Compensation for On-Call Shifts

April 6, 2018

It is well established that an employee’s on-call or standby time may require compensation. “Of course, an employer, if he chooses, may hire a man to do nothing, or to do nothing but wait for something to happen. Refraining from other activity often is a factor of instant readiness to serve, and idleness plays a part in all employments in a stand-by capacity. Readiness to serve may be hired, quite as much as service itself.” (Armour & Co. v. Wantock (1944) 323 U.S. 126, 133; see Skidmore v. Swift & Co. (1944) 323 U.S. 134, 137 (“Facts may show that the employee was engaged to wait, or they may show that he waited to be engaged.”); Madera Police Officers Assn. v. City of Madera (1984) 36 Cal.3d 403, 406 (concluding officers’ on-call mealtime was compensable hours worked).)

As recently noted by the California Supreme Court in Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833, 840-841, California courts considering whether on-call time constitutes hours worked have primarily focused on the extent of the employer’s control. (E.g., Ghazaryan v. Diva Limousine, Ltd. (2008) 169 Cal.App.4th 1524, 1535 (Ghazaryan); Bono Enterprises, Inc. v. Bradshaw (1995) 32 Cal.App.4th 968, 974–975 (Bono), disapproved on other grounds in Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 573–574.) The high Court has noted that “[t]he level of the employer’s control over its employees … is determinative” in resolving the issue. (Morillion v. Royal Packing Co. (2000)22 Cal.4th 575, 587).

“ ‘When an employer directs, commands or restrains an employee . . . from using the time effectively for his or her own purposes, that employee remains subject to the employer’s control. According to [the definition of hours worked], that employee must be paid.’ ” Id. at p. 583. Courts have identified various factors bearing on an employer’s control during on-call time: “ ‘(1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on employee’s movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during call-in time.’ Mendiola, supra, at 841 (internal citations omitted). Courts also consider whether the time is “spent primarily for the benefit of the employer and its business.” Gomez v. Lincare, Inc. (2009) 173 Cal.App.4th 508, 523–24.

In Ghazaryan, a case involving limousine drivers who were not paid for their “gap time” during their scheduled shifts between assigned passengers, the employees “[had] no way of predicting the length of any particular period of gap time.” Whether the unpaid time constitutes hours worked cannot be defeated simply through the incidental convenience of some employees having a home nearby to spend their on-shift time. Even if an employee successfully finds a way to utilize some of the unpaid time for their own purposes, they are nevertheless available and under the control of the employer for its benefit. See Ghazaryan, 169 Cal.App.4th at 528. The Ghazaryan Court found that the fact the unpaid gap time claim could not be defeated simply because some of the drivers were fortunate enough to have be able to go to their homes or gym during some of their gap time.

Labor Code §§ 226.7 and 512 and the applicable wage order require employers to authorize and permit off-duty meal and rest periods to their employees. California law prohibits employers from employing an employee for more than five hours without a meal period of at least 30 minutes. “[A]n employer’s obligation is to provide an off duty meal period: an uninterrupted 30–minute period during which the employee is relieved of all duty.” Brinker Rest. Corp. v. Super. Ct., (2012) 53 Cal. 4th 1004, 1035. “An employer must relieve the employee of all duty for the designated period.” Id. at 1034. An employer cannot “impede or discourage [employees] from [taking paid off-duty rest periods].” Id. at 1040. Section 226.7 and applicable wage orders also require employers to authorize and permit employees to take 10-minute rest periods for each four hours or major fraction thereof of work, and to pay employees their full wages during their rest periods. “[A]s a general matter,” one rest break should fall on either side of the meal break.” Id. at 1032. Unless the employee is relieved of all duty during the 30-minute meal period and 10-minute rest period, the employee is considered “on duty” and the meal or rest period is counted as time worked under the wage order. Augustus v. ABM Security Services, Inc. (2016) 2 Cal.5th 257, 264. When an employer fails to provide a rest or meal period in accordance with the applicable wage orders, the employer must pay the employee one additional hour of pay at the employee’s regular rate of pay for each workday that a required rest period is not provided, and one additional hour of pay for each work day that a compliant meal period is not provided. Labor Code § 226.7.

