Shifting Mobile Cost to Employees? Think Twice
An unfortunate business trend is moving away from corporate-liable mobile phone models and toward individual-liable setups, where employees procure their own wireless devices and services and may be reimbursed for their expenses by their employer.
Mon, November 16, 2009
Network World — I've noticed a disturbing anecdotal trend in talking to enterprise customers lately, and some recent IDC numbers I just stumbled across seem to back it up. The unfortunate movement is away from corporate-liable mobile phone models and towards individual-liable setups, where employees procure their own wireless devices and services and may be reimbursed for their expenses by their employer.
IDC has reported that it expects worldwide shipments of individual-liable business-use devices to grow by nearly 18% to reach 56.7 million units by 2013. The researcher also expects that in the same year, more than 56% of corporate mobile devices will be individual-liable devices.
Please think at least twice before going this route.
There are a couple seemingly obvious reasons to offload mobile expenses to employees, and they have to do with the perception of sparing budget and reducing corporate liability. One driver is the U.S. Internal Revenue Service's current categorization of cell phones as "'listed property"' that puts mobile phones on a par with a corporate car and PC. These items are considered taxable employment benefits because they can easily be used for personal use as well as for corporate use.
Note, however, that two identical bills to remove cell phones from the listed property category -- one from the House and one from the Senate -- have been languishing since January. So, while it's taking time, the IRS risk could ease up any day.
The IRS issue must be behind the individual-liable movement in corporate America, according to Kevin Dilallo, a partner at telecom law firm Levine, Blaszak, Block & Boothby LLP in Washington, D.C. The reason?
"'If companies think they are saving money [using the reimbursement method], they are out of their minds. And from a security standpoint, individual liability is suicide,"' he says.
Banning corporate-liable phones does solve the IRS problem, he acknowledges. But he indicates that these gains are shortsighted. They far outweighed by the risk of giving up IT control over the devices (any handset with Microsoft ActiveSync can sync to your Exchange server and you wouldn't necessarily know it, for example).
And banning smartphones at work altogether, while being done in some companies, "'is just nuts,"' he says.
