The Catholic University of America

Finance: Accounting
Employee Cell Phones for Business Use

Approved by:
President
History:

Issued   -- October 21, 2011

Revised --

 
Related Policies: Information Security and Assurance Policy
Additional References: Allowance Request Form
Responsible Official: Associate Vice President for Finance and Assistant Treasurer tel. (202) 319-5031

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I.  Introduction

In an institution whose primary purpose is to serve students, certain positions within the University require a cell phone to fulfill job responsibilities such as being available off-hours, frequent travel, or other business purposes. The purpose of this policy is to define payment rules for employee cellular business expenses, either through a supplemental compensation allowance or direct reimbursement.

II. Definitions

A. Cell Phone means a wireless, hand held electronic device used to make telephone calls across a wide geographic area by means of a network of stations that transmit and receive radio signals, allowing the user to be mobile. Some cell phones have text messaging capability.

B. Smartphone means a wireless, mobile electronic device that, in addition to cell phone capability, offers computing ability and connectivity via mobile broadband or Wi Fi access. Smartphone capabilities may include text messaging, e-mail and internet access, short range wireless communications, GPS navigation, media applications, and business applications. Examples of Smartphones include Blackberries, iPhones, and Droids. Smartphone service typically is provided by Smartphone providers by means of a data plan that provides computing and connectivity time for a fee.

III. Policy

A. Eligibility for Allowance

Employees whose job description and duties require a cell phone may receive extra compensation in the form of an allowance to cover business use of a cell phone or Smartphone.

A cell phone allowance can be provided for job duties where the employee is either: often away from the office and needs to be accessible on short notice, or in a position where he or she is expected to be “on call” outside of normal office hours. Smartphone allowances will only be provided when: one of the cell phone allowance requirements is met and the supervisor has determined that email access outside of the office is also critical to fulfill job duties. These requirements should be documented in the official job description for the employee’s position. The allowance may be requested using the Allowance Request Form and must be approved by the employee’s supervisor and cognizant Vice President/Provost. The request may be made any time during the fiscal year. The cost of the allowance and associated employer-paid taxes must be funded by the departmental budget, usually by moving funds into appropriate salary lines from expense lines. It is the responsibility of each Vice President/Provost to maintain overall fiscal stewardship and equity in their area in regards to allowance approval.

B. Payment and Taxability of Allowance

The allowance will be paid via the payroll system. This allowance does not constitute an increase to base pay, and will not be included in the calculation of percentage increases to base pay due to annual raises, job upgrades, etc.

An employer provided cell phone or an allowance provided for cell phones primarily for noncompensatory business purposes for substantial reasons relating to the employer’s business, is excludable from the employee’s income if the allowance is calculated in a manner consistent with IRS Notice 2011-72 and the accompanying memorandum to agents. The University will maintain records substantiating why a particular cell phone allowance level is selected. De minimis use of the cell phone for personal reasons does not disallow the favorable tax treatment.

C. Determination of Dollar Amount of Allowance

The dollar amount of the cell phone allowance should cover the employee's projected necessary business-related expenses. Four basic allowance levels, based on level of communication service required to perform the duties as described in the employee job description, will be administered by the Office of Human Resources. These allowance levels will be reviewed by Technology Services (TS) annually, and updated as required, by the Office of Human Resources. The allowance level chosen should be the least expensive that provides adequate business-related services. TS will maintain a list of recommended service plans and phones, as well as provide the option for employees to find their own plans. TS can provide support to sync a Smartphone that supports the necessary protocol to University email systems.

No incremental allowance will be provided for cell phone purchases because basic cell phones are typically provided at no cost to the user with a new service contract. The Smartphone allowance has been increased over the cost of average monthly business use to cover the cost of a Smartphone purchase.

Upgrades to basic equipment (special cosmetic or technical features, etc.) and cell phone use unrelated to business necessity will not be part of the allowance. However, an employee may choose to pay the difference in their respective allowance level and the cost of a more expensive device or service. Recommendation of an allowance level is made by the employee’s supervisor with final approval by the employees’ cognizant Vice President/Provost.

Requests for reimbursement for phone accessories are not covered and will be denied. If an employee with an allowance travels internationally, the specific cost of business calls overseas can be deducted on his or her expense report. International data charges will be reimbursed only with proper documentation demonstrating business use.

D. Use of Phone

The employee must retain an active cell phone contract as long as a cell phone allowance is in place. Because the cell phone is owned personally by the employee, the employee may use the phone for both business and personal purposes. The employee may, at his or her own expense, add extra services or equipment features as desired.

Due to their portability, cell phones and Smartphones are particularly susceptible to theft or loss. Use reasonable care to protect cell phones and Smartphones, and avoid accessing or storing confidential data (as defined in the Information Security and Assurance Policy) on such devices. Employees who access University data using cell phones or Smartphones must secure such devices with a password.

Use of the phone in any manner contrary to local, state, or federal laws constitutes misuse, and will result in immediate termination of the cell phone allowance. Please note that in the event of litigation, the rules of civil procedure may require the employee to save any data about potential litigation that is stored on a personal digital assistant, including all mobile devices, whether or not purchased with a University allowance.

E. Documentation and Review Requirements

The Allowance Request Form and a copy of the employee's most recent cell phone invoice must be submitted to the Office of Human Resources to initiate an allowance.

The employee’s supervisor is responsible for an annual review of employee business-related cellphone use, to determine if existing cell phone allowances should be continued as-is, changed, or discontinued. It is the employee’s supervisor’s responsibility to contact the Office of Human Resources immediately when employees with allowances leave or change positions within the University.

F. Fees for Contract Changes or Cancellations

Cell phone and Smartphone allowances will terminate upon an individual’s separation of service with the University. As the individual is the owner of the device and the voice and/or data plan associated with the device, the individual will remain personally responsible for all associated costs and charges previously covered by the allowance(s).

If, prior to the end of the cell phone contract, a departmental decision (unrelated to employee misconduct) results in the need to end or change the cell phone contract, the department will bear the cost of any fees associated with that change or cancellation. For example, the employee's supervisor has changed the employee's duties and the cell phone is no longer needed for business purposes. In that situation, if an employee does not want to retain the current contract, change or cancellation fees will be reimbursed by the department through an employee reimbursement request to Accounts Payable.

G. Infrequent Use of Cell Phones for Business Purposes

If a University employee's job duties do not include the frequent need for a cell phone, the employee is not eligible for an allowance. Such employees may request reimbursement for the actual extra expenses of business cell phone calls. Reimbursement for per-minute "air time" charges is limited to the total overage charge shown on the invoice, i.e., expenses for minutes included in the plan will not be reimbursed. In this case, an employee should make a personal payment to the provider, and then submit a request for reimbursement. Cell phone charges that result from official overseas business travel should be included as part of the normal travel reimbursement.