Putting employees on-call or requiring them to call in before shifts could raise employee pay issues.  Businesses that experience fluctuations in foot traffic, calls, or demand, face the difficulty of predicting employee schedules. Since needs change quickly, it could be difficult to anticipate how many employees the business needs on any given day or part of the day. Many businesses choose to address this difficulty by scheduling employees for on-call shifts to ensure that there are workers on stand-by who are ready to step in on short notice if the need arises.  Depending on your business’s particular rules and practices related to these on-call shifts, you may have employee pay violations if on-call employees are not paid “reporting time” pay.

A California Court of Appeal in the case of Ward v. Tilly’s, Inc., addressed the question of what it means to “report to work” for purposes of determining whether the employee is owed “reporting time pay” under the wage order (Wage Order 7 that governs the mercantile industry in this case). In that case, Tilly’s scheduled its employees for a combination of regular and on-call shift (also referred to as “call-in” shifts).  These on-call shifts had a designated beginning time and quitting time, like a regular shift. Employees were required to contact their stores two hours before the start of their on-call shifts to determine whether they were needed to work those shifts.  Employees were told to “consider an on-call shift a definite thing until they are actually told they do not need to come in.” Additionally, employees were disciplined if they failed to contact their stores before on-call shifts, or if they contacted the stores late, or if they refused to work on-call shifts.  Discipline included formal written reprimands and, upon three violations, could include termination. However, on-call shifts were not paid unless the employee actually worked the on-call shift.

In that case, Tilly’s scheduled its employees for a combination of regular and on-call shift (also referred to as “call-in” shifts).  These on-call shifts had a designated beginning time and quitting time, like a regular shift. Employees were required to contact their stores two hours before the start of their on-call shifts to determine whether they were needed to work those shifts.  Employees were told to “consider an on-call shift a definite thing until they are actually told they do not need to come in.” Additionally, employees were disciplined if they failed to contact their stores before on-call shifts, or if they contacted the stores late, or if they refused to work on-call shifts.  Discipline included formal written reprimands and, upon three violations, could include termination. However, on-call shifts were not paid unless the employee actually worked the on-call shift.

Plaintiff employees argued that when they have to call in to work 2 hours before the start of a shift to see if they have to come in, that’s reporting for work and entitles them to reporting time pay.

Tilly’s argued that the wage order’s reference to “reporting to work” means to physically appear at the work site at the start of the scheduled shift; just calling in does not entitle the employee to reporting time pay.

The Court of Appeal agreed with the Plaintiff’s argument and held that, under the facts of this case, merely calling in for one of these mandatory on-call shifts constitutes “report[ing] to work,” which entitled Tilly’s employees to payment equal to a minimum of two hours of reporting time pay under the applicable wage order.

Wage Order 7 requires reporting time pay if 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.” (Cal. Code Regulations., tit. 8, § 11070, subd. 5(A), italics added.) In that case, 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.”

The court reached its conclusion based on the following policy reasons:

• Requiring reporting time pay would “require employers to internalize some of the costs of overscheduling, thus encouraging employers to accurately project their labor needs and to schedule accordingly.”
• 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.

The Court noted that in the case of Tilly’s on-call policy that requires employees to call in 2 hours before their on-call shift, the employees’ activities are constrained not only during the on-call shift, but two hours before it as well. That is, at the time employees are required to call in to find out whether they will be required to work on-call shifts, they cannot do things that are incompatible with making a phone call, such as sleeping, watching a movie, taking a class, or being in an area without cell phone service. For example, consider an employee who has been scheduled for an on-call shift from 10:00 a.m. to 12:00 p.m., followed by a scheduled shift from 12:00 p.m. to 4:00 p.m. If Tilly’s tells the employee at 8 a.m. that she is not needed for the on-call shift, she will not be paid anything for that shift. Nevertheless, she will necessarily have forgone sleeping, working another job, taking a class, etc. both at 8 a.m. and between 10:00 a.m. and 12:00 p.m. In short, the employer will have imposed to some degree on four hours of the employee’s time—an imposition for which it will not owe the employee any compensation.

The take-away here is that the more the employer’s on-call policy exerted control over the employee’s activities, the more likely that the employee would be entitled to receive reporting time pay.

However, the court failed to instruct on whether its holding would apply retroactively—potentially exposing countless employers across the state that have similar on-call scheduling policies to staggering class action liability. The court also did not address the inherent line-drawing problem contained within its decision; that is, how long before a shift could an employee call in and still have it constitute compensable reporting? If not two hours, then how long?

What Should Employers Do Now?

The court identified several distinguishing features of the Tilly’s scheduling policy that led to its downfall, including: (a) requiring the employees to call the employer; (b) independently disciplining employees for late or missed call-ins; and (c) making call-in and reporting mandatory. To mitigate against these pitfalls, here are some ways you could craft an alternative scheduling policy:

• Call employees rather than requiring them to call you. You can do this by creating a call list of employees who might be available prior to the upcoming shift. Your managers can then call through the list to meet scheduling needs.
• Don’t discipline employees for failing to respond to your call to check for availability. Without a fear of discipline, it would be much more difficult for the employee to argue that the policy truly constrained the employee’s freedom and activity. Employers must ensure that employees are not being ostracized, suffering other slights because of their unavailability for on-call shifts even if there is no formal discipline.
• Don’t make reporting mandatory. If an employee answers and doesn’t wish to report to work, simply move on to the next person on the list. This practice has also been approved by various courts in related “on-call” contexts.

Employers may also consider doing away with such practices entirely because of the exposure and fact-intensive analysis that makes it difficult to predict how a court would determine any challenge to an on-call policy.