What is a Cell Phone Reimbursement Policy & How to Set One Up

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In today’s digital world, it’s important for companies to ensure that all employees are paid accurately and fairly, including regular salary and bonuses, fringe benefits, stock options, pensions, and any other perks the company may offer, such as travel allowances, internet allowances, hazard pay, overtime pay, and cell phone reimbursements, which are increasingly necessary for employees to use their phones for work purposes.

Do all your employees use their own mobile devices for work tasks like emailing, chatting in Slack, using social media apps, and texting? If so, it’s a good idea to set up a cell phone reimbursement policy in your company. This can help ensure that your employees have the necessary tools to effectively perform their job duties.

Despite the fact that using cell phones in the office is almost inevitable in today’s world, very few businesses adequately compensate employees for their use. This can create challenges for accounting departments that are trying to manage the costs associated with cell phone usage. It’s important for businesses to have clear policies in place to ensure that employees are fairly compensated for their cell phone use.

Read on to learn more about this topic! Click on the sections below to jump right to your specific question.

What is a Cell Phone Reimbursement Policy?

When you pay your employees for using their personal mobile devices, you are providing them with a cell phone allowance, often known as a cell phone reimbursement or a mobile stipend. Employers usually reimburse employees for using their cell phones in these common scenarios:

  • When employees use their cell phone for work related purposes. Some examples below:
    • Making and receiving business calls
    • Sending and receiving business emails
    • Accessing work-related apps and websites
  • When employees are required to be available after work hours, typically when they are on-call or on standby in case their help is needed
  • When employees travel for work, employers will typically cover cell phone related expenses due to roaming charges, and additional cell phone coverage (calling, texting, data) that the employee may need to purchase
  • Employers typically provide cell phone reimbursements to sales representatives who constantly use their cell phones for work purposes
  • When employees are working in the field, employers will typically pay for the employees cell phone as well as their cell phone coverage

What is the Average Cell Phone Reimbursement Amount?

In the US, the average cell phone reimbursement for employees is $30 per month. However, this amount varies throughout the states, as well as the employees’ specific requirements. Typically smaller companies will reimburse their employees in the $30-40 per month range. Whereas, larger companies may reimburse their employees in the $60-$70 range.

Some employers choose to provide their employees with a flat rate reimbursement, while others may actually reimburse employees based on their actual phone and plan costs. Employers will typically consider these factors when deciding on how much to reimburse their employees:

  • Type of phone
  • Type of plan the employee has
  • The specific work-related use of the phone
  • Other reimbursement policies of the employer

Are Cell Phone Reimbursements Taxable Income?

A tax-free benefit for employees is the provision of a mobile phone that can be used for both professional and personal purposes. In order to be eligible for this tax exemption, the Internal Revenue Service will not require proof that the mobile was in a use of business capacity: If the conditions for reimbursement set forth by the employer satisfy the standards for income exclusion, then it is considered that a worker’s mobile phone bill is appropriate for reimbursement. The IRS allows for income exclusion when a reimbursement is a part of an employee’s regular salary or wages. So, In cases where employees are expected to use their own mobile devices for company purposes, tax-free reimbursements for acceptable cell phone coverage are permitted.

However, if an employer provides a cell phone reimbursement as additional salary or wages to employees, the IRS requires that employers include this amount in taxable income. That being said, it’s important to consider the tax implications of a reimbursement program in your jurisdiction, and it is a good idea to consult with a tax professional before rolling out your cell phone reimbursement policy.

Can Employers Require Employees to use Cell Phones without Reimbursements?

While it may be costly to compensate workers for personal phones, this option is much cheaper than providing each worker with a company phone because the average price of a cell phone in the US is $444. It is much easier for the employees to use their personal phones to adapt to their new roles in any company. 

It’s common for businesses to reimburse employees for cell phone expenses related to work. From the employer’s perspective, this can help reduce costs. And from the employee’s perspective, it can help reduce their monthly phone bill. Overall, it can be a win-win for both the business and the employee.

