LawFlash

California Court of Appeal: Two-Hour On-Call Scheduling Policy May Create Reporting Time Pay Liability

February 12, 2019

The California Court of Appeal recently held that if an employer requires an employee to call in two hours before the start of a scheduled shift to find out if the employee will be required to work the shift, and the employee is not put to work, the employer is liable for California reporting time pay.

Background

In the case, retail store employees in California were scheduled for regular shifts and were also assigned “on-call shifts,” where they were required to call in two hours before their shifts were scheduled to start to find out if they actually needed to come to work. If employees were told not to come to work, they did not receive any pay. If they were told to come to work, they were paid for the shift worked. The plaintiff filed a class action alleging that by calling in, she and other employees were effectively reporting to work, and so should be paid reporting time pay. The employer filed a motion seeking dismissal on the grounds that because the employees were only calling in and were told not to report for work, reporting time pay was not owed. The trial court agreed and dismissed the case, finding that the wage order only requires reporting time pay for employees who “report to work [by] physically appear[ing] in the workplace” and not those who merely “call[] in to ask whether to report to work.” The plaintiff appealed the dismissal.

Decision

The California Court of Appeal reversed the dismissal, finding that the facts alleged in the complaint triggered the applicable wage order’s reporting time pay requirements. That section of the wage order 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, 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.


First, the court held that the “plain language” of this provision did not obviously answer the question of whether “report for work” meant coming to the work site or whether it could also mean “reporting” in the manner the employer has directed, such as calling in two hours before the scheduled start of an on-call shift.

Second, the court looked to the “history and purpose” of the reporting time pay requirement and concluded that requiring reporting time pay for on-call shifts was consistent with the agency’s goals in adopting the requirement. The court found that telephonic call-in requirements “are enormously beneficial to employers” as they “create a large pool of contingent workers . . . without any financial consequences to the employers.” The court also found that “unpaid on-call shifts impose tremendous costs on employees,” as they cannot commit to other jobs or activities during those shifts, and “their activities are constrained not only during the on-call shift, but two hours before it as well.”

The court rejected the employer’s argument, which some prior courts had accepted, that the sole intent of reporting time pay is to compensate the employee for transportation costs and lost time, and making a phone call does not involve such costs or lost time. The court found that another primary purpose of reporting time pay is to encourage proper notice and scheduling by employers. Therefore, the court concluded that “an employer need not necessarily physically appear at the workplace to ‘report for work.’” Rather, the phrase “does not have a single meaning, but instead is defined by the party who directs the manner in which the employer is to present himself or herself for work—that is, by the employer.”

As applied to the facts alleged, the court ruled that if “the employer directs employees to present themselves for work by telephoning the store two hours prior to the start of a shift, then the reporting time requirement is triggered by the telephonic contact.” The court clarified that “an employee is owed reporting time pay only if upon reporting to work, she is denied the opportunity to work.” As such, reporting time pay would not be due if the employee were directed to work the on-call shift, even if the employee decides not to work it. The court also explained that employers do not owe reporting time pay merely by expecting employees to find out their schedules. As alleged, the employer here required employees to call in exactly two hours before the on-call shift, and failing to call in on time was grounds for discipline. Thus, the court limited its holding to imposing liability for reporting time pay if an employer “requires the employee to call in two hours before the start of the shift, and the employee does so but ‘is not put to work or is furnished less than half said employee’s usual or scheduled day’s work.’”

Open Questions

The court did not consider whether its interpretation of the wage order would apply prospectively only, or also retroactively. The court also left unanswered how much advance notice of an on-call shift employees must be given for the employer to avoid a reporting time pay obligation.

While the court’s holding is limited to the alleged two-hour call-in policy addressed in the case, California employers who require employees to find out shortly before a scheduled shift whether they need to come to work should review this policy and consult with legal counsel about the impact of the decision.

The case: Ward v. Tilly’s, Inc., California Court of Appeal, Case No. B280151 (Feb. 4, 2019).

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Los Angeles
John S. Battenfeld
Max Fischer
Douglas R. Hart
Kathryn McGuigan
Jennifer Zargarof

Miami
Anne Marie Estevez

Orange County
Carrie A. Gonell
Daryl S. Landy
Barbara J. Miller

San Francisco
Eric Meckley

Silicon Valley
Alicia Farquhar
Melinda S. Riechert
Michael D. Schlemmer