A Guide to California’s On-Call Pay
The concept of on-call pay in California is relatively simple, but the stakes are high for employers and employees alike. On-call pay, as the name implies, is pay awarded to employees who must be available to respond to a work-related call, SMS, email or other communication at odd hours. While the concept of on-call pay is very straightforward, it is governed by California legislation that almost always favors the employee over the employer.
California Labor Code § 246 (effective July 1, 2014) requires that employees who are called into work after their regular shift must receive (from the time of report to work to the time of dismissal) either one half the employee’s regular rate of pay, or the regular rate of pay for two times the employee’s regular pay rate or a minimum of two hours at the employee’s regular rate of pay, whichever is greater (subject to certain exceptions).
California courts have developed a bright-line rule for determining when an employee is "on-call" and entitled to on-call pay. An employee is "on-call" in California when the employee needs only some sort of communication device for example a telephone or pager and must remain reachable, at the employer’s disposal, and in the correct physical location. However , the employee need not be physically present at the employer’s place of business to be considered On-Call, so long as the employee is "on the employer’s premises or at an other fixed location where he or she may be reached." Under California law, such an "other fixed location" may include the employee’s home.
By 2018, three counties had enacted ordinances to give additional protection to employees beyond what the state around on-call pay. San Francisco, Santa Monica and Emeryville all require certain nondiscretionary on-call pay for employees in their respective cities who work in certain industries. While each city has its own idiosyncrasies, in general the ordinances address the following issues:
The courts have made clear that the city laws and ordinances should be read in conjunction with the state laws and regulations. As these ordinances are relatively new, the courts have not yet issued a decision to interpret them. Thus, despite the apparent clarity of the ordinances, local employers will need to wait until the court’s decisions interpret the ordinances more clearly and employers implement the ordinances to get a more clear understanding of the ordinances.
California Labor Code § 246(a) was signed into law September 2013 and went into effect July 1, 2014.
Applicable Law on California On-Call Pay
California’s on-call pay requirements are governed by several key labor laws. The first is the California Labor Code, which is a set of regulations compiled and organized by the State of California.
Key Sections for California On-Call Pay
Some examples of what is found in the labor code when it comes to on-call pay in California are §§ 204, 510, 511, 554 and the wage orders, which deal directly with compensation and wages for the state. These sections and their subsections specify how employees must be compensated for all hours worked, including hours worked while "on-call" or "on standby." California, like some other states across the country, does not allow non-payment of wages for work performed—even if that work was performed in an on-call capacity. Because the concept of "on-call" pay—to say nothing of its very definition—can vary so much, it is important to go through these regulations in-depth to see what is required in terms of compensation.
California Wage Orders
Recap of California Wage Orders
The wage orders comprise a set of Minimum Wage Orders and a set of Child Labor Laws that define overtime, minimum wages, and on-call pay in California, as well as a list of special rules for overtime hours during the first workweek. An employer must abide by these regulations when determining whether to compensate an employee. If the employer does not adhere to the regulations, they run the risk of being found legally responsible for any unlawful wage practices or breaches of contract. It may not seem like a crucial topic, but there are circumstances where an employee could have a legitimate cause of action. Employers who have employees work an on-call schedule need to make sure they are compliant with California’s labor laws.
Threshold Requirements for California On-Call Pay
Eligibility for On-Call Pay Compensation: Criteria for On-Call Employees Decreased or Eliminated
California law does not require employers to pay employees if they are simply "on-call" or required to "be available for work." For example, if an employee is simply required to be available for work and has not actually perform any work, such an employee is not entitled to compensation. Rather the employee must be "engaged to wait" or "engaged to be controlled" to be entitled to compensation. Further, employers must compensate on-call employees at least the minimum wage for the time that they are "engaged to wait" or "engaged to be controlled." Thus, to the extent that on-call employees are to be paid minimum wage, employers are not required to compensate the employees for "idle" time unless the employees are required to remain at the work premises or their homes during their "idle" time.
A distinction must be drawn between employees who are merely required to be available for work, as opposed to employees who are actually called to perform work. The former group are not entitled to any compensation beyond the minimum wage for their "idled" time – unless they are required to remain at a work site or their homes during "idle" time. However, the latter group are entitled to pay for all time worked and all time spent "waiting to be controlled" pursuant to the law. The paler of law requires the employer to compensate the employee for all time spent in "waiting to be controlled," whether the employee is required to remain at a worksite or not. Specifically, California’s Department of Industrial Relations states that employers are not required to pay on call employees when there is no opportunity to work as long as there is "restricted use of their skills."