The recent enactment of Labor Code § 226.2 and its determination that rest periods taken be paid at the employee’s regular rate of pay (and not any hourly rate) indicates that missed meal and rest period premiums should similarly be paid at the regular rate. See Studley v. Alliance Healthcare Services, Inc. (C.D.Cal. July 26, 2012) 2012 WL 12286522 at *4. (concluding that “the ‘regular rate of compensation’ owed [for § 226.7 premiums] “is the same as the ‘regular rate of pay’ as stated in [Labor Code] Section 510 and calculated according to the FLSA, and not the base [hourly] rate of pay.” (emphasis supplied)). The Studley court relied on the holding in Naranjo v. Spectrum Sec. Servs., Inc. (2009) 172 Cal.App.4th 654, 666, that the compensation provided by § 226.7 “is not a penalty, but a form of ‘premium wage’ paid to employees to compensate them for an adverse condition they have encountered during their work hours,” it “is akin to overtime pay, which is another form of premium pay.” Similarly, the DLSE Enforcement manual uses the terms “regular rate of pay” and regular rate of compensation” interchangeably in its discussion of the payment of meal and rest period premiums. See DLSE Enforcement Manual at §§ 45.2.7-45.2.9 (meal period premiums to be paid at the regular rate of pay/compensation); 42.3.7 (rest period premiums calculated in the same manner as meal period premiums).  

Labor Code §§ 201-203 require an employer to pay all wages owed to an employee who has been discharged or who has quit. If the employer fails to pay an employee all wages owed within the statutorily required time period, § 203 calls for a penalty equal to one day’s wages at the regular rate for each day the employer fails to pay, for a time period not to exceed 30 days.

An employer’s conduct can easily satisfy the requirement that its failure to pay proper wages upon termination was “willful.” The standard for willful is not high: “[t]he employer’s refusal to pay need not be based on a deliberate evil purpose to defraud workmen of wages which the employer knows to be due.” Rivera v. Rivera, No. 10-CV-01345-LHK, 2011 WL 1878015 at *7 (N.D. Cal. May 17, 2011). A willful failure to pay wages within the meaning of § 203 occurs when an employer intentionally fails to pay wages to an employee when those wages are due. Id.

As noted in the DLSE Enforcement Manual, “if an employee is laid off without a specific return date within the normal pay period, the wages earned up to and including the layoff date are due and payable in accordance with Section 201.” DLSE Manual 3.2.2;(citing Campos v. EDD (1982) 132 Cal.App.3d 961; see also DLSE Opinion Letters 1993.05.04 and 1996.05.30).

California courts have interpreted § 17200 of the Business & Professions Code broadly, and have consistently held that a violation of any law or statute can serve as the predicate for pursuing a § 17200 claim. Isuzu Motors Ltd. v. Consumers Union of U.S., Inc., 12 F.Supp.2d 1035, 1048 (C.D. Cal. 1998).

As relevant here, Wage Order 5-2001 states:

(A) Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.

(B) If an employee is required to report for work a second time in any one workday and is furnished less than two (2) hours of work on the second reporting, said employee shall be paid for two (2) hours at the employee’s regular rate of pay, which shall not be less than the minimum wage.

(C) The foregoing reporting time pay provisions are not applicable when:

(1) Operations cannot commence or continue due to threats to employees or property; or when recommended by civil authorities; or

(2) Public utilities fail to supply electricity, water, or gas, or there is a failure in the public utilities, or sewer system; or

(3) The interruption of work is caused by an Act of God or other cause not within the employer’s control.

(D) This section shall not apply to an employee on paid standby status who is called to perform assigned work at a time other than the employee’s scheduled reporting time.

(Cal. Code Regs., tit. 8, § 11050(5).)

In other words, an employee is entitled to reporting-time pay for at least two hours of work where they are “required to report to work and does report,” but are furnished less than half of their usual or scheduled day’s work.

Author: Richard Hoyer
Category: Arbitration, Legal Procedure, Missed Meal and Rest Breaks, Overtime, Unpaid Wages, Wage and Hour
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