwise require or prefer on company-owned devices (such as password requirements or privacy settings that limit accessible information).

Likewise, there may also be concerns regarding unpaid overtime if the employee is also using her personal cell phone to perform work-related tasks. Nonexempt employees are required to be compensated for work, which can include e-mailing, calling, or texting clients or other employees from their own personal cell phones. If you permit employees to use their personal cell phones for more than simply clocking in and out, you should remind them that they need to clock in each time they check their e-mail or perform any other work.

This article, slightly modified to note recent updates, was featured online in the Wisconsin Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.