On February 4, 2019, a California Court of Appeal ruled that employees calling their employer to determine if they must come into work is considered reporting to work, and reporting time pay is owed to the employee if they are not required to work that day. The case is Ward v. Tilly’s, Inc. from the Second District Court of Appeals. Here are five key issues for employers to understand about the ruling:
1. Reporting time pay.
California law requires an employer to pay “reporting time pay” under the applicable Wage Order. Wage Order 7 requires that 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, 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 cannot not be less than the minimum wage.” See Wage Order 7-2001(5).
In addition, if an employee is required to report to work a second time in any one workday and is furnished less than two hours of work on the second reporting, he or she must be paid for two hours at his or her regular rate of pay.
California’s Labor Commissioner provides the following example:
For example, if an employee is scheduled to report to work for an eight-hour shift and only works for one hour, the employer is nonetheless obligated to pay the employee four hours of pay at his or her regular rate of pay (one for the hour worked, and three as reporting time pay). Only the one-hour actually worked, however, counts as actual hours worked.
2. Does requiring an employee to call two hours prior to their shift to see if they are needed at work trigger reporting time pay obligations?
The court in Ward v. Tilly’s, Inc. was presented the issue of what does “report for work” mean? The phrase is used in Wage Order 7 to trigger reporting time pay obligations, and is not defined in the Wage Orders. In Ward, the plaintiff was required to contact the employer two hours before the start of her on-call shifts to determine if she was required to come into work for that shift. Plaintiff argued that being required to call her employer two hours before a potential shift to see if she was required to work that day should be considered reporting to work, which triggers the employer’s obligation to pay reporting time pay. As the court noted, “[b]oth parties assert this phrase is unambiguous—but they interpret it in very different ways.”
The employer argued that “report[ing] for work” requires the employee’s “physical presence at the workplace at the start of a scheduled shift.” The employee argued that reporting referred to in Wage Order 7 refers to “any manner of reporting, whether in person, telephonic, or otherwise.” Plaintiff argued that given present day’s work arrangements, it is common for employees to work remotely, use phones for work, and not even physically ever arrive to work while still working. Therefore, the employee argued that calling the employer is tantamount to reporting to work.
The employer argued that the meaning of the term “report for work” when it was drafted by the IWC in 1940 should be the controlling meaning applicable to the court’s analysis. The employer argued that when the Wage Order was drafted, the phrase “’report [for] work’ meant physically showing up.” The Court agreed and recognized “that is how an employee reported for work in the 1940’s,” but this should not end the court’s analysis. The court continued to note that “in applying existing statutes to new circumstances, ‘we must maintain our usual deference to the Legislature in such matters and ask ourselves first how that body would have handled the problem if it had anticipated it.” Basically, the court placed itself into the role of “channeling” the drafters of the Wage Orders to interpret the Wage Orders as they would have applied them to today’s workforce.
3. The court in Ward held that a telephone call to employer does trigger reporting time pay.
Considering how the 1940 drafters of the IWC Wage Orders would approach this issue, the court held that they would have defined “report for work” to include making a telephone call to the employer:
[S]uch an omission [of telephonic reporting] ‘is not surprising’ because neither the practice of on-call scheduling nor the cell phone technology that makes such scheduling possible existed when the IWC adopted the reporting time pay requirement in the 1940’s. Consistent with Apple Inc. and WorldMark, we therefore next consider whether, had the IWC been “prescient enough to anticipate” cell phones and telephonic call-in requirements, it “would have intended” the reporting time pay requirement to apply.
The court explained that “had the IWC considered the issue, it would have concluded that telephonic call-in requirements trigger reporting time pay.”
On a side note, and not discussed in the court’s opinion, the telephone had in fact been invented in 1876, well before the IWC drafted the Wage Orders in the 1940’s. In addition, it appears that there were nearly 30 million telephones connected to the phone system in the United States by 1948.
4. Other courts and the DLSE have viewed “reporting for work” differently.
The dissenting opinion noted that “[a]s recently as 2011, the DLSE stated that reporting time penalties are due only when ‘the employer finds it necessary to send the employee home because there is no work.’” (DLSE, Information Sheet: Wages et al. (Jan. 2011).) Not discussed in the opinion, but also interestingly, the DLSE’s current website’s FAQs on reporting time pay also only discusses examples of when the employee is sent home from work.
The dissenting opinion also noted that federal courts examining the same issue came to a different conclusion. In Culley v. Lincare, Inc., 236 F.Supp.3d (E.D.Cal. 2017) the court held that reporting time pay only applies when employees “were required to physically report to work and not to when they performed work via telephone.” In Casas v. Victoria’s Secret Stores, LLC (C.D.Cal., Dec. 1, 2014, No. CV 14-6412-GW), a federal district decision by the Hon. George Wu held that, “Viewed in context, then, the plain meaning of the word ‘report’ supports [the retailer’s] interpretation—that a person ‘reports to work’ by physically showing up at the place ready to work.”
Alternatively, in Bernal v. Zumiez, Inc. 2017 WL 3585230 (E.D. Cal. Aug. 17, 2017) the court held that “report for work” does not require physical presence, and reporting time would be triggered by a telephone call. Zumiez appealed this decision and it is currently pending before the Ninth Circuit. In Segal v. Aquent LLC, 2018 WL 4599754 (S.D. Cal. Sept. 24, 2018) the court agreed with Bernal, and held that “report for work” does not require physical presence, but asked the parties to notify the court of any development in the Zumiez appeal before the Ninth Circuit.
5. Next steps for employers.
Another issue noted by the court, but not addressed, was how much advance notice must be given to employees prior to their shift in order to avoid reporting time pay. The court did not answer this question: “We agree that the wage order potentially creates some difficult line-drawing challenges, but we need not resolve all of those challenges to answer the limited question before us….”
This issue raising many new concerns and may be a case that will be appealed to the California Supreme Court. However, the decision in Ward v. Tilly’s is arguably controlling law in California, and employers need to review their reporting time pay policies to ensure compliance with applicable law, and should continue to monitor for any new court decisions on this issue.