California Workers May Be Owed Pay for Call-In Shifts

California employees must be paid for certain "on-call" shifts if they are required to check in to see if they're needed for a scheduled shift but are told not to report to work, the California Court of Appeal held Feb. 19 in Ward v. Tilly's, Inc. According to the court, calling in triggers the state's reporting time pay requirements, even though the employee is not actually required to go to work.

California employers generally must make these payments when "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," according to the California Industrial Welfare Commission's wage orders, which regulate wages and working conditions in the state. 

The employer must pay the employee for half of the usual or scheduled day's work, but for no less than two hours or more than four hours. Employees who report for more than one shift in a workday may be owed additional payments.

Background

In this case, retail employees had to check in two hours before their scheduled on-call shift began to find out if they needed to work that day. The on-call shift was sometimes followed immediately by a regular shift, and the employee would call to learn if they needed to work the on-call portion. In other circumstances, they were scheduled for an on-call shift immediately after a regular shift and would find out during their shift if they had to remain for the "on-call" portion.

In each of these scenarios, employees were paid only for their actual time worked, with no compensation for on-call shifts (or portions of shifts) if they were told they did not need to work.

[SHRM members-only toolkit: Complying with California Wage Payment and Hours of Work Laws]

Employees were disciplined if they failed to call in before on-call shifts, if they called in late or if they refused to work the on-call shifts. The plaintiff sought reporting time pay for the on-call shifts that employees called in for but did not work.

The employer contended that "reporting for work" required the employee's "physical presence at the workplace at the start of a scheduled shift," as opposed to simply verifying the work schedule in advance. 

In contrast, the plaintiff argued that in the modern work environment, where employees often work remotely and use their phones for timekeeping purposes, "reporting for work" should be interpreted more broadly.

After determining that the phrase "report for work" was ambiguous, the court turned to the purpose of the reporting time pay requirement, which it determined to be twofold:

• To compensate employees.
• To encourage proper notice and scheduling.

The court found that the employer's practice was contrary to these purposes. The call-in system was burdensome on employees by requiring them to be available, preventing them from working other jobs or scheduling other activities, and making it difficult and potentially costly to arrange for child care. Employees also had to be available two hours before the shift start time to call in or contact the employer. The employer, on the other hand, benefited greatly from having a pool of employees readily available without any cost.

Based on these findings, the court held that requiring the employer to provide reporting time pay under its scheduling system aligned with the state law's purpose: to compensate employees and to encourage employers to properly notify and schedule work in advance.

Questions Remain

The Ward decision has important implications for California employers and their scheduling practices. Most immediately, employers that use any type of call-in scheduling system should evaluate and reconsider their practices.

Although the court only addressed a system that required employees to call in two hours before the start of the shift, the court's reasoning would appear to apply to longer periods as well. but it remains to be seen how the courts will view a requirement that employees call in further in advance.

Unfortunately, the court provided no guidance on where that line should be drawn. As a result, any call-in requirement could pose risk. However, to the extent it is necessary for employees to call in to get information on their schedules, they should be allowed to do so during a window of time as well in advance as possible.

Can California employers still call employees to let them know they are not needed to work an upcoming shift, without incurring reporting time pay? That practice is likely distinguishable from the call-in system at issue in Ward, as long as the employee is not required to be available to take the call at a specific time or otherwise establish contact before the start of the shift. However, because it could implicate many of the same policy concerns addressed in Ward, employers should be cautious about any systematic practice of telling employees not to come in shortly before the start of a scheduled shift.

Ward further raises questions about its applicability to remote workers. The court noted that an employee could report to work for purposes of the reporting time pay requirement by logging on to a computer remotely. The relevant question, the court said, is whether the employee reports "in the manner directed" by the employer. So, for example, requiring a nonexempt employee to attend a videoconference from home might implicate reporting time pay, in addition to concerns about working off the clock.

Broader Trend

The Ward decision is part of a broader predictive-scheduling trend at the state and local levels. San Francisco, Emeryville, Calif., Seattle, New York City and Oregon have all passed various forms of predictive-scheduling laws. These laws generally apply to chain retailers and fast-food establishments and require, among other things, that employers give workers a certain amount of advance notice of schedule changes. Employers usually have to pay premiums or penalties for making schedule changes on shorter notice. A number of other states and municipalities, including California and Los Angeles, are considering similar laws, and New York is expected to adopt statewide predictive-scheduling regulations soon.

Gary McLaughlin and Christopher Petersen are attorneys with Akin Gump in Los Angeles.