Providing cell phone reimbursements for employees can potentially help a business save money and improve morale. However, it can also be costly and time-consuming for the business to manage these reimbursements. There is no clear-cut answer on whether or not it is worth it for a business to offer cell phone reimbursements to employees. It ultimately depends on the specific circumstances and needs of the business and its employees.

Benefits of offering a Cell Phone Reimbursement Policy to Employees

It’s important for HR professionals to understand that offering a phone stipend package can be beneficial for both the business and its employees. In today’s world, people tend to value companies that offer wellness programs for their workers. That’s why we recommend that HR departments advocate for and implement a cell phone reimbursement policy. Not only can it benefit the company in numerous ways, but it can also be a great way to show appreciation for your employees.

Helps with Talent Acquisition

Studies have shown that companies that offer cell phone reimbursement programs tend to have a higher employee retention rate compared to those that don’t. Businesses that are successful in attracting and retaining top talent often have highly motivated teams that produce high levels of work. Having a cell phone reimbursement program in place can be a great way to show your employees that you value their contributions and are willing to invest in their success.

More Job Satisfaction

When employees are no longer financially burdened by their cell phone use, it can have a positive impact on their work-life balance and overall health. Employees often report higher levels of job satisfaction and contentment when they feel that their mental health is being taken into consideration. Removing the financial burden of cell phone use can be a simple yet effective way for employers to show their employees that they care about their well-being.

Examples of Companies that offer a Cell Phone Reimbursement Policy

There are a couple of options available to you when it comes to compensating your team for cell phone expenses. You could set up a stipend specifically for cell phone plans, or you could create a more comprehensive program that includes cell phones and other work-related expenses. It’s up to you to decide which option makes the most sense for your business and your employees.

The following are some companies that give cell phone reimbursement to their employees.

1. Google:

They provide a cell phone stipend of $70 per month.

2. Microsoft:

They provide their employees monthly reimbursement of $75.

3. Amazon

They provide a monthly stipend of $50 to their employees.

How to decide between a Corporate Owned, Personally Enabled (COPE) and Bring Your Own Device (BYOD) policy?

BYOD means “bring your own device.” When contrasted with this, COPE stands for “Corporate Owned, Personally Enabled.”

The BYOD policy lets employees use their own phones for work. With the COPE policy, the employer pays for the employee’s phone and can monitor how it’s used for work.

The COPE policy is an option if you value privacy. It’s also easier to manage because all the phones are the same and need similar maintenance. However, using two phones at the same time can be difficult for employees.

With BYOD, the costs are mainly for work calls and repairs. It might seem like a good idea at first, but your IT department might have trouble keeping track of all the different phones that employees bring.

How to set up a Cell Phone Reimbursement Policy at Your Company?

To create a successful cell phone reimbursement policy, it’s important to involve key decision-makers in your organization. HR managers should also make sure that any changes to the policy align with the values of the company.

While it might be tempting to use a template and make changes to fit your company’s needs, it’s important for HR departments and other stakeholders to carefully consider which details to alter. Here are some tips for creating a cell phone allowance program for your company.

  • Establish why it is that your firm needs a cell phone reimbursement policy in the first place.
  • Include stakeholders from other divisions who will need to weigh in on or approve the cell phone reimbursement policy. Human resources manager is a typical position in this chain of command.
  • Create a spreadsheet detailing your costs and the following details.
  • Whether or not a worker is qualified to do their job.
  • A method for receiving the monthly cell phone allowance.
  • The method of reimbursement.
  • Make a final draft and have everyone who matters to the project sign off on it.
  • Share the news via all company avenues of interaction.
  • Choose a spending limit
  • Choose an option
  • You should have complete control over the rewards and salaries your staff receives.
  • Costs should be monitored.
  • The choice to manually or digitally manage this data is yours to make.

Conclusion

If you want to provide your employees with a cell phone but are unsure of how to structure a reasonable stipend plan, it’s a good idea to work with professionals who can show you the best practices, and potential pitfalls that you should avoid. This can help ensure that the process goes smoothly and doesn’t negatively impact your business. If you would like to learn more about fringe benefits, check out this guide on the different types of fringe benefits you can offer.

Feel free to schedule a free introductory call with our benefits experts, so we can show you the best practices when it comes to reimbursements programs!

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