Updated January 16th, 2023
Is your team using their phone for work-related email, Slack, social apps and texts on their phone? Then you need a cell phone reimbursement plan.
In 2018, the Oxford Economics survey conducted a survey which found that 89% of organizations provide a full or partial stipend to compensate "bring your own device" (BYOD) employees for their mobile phone expenses.
With such a large percentage of organizations offering this type of perk, that's why we developed this guide to everything you need to know about cell phone reimbursement stipends, also known as cell phone allowances or a telephone reimbursement.
Here's what is covered in this guide:
First, a definition:
A cell phone reimbursement stipend, or a cell phone allowance, is a sum of money given to employees for them to purchase on their cell phone plans.
Further details on what they are:
Covering your team's cell phone bill is an especially good idea when team members use their personal cell phones:
If your team members are expected to work long hours and be accessible during off hours, covering their cell phone is an excellent work perk.
Setting up an IRS compliant cell phone reimbursement stipend also helps add the needed clarity around what your company covers and how, which makes it all that more likely for your employees to be more mindful about their work-related cell phone usage and expenditure.
Employees who use their cell phones for work would love your help covering those costs. Learn how managing a cell phone stipend through Compt makes life easier for you and for your employees.
When setting up a cell phone program, there are two approaches. You can set up a stipend to reimburse your team for cell phone plans, or as we talked about above, you can create a broader program that includes cell phones as well as other categories related to work.
Below are examples highlighting the two unique approaches.
They provide one stipend for their team:
Buffer offers several work-perk stipends:
To learn more about Buffer's stipend programs, check out this in-depth post.
Circle offers its employees a monthly stipend to use on their cell phones.
There are more examples of companies doing this successfully. If you want to talk through what our most successful customers are doing, we’re happy to help. Click here to talk with a perk stipend expert.
When most people think about covering their team member's work-related expenses, many stop at cell phones.
However, in today's world people are not only using their cell phones for work but they're often spending personal money on work-related expenses such as noise-canceling headphones, ergonomic mouses, monitors, wifi/internet bills (especially for those who are remote), software, and more equipment.
Many of today's culture-forward companies are going beyond the traditional cell phone reimbursement model and are considering other ways they can support their employees at work through a work equipment stipend.
The major benefit of using the equipment model is that you're able to cover the same amount of money for your employees but give them more options and control over what they spend that stipend on. You're giving them the choice of covering their cell phone, but in addition to any other work-preference-related personal expenses.
Below is a graphic highlighting the two programs you can develop with $100/month.
Throughout this guide, we'll be discussing both types of stipends.
First, what do these acronyms stand for?
If you're planning to buy the cell phones, the plans, and distribute them to your team, that's COPE. BYOD is your go-to plan if you're reimbursing all or some of your employees' cell phone plan.
To decide between the two, you have to determine what matters most to your company. If security is a big concern or being able to track the location of your employees -- then COPE is likely the right path for you. Be careful though because it's important to realize that with the COPE approach, you're going to manage the cell phone devices, plans, bills and everything else that comes with owning a cell phone (or hundreds of them) which can take a lot of work.
As the Abacus blog points out, "BYOD is a more scalable, affordable, employee-oriented policy than COPE." Plus, most people don't want to carry around two phones, scoring another point for BYOD and its practicality.
Read more:
Input some basic data into our Perks Vendor Cost Calculator to identify how much you're spending on all of your vendors and how much you can save by consolidating with Compt (while easily ensuring IRS tax compliance).
Process options:
For the longest time a simple reimbursement model was the only option available, but that's not true anymore. Below are some options you have for offering your employees a cell phone reimbursement stipend:
Software options:
If you're looking to offer these as a business expense, choose a business expense software like Concur or Expensify.
However, if these are part of a perk and lifestyle benefit program that you offer above and beyond salary, then a perk management software like Compt is best.
Most companies offer cell phone stipends on a monthly basis, but you can do quarterly or annual -- whatever is best for your situation and team. Then determine how much.
According to Abacus' How to Create a Cell Phone Reimbursement Policy, they suggest "$50 for low business use and $75 for high business use."
Also, here's a handy calculator to help you identify how much you should be spending on mobile stipends.
Next decide, if you're doing a cell phone reimbursement spending option only, or if you're creating a larger, more comprehensive program around all-work-related expenses. The latter is considered more akin to a perk program and would include items like hardware, home internet bills (especially great for those who are remote), software, and anything else that helps them to enhance their work abilities and experience.
Your options include:
Managing the process manually
If you choose this option, be prepared to set up a process to track purchases, receipts, balances, approval and paid perks, as well as rejections or ones which need further review.
Consider using Google forms to track submissions, excel or Google sheets to track progress, and be sure to create a process to track the nontaxable vs taxable (for IRS compliance).
Or choose software to help you manage it
Concur and Expensify are two of the most well-known choices for business reimbursements.
However, if you decide however to extend the program to be more than just a cell-phone reimbursement program and include all types of work-related perks, a perk management software like Compt is best.
Compt is 100% IRS compliant, can manage your other perk stipends, and streamlines the entire process which makes you and your finance team's job easier. Plus, with Compt you don't have to pay each expense report like expense software, but rather pay a monthly amount based on the number of team members which can lead to a lower total price.
A perk stipend makes it possible for companies to offer more lifestyle benefits, with less money and ensure that they are personalized to meet the needs of their people.
Download our free eBook to discover why Lifestyle Spending Accounts are the number one way to support employees.
Employees who use their cell phones for work would love your help covering those costs. Learn how cell phone stipend reimbursement through Compt makes life easier for you and your employees.
