On February 5th, a California Court of Appeal announced a drastic change to California’s reporting time pay rules that will directly impact the scheduling policies of all employers in the state. The decision, made in the case of Ward v. Tilly’s, Inc., effectively amends the reporting time rule contained within Wage Order No. 7(A) which states:
“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, 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 minimum wage.”
Prior to the above-mentioned court case, various disagreements in state courts have occurred regarding how the term “report to work” should be received within the context of the provision. Many courts and employers have assumed it to mean that this provision requires an employee to physically report to the workplace in order to be eligible for reporting time pay. For example, if an employee were to show up at their place of work and clock in, only to be sent home immediately due to overstaffing, illness or another reason beyond their control, they would be provided with at least two hours of pay to compensate them for their time and the inconvenience.
Many employers in California adopted the practice of utilizing a “call-in shift” policy to get around the wage order provision. In the case of Ward v. Tilly’s, Inc., Tilly’s scheduling policy of requiring employees to call the store approximately two hours before the start of their shift to determine whether they needed to actually come in or not was called into question. According to Ms. Ward, if she called in to Tilly’s and was told to report to work, she was required to do so and would be paid for that shift as normal. However, if Tilly’s were to inform her that there was no need to come in, Ms. Ward would receive no compensation, as she didn’t physically report to the worksite prior to her dismissed shift.
In a precedent-setting ruling, the court held that, “under the facts of this case, merely calling in for one of these mandatory on-call shifts constitutes ‘reporting to work,’ which entitled Ms. Ward and her coworkers to a minimum of two hours of reporting time pay under the applicable wage order.” According to the court’s decision, modern technology has advanced to the point where “reporting” could mean far more than just physically arriving at the worksite for a shift. This means that California employers who require employees to call in before a shift to determine whether or not they should physically come into work, are now obligated to pay those employees, for a minimum of two hours of work for that day even if their presence is not needed.
The court went on to reason that placing a telephone call as part of a mandatory schedule should be categorized as part of the “reporting” rule for two main reasons:
- One, requiring reporting time pay for on-call employees would “require employers to internalize some of the costs of overscheduling, thus encouraging employers to accurately project their labor needs and to schedule accordingly.”
- Two, it would also “compensate employees for the inconvenience and expense associated with making themselves available to work on-call shifts, including forgoing other employment, hiring caregivers for children or elders, and traveling to a worksite.”
What Employers Should Do Now
Going forward, employers should be careful to avoid the pitfalls of having a “call-in shift” scheduling policy. The court specifically identified several defining factors that led them to make a decision against the Tilly’s scheduling policy:
- Requiring the employees to call the employer
- Independently disciplining employees for late or missed call-ins
- Making call-in and reporting mandatory.
Having employees available for on-call shifts does not go against California wage orders, but employers should proceed with caution. Rather than requiring employees to call in to the workplace at a certain time and day, employers should instead create a list of possible available employees that they can reach out to in the event a shift becomes available. Additionally, employers should never discipline employees for failing to respond when called to check availability. When there is a fear of discipline, the employee could argue that the policy truly constrained the employee’s freedom and activity, thus qualifying them for reporting pay.
Employers who rely on call-in shifts to supplement their schedule may want to take a hard look at their scheduling policy and speak with their HR representative to ensure they are in compliance with current wage and hour laws. Stay tuned to the Emplicity blog for up-to-date on California Supreme Court decisions that affect employers.
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