Courts and the Department of Industrial Relations have set forth certain circumstances where the employer must pay the employee. For example, in Morillion v. Royal Packing Co., (2000) 22 Cal.4th 575, 578, the California Supreme Court held that truck drivers are entitled to compensation for the time spent driving to and from far-away orchards to be on the truck-loading dock, waiting up to two hours for their trips to "begin." In so holding the Court opined that "idle time" is compensable even when the employee "is free to use the time for his [or her] own purposes and is not restricted from leaving the premises." The court also stated that the employers cannot "have it both ways," and continue to follow its previous decisions which allowed such employees to be "engaged to wait" and compensated only for the time spent at work. Instead, the court purported to distinguish between waiting for a customer and waiting for work to begin. It stated that the distinction "at some point becomes meaningless," and, given modern-day requirements that employees only work for a certain number of hours per day, such distinctions unnecessarily hold employers to old precedents that no longer reflect modern business needs and realities.
However, subsequent courts have not been as clear as to what constitutes "compensable time." For example, in Ruffin v. Entourage Security Services, Inc., (2015) 241 Cal.App.4th 846 the Court distinguished between "idle" time and "sympathetic time." In Ruffin, Security Guards were scheduled for shifts at schools, and were subsequently called on to guard functions and sporting events at different times throughout the day. The court implemented the distinction between "idle time" and "sympathetic time" to assess when the employees were entitled to compensation.
Specifically, the court found that sympathetic time is time that is not merely idle, but "an extension of the employee’s principal employment activities." In terms of on-call compensation, the critical inquiry is whether employees are expected to remain "at the ready" and perform work at any location other than the employer’s place of business. The implication is that employees who are required to wait at their homes or a location other than their employer’s business are "at the ready" and thus engaged to work, and are therefore entitled to some compensation.
Effects of On-Call Duties on Employee Pay
In the context of wage and hour issues, on-call time is a subset of what employers typically think of as "time worked," hours for which employees are paid regardless of the nature of the work performed. On-call time is defined as time an employee is required by an employer to be on-call to respond to work requests while not actually performing any work (e.g., reporting to a job site). In other words, the employee is not necessarily being paid for physically performing work during on-call time, but may be paid for time spent waiting or tending to the call if he or she cannot use that time effectively for her own purposes (such as sleeping).
There are several issues worth noting when it comes to on-call duties. First, the time needed to actually report to the job site to begin the performance of work is compensable and is considered "time worked," regardless of whether the employee is engaged in on-call time or not when being called to work. In addition, if the employee is needed to respond immediately to the call, or otherwise attends to the call and is unable to use the remaining time effectively for her own purposes, she is entitled to be paid for that time in addition to the time spent actually performing any work requested by the employer. On the other hand, if the employee is able to use the on-call time effectively for her own purposes, and is not specifically required by the employer to wait at home or must wait at home solely for her own convenience (as opposed to employer requirement), the time does not need to be compensated.
Second, all time spent responding to a call will not necessarily be eligible for overtime pay. Overtime pay is owed for time spent working in excess of eight hours on a single workday or 40 hours in a single workweek, provided the time worked (including time spent responding to on-call issues) is not excluded from that calculation. For example, if time spent responding to an on-call issue will result in an employee working in excess of the eight hour day or 40 hour workweek, and the time spent responding to the call is not work that is both regular and integral to the employee’s primary duties, the time will be considered overtime hours for the day/week. Note that the issue is not simply whether the on-call duty caused the overtime hours, but whether the call, if not effectively ignored or delayed, would have caused the regular workday to finish later than the end of the scheduled workday. Likewise, schedule-changing on-call duty, which is defined as requiring or shifting a person from one shift to another (or to different duty), can also trigger overtime pay requirements. However, if the employee was going to work in excess of eight hours on the scheduled day or more than 40 hours in the workweek even without the ability to delay the duty or not be subject to the on-call requirement, the on-call time will not trigger the additional overtime pay.
On-call time can also impact an employee’s schedule. In some industries, employers have successfully argued that on-call duty need not be counted for daily or weekly hours worked, which in turn allows for different scheduling of employees during the workweek that will work for the employees without impacting the employer’s operations. For example, employees who work rotating shifts with varying hours may not be entitled to overtime pay if on-call time is not compensable. The associated risk here, however, is the potential liability if the provisions of the allocation scheme are not followed, and the employee working on-call time is then found to have engaged in other compensable time not directly related to responding to an on-call issue. In this instance, the compensation obligation can begin to start even prior to actual response to the call or simply result from the failure to have an employee on-call, if such schedule was agreed to by the employer and the employee. Employers should take care to ensure that any variation in scheduling allowed by the on-call duties be clearly set forth in the agreement, and that the employee adheres to that schedule in order for the schedule to be followed.
