Why You Should Add a Phone Stipend To Your Employee Perks

Whatever you call them — cell, mobile, or smart — phones play a pivotal role in the business world, instantly connecting people worldwide. Around 2/3 of employees use their phones for work, and 87% of employers have integrated personal phone usage into their policies, highlighting the importance of phones in the workplace.

As a manager, business owner, or coworker, being able to connect to other employees at any time provides a wealth of benefits. Cohesiveness, communication, and workflow improve, and no one’s left in the dark, so to speak. The only issue that may arise is how you intend to pay for the privilege.

Cell phone stipends have become one of the many perks that can offset employees’ costs and even make jobs more alluring for new hires, all other things equal. If you want your employees connected on the go, we’ll help you decide how to structure it and what options work for you and your business.

Why You Should Consider a Phone Stipend

Like other employee perks, a phone stipend is a fringe benefit that adds up to remarkable savings. The average U.S. cell phone bill is $141 per month, meaning that your phone stipend program can put $1,700 in their pocket each year.

Employee cost savings aren’t the only reason to consider a phone stipend. Cell phone stipends can also entice new hires, especially if you pay all or a majority of the phone bill. While employees have to buy their own phones, a bring-your-own-device (BYOD policy) that offsets or alleviates monthly bills is a major perk.

Phone stipends may also enable compliance with state law. Nine states and the District of Columbia have laws that require employers to offer a stipend or reimbursement for work-related expenses incurred when using their personal phones.

Work Phones vs. Personal Phones

From an employer’s perspective, having employees use their personal cell phones for business use avoids the costly price of a new phone and a cell phone plan — which can total almost $2,500 for a new phone and plan each year.

Furthermore, employees are already familiar with their mobile devices, can select their preferred service provider, and can choose to upgrade as they see fit. Typically, a single phone is simpler, and employees won’t have to juggle multiple devices.

However, you need to have boundaries in our phone stipend policy. You can’t readily expect employees to maintain availability at all hours of the day. Work-life balance can be disrupted, employees may worry about privacy, and burnout may follow. If you choose a phone stipend and allow personal cell phone use, outline the policies and expectations.

Alternatively, you can provide work phones to your employees. This requires them to use both their work and personal phones, and you may have higher mobile phone expenses, but it comes with several benefits:

• Streamlined communication
• Enhanced security and privacy
• Increased productivity
• On-call access
• No issues with iOS/Android compatibility
• Employee monitoring
• Business phone number rather than a personal one
• Pre-loaded apps for smoother workflow
• Ability to contact people on demand, handy for remote work

In almost all cases, a work phone plan is far more expensive than a cell phone reimbursement or stipend — but if the advantages listed above speak to you, it may be worth the added cost.

What’s the Difference Between a Phone Stipend and Phone Reimbursement?

A major decision in your cell phone allowance policy is whether you choose a phone stipend or a phone reimbursement plan. A phone stipend is a sum of money given to employees each month to offset or pay for their cell phone usage. Phone reimbursements, though similar, are variable amounts paid to an employee based on their documented expenses. Cell phone reimbursement policies may also have eligible and ineligible expenses as outlined in your expense eligibility policy.

Both have benefits and drawbacks. We’ll examine both sides to determine which option is right for you.

Phone Stipend

• Allows users to choose their service plan and provider for maximum connectivity, preferred features, and pricing
• Simple for expense reporting and payment thanks to the same payment each month or quarter
• Easy for budgeting
• Less cost, as you don’t have to purchase the mobile device

Phone Reimbursement

• Shows actual phone usage, which enables you to budget accordingly
• Better monitoring of monthly cell usage, including how much employees use their phones for business purposes
• Documentation is required, which can increase administrative costs
• Variable costs can make budgeting difficult
• Ability for employees to make work-related purchases while still getting their money back

How Much Should My Phone Stipend Be?

Your phone stipend amount depends on many variables. What service provider you use, how much data you buy, and how many employees you have will all affect it. (Keep in mind that many service providers will offer a bigger discount the more lines you have.)

According to a 2022 Oxford Economics survey, the average monthly mobile stipend is $40.20 — considerably lower than the average $141 bill. However, this is primarily due to employees only using their personal devices for work-related activities a portion of the time. When you consider 40 hours in a 168-hour week, $40 is actually right on the money. Of course, you can adjust this to meet the needs of your employees, especially if you want them on call for job duties outside of office hours.

Phone reimbursement plans are a bit different because you’re paying for expenses based on the amount spent by the employee. While a portion of the phone bill is your responsibility, you may also have to pay for added data, international calling, or talk time, if the job necessitates it. Other eligible expenses that you might include in a phone reimbursement plan might include:

• Apps
• Professional memberships, such as a GoPro account for videographers or Adobe account for graphic designers
• Online course providers, such as Coursera or Udemy

Creating a Phone Stipend Policy

Your human resources department should outline your phone stipend policy along with other employee benefits in the employee handbook. In this document, you should outline several facets, including:

• What expenses are considered business needs
• Security measures for keeping sensitive information secure, such as VPNs and antivirus software
• Your monthly phone stipend or reimbursement amount; if using a reimbursement policy, the maximum amount allotted per month
• How to file expense reports and submit receipts
• Whether you will include this as part of a remote work stipend, home office stipend, or if it’s separate, assuming you have remote employees
• When an employee is expected to answer phone calls and texts
• What devices are compatible with your phone stipend program, i.e. iOS or Android
• Which apps should remain on the phone at all times, such as Slack or Microsoft Office
• Privacy considerations
• The frequency of the phone stipend (monthly, quarterly, or annually) and how they’ll be paid (direct deposit, check, etc.)
• Acceptable use policies, at least during business hours

Key stakeholders should also discuss how to monitor phone usage. Because the phone is a personal device, you need to have a policy that differentiates personal use from business use. Communicate these expectations to employees to avoid a messy situation.

Acceptable Use

When you put together your phone stipend program, you should also outline the expectations of usage. If you’re paying for all or a portion of the phone bill, you want to ensure your employees know what they should be doing. This may include:

• Writing and answering emails
• Making business calls to clients, customers, vendors, or coworkers
• Submitting receipts and invoices for their phone or other business-related expenses
• Joining video calls on Zoom, Google Hangouts, or Microsoft Teams
• Training and continued education classes
• Scheduling meetings with coworkers or clients
• Using project management or collaboration software to communicate and update others on their progress

Phone Stipends and Taxes

One of the best features of phone stipends and reimbursements is that they’re generally not taxable benefits. Because the stipends are provided for non-compensatory purposes and are for the convenience of the employee, the IRS doesn’t deem this taxable income.

However, if the phone stipend or reimbursement exceeds the employee’s monthly bill or non-business usage, the stipend is taxable. This is a rare occurrence, and you’ll need to monitor it to ensure that neither you nor your employee owes taxes at the end of the year.

Bridge the Gap Between Personal and Work Phones With Hoppier

Whether you decide to use a monthly stipend or implement a reimbursement plan, your employees may need petty cash for work-related expenses or a way to have fun, relax, or unwind through their phones. Either way, having a convenient method to pay for phone-related work or play is essential.

Hoppier digital gift cards give you that power. With a Hoppier gift card, you choose the amount, expiration, and vendors. Once your employees receive the card, they will have a handy way to purchase games, extra data, storage space, or anything else they need.

In a world of constant contact and communication, Hoppier gives you a payment method that’s every bit as practical.

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