Cell Phone Stipend: A Win-Win Solution for Employers and Employees
Everything you need to know about setting up a cell phone stipend as an employee benefit to attract and retain talent
Our 2023 Benepass Benefits Benchmarking Guide reveals insights on top pre-tax and perks programs, average stipend contributions, and benefits design so you can design more competitive benefits.Get the guide
Cell phones provide the perfect illustration of blurred lines between work and home. Employees stay connected with their boss, colleagues, spouse, friends, clients, business partners, and even their kids’ teachers from the same mobile device. They might spend their lunch breaks flitting between work emails and family WhatsApp groups, logging into a client meeting, and then shopping online for a new pair of jeans. It’s as convenient as it is chaotic, and it’s become second nature to us all.
The burning question: Who should pay for cell phone plans when employees use their devices for both work and play?
This guide explains how companies can attract and retain talent by offering a cell phone stipend and the legalities involved in doing so. We also discuss how this model differs from a cell phone reimbursement plan and some examples of stellar companies already supporting their workforce with this perk.
When employees use their personal cell phones as part of their work activities, employers can offer a stipend to reimburse them for the cost. They pay a monthly or annual allowance or occasionally a lump sum to cover part or all of their cell phone plan.
Is a cell phone stipend right for your company? Pause to consider how your employees may use their personal devices for business purposes like the following:
By providing a cell phone stipend, you can show your employees that you appreciate their dedication and hard work in completing these tasks on the go.
The difference between a stipend and a reimbursement policy is that a stipend is provided in advance and doesn’t require employees to log the expense. There’s no burden associated with tracking, managing, and submitting expense reports, making it attractive to employees and accounts departments.
In a contrasting cell phone reimbursement model, employees must submit documentation of their expenses before being reimbursed. Employees pay the cost of the cell plan upfront, then go through a lot of red tape to receive their money back. They must keep track of receipts, submit a report, and hope it’s processed quickly, so they’re not out of pocket for long. This is especially difficult for those with lower socioeconomic status or existing student loans who may struggle with dents in their monthly finances. Some will go into debt waiting for the payment to arrive.
Equally, in a reimbursement model, finance teams must go through the headache of combing through call and internet data — and there’s a cost associated with this work. GBTA research highlights that the average time to process an expense report is 20 minutes at a company cost of $58. But 19% of expense reports include errors or missing information, which adds 18 minutes and $52 to the total.
Why fork out for a cell phone program? Here are three top reasons to find room for this in your benefits budget:
Although there is no federal law related to cell phone stipends, states such as California, Illinois, Iowa, Massachusetts, Minnesota, Montana, New Hampshire, New York, Pennsylvania, and the District of Columbia all require employers to reimburse workers for business expenses, including cell phone device usage.
The law varies by state; for example, California has Labor Code 2802 which requires an employer to pay back a reasonable percentage of an employee’s cell phone plan costs, even if they have unlimited minutes or data.
If you're not covering these costs, your organization could be vulnerable to legal action, such as class action lawsuits against these unpaid benefits.
Thoughtful workplace perks can swing the balance in your favor when it comes to talent acquisition and retention. A Glassdoor survey revealed that 80% of employees prefer a greater selection of benefits than a pay rise.
A competitive cell phone policy can be the deciding factor that ensures you attract the best people to your team and keep them there.
Adopting a “bring your own device” to work policy is often more cost-effective than supplying company cell phones to your employees. Statista research finds that the average price of a consumer smartphone in 2023 is $720, rising to $824 in the business category, and this can quickly add up across an organization.
As a result, only 15% of businesses provide mobile devices for their employees, known as corporate-owned, personally enabled (COPE) wireless devices, where the employer monitors their usage. Instead, some 39% implement a BYOD policy and use a cell phone stipend as an affordable alternative.
The average cell phone stipend cost may vary according to the business, employee role, and phone plan.
Research conducted by Samsung and Oxford Economics reveals that 98% of BYOD companies don’t pay for the cellular device or the service plan but offer an average mobile stipend of $40.20 per month, or $482 per year per employee, to go toward these costs.
However, the 2023 Benepass Benefits Benchmarking Guide reveals a higher monthly stipend based on our internal customer data. For a phone-only plan, the stipend is $41 per month, rising to $102 per month for companies that bundle cell phone and internet services usage together. Download the complete guide today to cross-check your benefits package against benchmarked standards from leading companies across a variety of industries.
