Businesses that have employees on standby waiting to be called for work must review whether this on-call time needs to be paid time. It is a very fact intensive inquiry, that employers must ensure they get correct. Any mistake in not paying employees for compensable on-call time can result in potential exposure for overtime, minimum wage, and additional penalties. Here is a list of five items employers should understand about on-call time under California law.
1. Courts generally look to the extent of control over employee in determining whether on-call time is compensable.
In Mendiola v. CPS Security Solutions, the California Supreme Court held that, “[i]t is well established that an employee’s on-call or standby time may require compensation.” The Court, quoted Armour & Co. v. Wantock, a seminal case on this issue, for the proposition employee on-call time may have to be paid:
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, and time spent lying in wait for threats to the safety of the employer’s property may be treated by the parties as a benefit to the employer.
2. Courts look to a number of factors in making the determination of when on-call time must be paid.
Generally courts will look at the following factors in determining whether the on-call time should be paid:
- whether there was an on-premises living requirement;
- whether there were excessive geographical restrictions on employee’s movements;
- whether the frequency of calls was unduly restrictive;
- whether a fixed time limit for response was unduly restrictive;
- whether the on-call employee could easily trade on-call responsibilities;
- whether use of a pager could ease restrictions; and
- whether the employee had actually engaged in personal activities during call-in time.
3. Sleep time may be compensable when employee works 24-hour shifts.
The California Supreme Court held that security guards who were required to reside in a trailer provided by the employer at construction worksites would still need to be paid for the time they slept while on-call. In that case, during weekdays the guards were on patrol for eight hours, on call for eight hours, and off duty for eight hours. On weekends, the guards were on patrol for 16 hours and on call for eight hours. The Court held that the employer was not permitted to exclude the time guards spent sleeping from the compensable hours worked in 24-hour shifts. See Mendiola v. CPS Security Solutions, Inc.
4. Employers may pay a lower rate of pay for controlled standby time.
Employers are permitted to pay employees a lower hourly rate for controlled standby time as long as the rate is set before the work is performed, and the rate for any hour worked does not fall below minimum wage. In order to calculate overtime owed, the weighted average of the two rates is used to determine the regular rate of pay.
5. Travel time may be compensable under some circumstances.
In Morillion v. Royal Packing Co., the California Supreme Court held that, “we conclude the time agricultural employees are required to spend traveling on their employer’s buses is compensable under Wage Order No. 14-80 because they are ‘subject to the control of an employer’ and do not also have to be ‘suffered or permitted to work’ during this travel period.” Generally, travel time is considered compensable work hours where the employer requires its employees to meet at a designated place and use the employer’s designated transportation to and from the work site.