A few establishments have begun experimenting with automated on-call systems, which theoretically allow for a shift to be offered to any on-call employee who can respond to a notice within a certain period of time for a certain workload. A California decision has upheld such a system as not violating the state’s "call-in pay" laws, finding that the employment formalizes the individual’s acceptance of the risk of not being notified in advance of a shift or not being assigned to work (see the section above explaining such risks to pay).
Current Court Decisions and Developments
WCAB Cases have further refined employees’ entitlement to on-call pay. In Rivera v. Atomic Transportation, 2016 Cal.Wrk.Comp. P.D. LEXIS 132, the WCAB reaffirmed the entitlement of employees to be compensated for time they are required to remain available for work even if it is not in actual attendance at the place of business. In that case, the applicant was employed as a truck driver. In his job description, he was required to drive to Los Angeles on a Saturday to pick up a load for delivery the following day. He was to leave his home at 7 a.m., which did not allow sufficient time to drive to the yard and then to Los Angeles. Because he did not have a permit to drive a tractor trailer, he was picked up and driven at 9:30 a.m. At 2:30 p.m., he arrived back at the yard, left his tractor and took a truck that was designated for personal use. He then had a flat tire.
The applicant argued that he should be compensated for his time from 7 a.m. until 9:30 a.m. when he left for Los Angeles. The employer argued that the applicant was not working from 7 to 9:30 so he was not entitled to compensation during that time. The workers’ compensation judge found that the applicant was entitled to compensation for the time between 7 a.m. and 9:30 a.m., the time he would have spent driving to LA, if he had possessed the appropriate permit. The self-represented defendants filed a Petition for Reconsideration which was granted. The WCAB found that the judge’s finding was not supported by substantial evidence because the applicant subjectively reported that he was not performing any services for his employer. The WCAB opinion does not contain a discussion or analysis of the law other than a reference to the Court of Appeal decision in Peabody v. Workers’ Comp. Appeals Bd. (1995) 9 Cal.4th 81. However, the WCAB panel clarified that the applicant was not entitled to compensation for the time that he spent in LA. The applicant filed a Writ of Review with the Appellate Court; however, the court denied review of the matter.
In her concurring opinion, Commissioner Romyn Victory listed several cases where this issue has come up, as well as the cases that distinguish between work-related activities for which compensation is paid, such as pre-employment travel, repair of a vehicle, and selected transportation by the employer in Peabody.
However, this decision is not the first to shed additional light on the interpretation of the applicable wage orders. In Furlong v. Tri-Counties Bank, 2015 Cal.Wrk.Comp. P.D. LEXIS 207, the applicant was hired as a bank teller and worked a set schedule each week. On top of her regular schedule, her employer asked her to be "on call" during the weekends. On weekends, she was required to carry a phone at all times during a set time period. She was expected to answer if her boss called, and resolve whatever issue he may be calling about. If she missed the call, she was to call him back within 15 minutes. If she failed to resolve the issue to his satisfaction, he would come to her location to personally handle the situation. During this time, she was expected to stay within a certain geographic area from home.
The district office manager (the applicant’s immediate supervisor) testified that the applicant was compensated at her hourly rate of pay and was able to be compensated even if she resolved the issue quickly and had to limit her activities during the weekend. Because she was required to deprive herself of usual weekend activity and activities away from home, the district office manager believed that the applicant had to remain ready and responsive to the demands of her employer and was thus entitled to compensation for the on-call time . The presiding judge found that the applicant was engaged and allowed to work for the employer by the employer being kept informed by telephone during the hours that the applicant was on call.
The WCAB noted that the California Supreme Court has long recognized an employer’s duty to compensate employees for time spent responding to their employer’s demands, even if the employees are not performing work during that time period. In Peabody, the California Supreme Court held "Under the language of the wage orders… the employee who is required to be on call is performing work for purposes of the wage orders." The WCAB also noted that the California Court of Appeal has held that the crucial inquiry involves whether, at the particular time in question, the employee is subject to the control of the employer and is therefore entitled to be compensated for time spent waiting at home…. To hold otherwise would make the compensation of workers dependent on serendipity – whether the worker happens to be engaged in activities unrelated to his or her work at the time of the employer’s call". There, the applicant was permitted to return to his home from the field while on call, but was generally required to remain within a reasonable distance from his home and to keep his cell phone charged and available. The applicant was also expected to wear his work clothes while on call and could not consume alcohol or use drugs or tobacco during the on-call period.