IRS-2011-933 offers specific guidance on the tax treatment of cell phones. Employers may provide cell phone stipends for work-related purposes as a non-taxable benefit. However, you must have documentation showing that using personal phones is necessary for your employees to perform their job duties. Without this, the benefit will be taxable.
If you provide your employees with cell phones for business purposes, you can do so as a tax-free fringe benefit, as long as it’s necessary for their job and not just an additional incentive.
The number of companies offering a full or partial stipend program to BYOD employees has risen by 9% since 2018, according to the 2022 Maximizing Mobile Value study. Here are five examples of organizations committed to compensating their employees.
Public relations platform Muck Rack has a global workforce of 250+ employees across 28 states and eight countries. The company recently turned to Benepass to overhaul its approach to benefits, as its previous reimbursements model was cumbersome and inflexible.
Now, Muck Rack employees use a pre-funded Visa card through Benepass to spend across several perk spending categories, including access to various phone and internet service providers.
Corporate gifting platform Reachdesk is based globally with New York, Lisbon, and London offices supporting 200+ remote and hybrid employees. The company decided to revamp its approach to benefits during the Great Resignation to better appeal to prospective talent.
Reachdesk leaned on Benepass to build a competitive perks program accessible through a pre-funded Visa card. Employees can access perks from categories such as wellness, professional enrichment, and work from home, which includes phone and internet payments.
AJAC offers advanced apprenticeship programs to upskill the aerospace and manufacturing industries. The company serves almost 400 apprentices yearly at nearly 300 companies and has a generous benefits package for its instructors. Full-time staff can expect an 8% 401k contribution, 16 days of paid holiday, four weeks of PTO, and a monthly stipend for cell phone use.
Personal finance company NerdWallet is a remote-first workplace that has won multiple awards for being a great place to work. The company offers its Nerds an excellent range of perks, including a WFH stipend to deck out home offices. This also includes a monthly cell and Wifi stipend.
As the largest sports community in the world, Strava presents an attractive employer brand to prospective job-seekers. The company offers a wealth of benefits to its hybrid and remote employees, but it uses a mix of stipends and reimbursements to deliver them. For example, the Strava workforce is eligible for a $1,000 annual gear stipend but must claim reimbursements for gym memberships and mobile phone expenses.
There’s no one-size-fits-all approach to covering your employees’ cell phone bills. Create a customized policy that’s fair, consistent, and cost-effective by asking key questions like the following to define the parameters of your stipend.
Consider whether you intend to offer a cell phone allowance to all part-time and full-time employees or those in specific roles or seniority levels. For example, sales professionals who must keep in touch with potential leads and customers on the go may regularly use a mobile device.
Local laws may also influence your decision. For example, Illinois-based businesses must adhere to the state’s expense reimbursement law, which was changed in January 2019 to require employers to reimburse “all necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.”
Calculate your budget based on how many employees you offer the stipend to.
Example: If you opt for a stipend of $50 per month per employee and extend this to 100 employees, that’s $60,000 annually.
The advantage of a fixed monthly stipend is that it’s easier to manage and budget for, especially if staff members leave or join during the year.
Alternatively, a lump sum payment is great for employers that want to cover costs one time and are confident they have the upfront budget to do so.
Some organizations may choose to deliver a fixed stipend explicitly designed to cover the cost of cell phone payments. But as with any benefit, some employees will love it and others would prefer support in a different area.
An alternative to a fixed cell phone stipend is to add it as an eligible spending category within a more flexible perks program such as a Lifestyle Spending Account or a Remote Work Account. In this scenario, your employees may use the stipend on cell phone payments if that suits their circumstances. Equally, they may prefer to use their allowance for other perks such as a gym membership or professional development courses.
A stipend covering cell payments goes hand in hand with outlining how your employees access business systems and data on their personal devices.
Karolina Kijowska, the Head of People at PhotoAiD, reminds HR teams to liaise with IT and compliance departments before providing “clear guidelines on how employees should use their phones for work purposes, as well as establishing security protocols. This may include requiring employees to use password protection, encryption, or other security measures. Without that, the program could potentially put the company at risk of sensitive information leaks.”
Complete a templatized agreement and ask your employee to sign it before paying out the stipend. The content will vary depending on your specific business requirements but could include:
If your employees use their personal phones or other mobile devices to complete work-related tasks during the business day, then providing a stipend positions you as an employer that cares about your people.
With Benepass, you can offer a cell phone allowance as part of your work from home stipend or lifestyle spending account, enabling your employees to use their benefit funds for their phone plans or any other perk that suits them. Here's how it works:
Read up on other stipends that can complement a travel stipend and further support employee well-being: