Establishing and Paying for Cellular Device Business Expenses

There are three scenarios for payment of cell phone and cellular PDA business expenses:

1. Supplemental compensation for qualifying individuals (refer to Financial Policy 3.1.3)
2. Reimbursement to non-qualified individuals for occasional, incremental actual expenses.
3. Direct payment to vendor for departmentally-owned cell phones.

Supplemental compensation to qualified employees

Contracts for cell phones used in conducting business on behalf of the University should be in the employee's name as the billing entity. When an employee's supervisor or manager determines that the employee's business need for a cell phone meets all of the conditions required in the University financial policy 3.1.3, Cellular Device Business Expenses, the employee will then be granted supplemental compensation of $65.00 per month for cell phones or $130.00 per month for cellular PDAs such as Blackberry or Treo. The supplement, spread across pay periods, is taxable compensation to the employee. However, the supplemental amounts have been calculated to take taxes into consideration. An annual review of the business need for cellular services and associated additional compensation must be completed by the employee's supervisor/manager.

Establishing the supplement

When an employee qualifies for supplemental compensation for their cellular or cellular PDA expenses, the following procedures are applicable:

1. Managers and supervisors determine if employee meets requirements for supplemental compensation, as stated in policy. Recommendations should be forwarded to the department head if they are not the employee's manager/supervisor.
2. The appropriate Vice President or dean or designee must approve the supplement.
3. The department's HRMS ACES set up the supplement as follows:
   1. Complete the information on the Additional Pay page in PeopleSoft. Refer to Training Services' HRMS course materials for more set-up information and instructions.
   2. Enter either Earn Code of CPA (cell phone supplement) or PDA (cellular PDA supplement such as for a BlackBerry or Treo). Note: The payment will show as a separate line item on the employee's pay statement.
   3. The end date should be set up for no longer than 12 months. Nonsponsored account numbers, as specified by the approval authority, must be used for this supplement, regardless of the account from which the employee's salary is paid. The exception is when a PI or project has met all of the requirements, including budgetary and sponsor approval has been given to direct charge cellular expenses. The PI should acquire a separate contract with a cellular vendor and use the existing process of billing and charging the sponsor for these expenses.
4. Documentation to support the decision to grant supplemental compensation must be retained in the department and be available for audit.
5. Supplements will be ratable, paid every pay period and should be set up within the payroll system to expire annually.
6. Managers/supervisors must conduct an annual review and document the continued business need for the supplement in addition to documenting their approval.
7. The cost of the supplements should be included in the department's budget.

Changing or discontinuing the supplement

1. If there is a change in an employee's responsibilities that would disqualify them from continuing to receive the allowance, the department must take the steps necessary to cease the supplement, effective with the date that their responsibilities changed.
2. When supplements are given, the department should discontinue paying all other forms of cellular expenses for that employee via the Purchasing Card or by any other payment method.

Equipment purchase

If the department determines that the equipment should be paid by the unit, the following procedures are applicable:

1. Department confirms and documents the reason for the equipment purchase (e.g., financial hardship for the employee).
2. The department's payroll staff set up the one-time taxable payment through the Payroll system for the cost of the equipment using either CPA (cell phone) or PDA pay codes.
3. Departments may, if applicable, reimburse the individual for equipment costs no more frequently than every two-years.

Reimbursing occasional, incremental actual expenses

Reimbursements may be processed for those employees who do not qualify for the supplemental compensation and who occasionally incur incremental business call expenses that have caused them to exceed the monthly minutes on their personal cell phones. Note: If the business calls made did not cause the employee to incur additional (incremental) costs on their phone bill, no reimbursement is allowed. The following are the reimbursement procedures:

1. The employee prepares and Employee Expense Report (UM 1612) and submits the documentation (copy of the bill) along with notations as to who was called and the business purpose of the University-related calls.
2. The department enters transaction into PeopleSoft
3. Documentation is forwarded to the approver. Approver approves transaction on-line
4. A check or direct deposit will be issued to the employee.

Direct payment to vendor for departmental owned cell phones.

The University's exemption from federal and state taxes presumes that cell phones are primarily for business and not personal use. Therefore, cell phone purchases and contracts, where the University is the official billing entity, should be approved only for those situations where the University intends for the phone to be used solely for business.

The department head or designee in the unit must approve cellular phone purchases and contracts where the University is the official billing entity. Cellular phone service plans should be selected to reflect the estimated business use (i.e. service minutes). Contracts should be reviewed on an annual basis and adjusted as necessary, to reflect average business use.

If departments have employees that do not meet the criteria for receiving supplemental compensation but need to be reachable by cell phone or have a need to make calls economically when away from their land phones, the department may choose to purchase calling cards or purchase and rotate a departmental cell phone which could be used by employees on an as needed basis. In these cases, the employees would not receive a salary supplement nor an expense reimbursement and the equipment would be the property of the department, used 100% for business purposes and returned to the department daily (or other time interval, e.g., weekly, as the business need dictates) after the employees work shift, e.g., parking cashiers, delivery drivers, police officers, maintenance and other security personnel, need to be accessible by phone during their work shift. This should not be an option for administrators or faculty members.

When processing payments to vendors for departmentally-owned phones, we recommend use of the departmental purchasing card.

Transferring Contract Title from the University to the Employee

University colleges and departments are expected to implement this policy change immediately, and work with the applicable employees to transition existing cell phone contracts to the individual no later than 06/30/06. The major cell service providers do not charge a fee for this transfer, but may require establishing a new contract. If encountering a provider that does charge for transferring the contract to the employee, the department may choose to pay the transfer fee or complete the transfer at the earliest date that allows the University to avoid the fee. No renewals or extensions of existing arrangements are allowed.

If the contract already exists in the employee's name, but the billing goes directly to the department, the employee should ask the cellular provider to do an address change so that the future bills go directly to the employee.

Please refer to Appendix A for cell service provider specific transfer instructions.