The WCAB in Furlong found that the requirement to remain on call subjected the applicant to her employer’s control. The court also found that the employer "required its employees to anticipate and respond to work assignments while on call, the fact that such work was performed "distantly" from the employer’s place of business is of no legal significance, as long as the employee is otherwise acting "for" the employer and not for personal interests and is subject to the employer’s direction and control. (See Rest.3d Employment Law, § 55, com. (a).) The Application for Reconsideration was denied.
In December 2016, the United States Department of Labor (DOL) issued a new on-call pay fact sheet. 11 In that fact sheet, the DOL laid out that "for employer shuffling employees around within a workweek, such as changing shifts or requiring employees with differing skills to substitute for one another, employers must pay those non-preferred employees at least the minimum wage for all hours worked, and overtime, where applicable. Employees are considered to be ‘working’ and entitled to minimum wage and overtime for whether on-call or actually on the premises. Since the Fair Labor Standards Act does not allow a workweek to exceed 40 hours without overtime compensation, employers cannot simply allow employees to ‘work off the clock’ to save on overtime premiums."
In light of these recent cases and changes to the law, it would seem that employees who are required to remain available for work but are not actually working at that time are entitled to compensation for that time even if they are not at their place of business. This is true so long as the employee is in fact subject to the control of the employer and under the obligation to respond to calls during their on-call time. This is consistent with Rule 556. D(18) of the California Unemployment Insurance Code which defines hours worked as the time an employee is subject to the control of the employer and starts when the employee gets on the bus or gets in their car to go to work.
Best Practices for California On-Call Pay
To avoid the pitfalls of liability under California’s on-call pay laws, employers should implement the following best practices: Clearly identify any on-call shifts within the employee’s schedule and indicate whether there are any pay guarantees due to on-call shifts. Employers should also implement a written policy for any position in which on-call duties may be required. Management should ensure any on-call policies comply with wage and hour, as well as recordkeeping and covered employee requirements. Employers should review their policies to ensure they are complying with all prevailing wage and project labor agreements that may require guaranteed compensation or similar benefits for employees who are on-call or not otherwise working. Where feasible, try to schedule on-call shifts during a 24 to 48 hour time period, especially when employees are required to respond to calls more frequently than every 24 hours or where they are required to respond to frequently recurring calls. Employers should require that employees be available to respond to calls within a reasonable period of time. Note that while "reasonable" may differ from one industry to another, generally responses to calls in one hour or less are generally considered reasonable. If possible, attempt to minimize or control call back pay under the circumstances by renting extra space or using technology to eliminate or reduce commute time to locations frequently requiring employee response. With the ever-developing field of technology and connectivity, employers should consider whether they will have policies on how employees should respond to calls, such as via cell phone, text messaging, email or other means of communication.
Employee Rights and Helpful Information
Under California law, employees who are on-call and must remain close to their workplaces in case they are needed to come in to work have a right to be compensated for the time spent on-call if their on-call time substantially restricts their ability to use that time for their own purposes. In determining if on-call time is substantially restricted, the California Supreme Court has indicated that courts should consider a number of factors: (1) whether the employee is required to remain on employer’s premises and how much time is spent on the premises; (2) how far the employee must travel from his or her residence to the worksite; (3) whether there are other restrictions on the employee’s mobility; (4) whether the employee must remain under a supervisor’s control during the on-call period; (5) whether the employee is required to respond to telephone calls or other communications immediately; and (6) whether the use of employer-owned equipment is restricted.
In addition to their right to compensation for on-call time, workers in California have other rights and protections with regards to additional hours worked, overtime and work breaks. This may include the right to food and rest breaks during shifts, and to compensation at 1.5 times their regular rate of pay (i.e., "time and a half") or sometimes even 2 times their regular rate of pay (i.e., "double time") , depending on how many hours the employee worked in a given work day or work week.
There are certain resources available to California employees regarding their rights in the workplace, including with respect to wages and hours worked. Employees may contact the California Division of Labor Standards Enforcement (DLSE) if they have a question about whether their employers are violating their rights with respect to on-call pay, or otherwise not paying them properly. Employees may also contact the DLSE with questions about other wage and hour issues, such as meal and rest breaks, overtime, etc. The DLSE is responsible for enforcing wage and hour laws. For more information about the DLSE, visit its website at www.dir.ca.gov/DLSE.
Legal assistance to potential claimants may be available through the Legal Aid Foundation of Los Angeles (LAFLA). Their services include unlawful wage garnishments/levies; debt collection harassment; and some consumer protection matters. For more information, visit LAFLA’s website at www.lafla.org.
There are other work-related organizations out there, which may further assist potential claimants. Most notably, the California Labor Federation is a labor organization that advocates for labor rights throughout California. Interested individuals can read about the group and check the current calls on their website at www.calaborfed.org.