A Significant Change in California’s Reporting Time Pay Rules

A recent California Court of Appeal decision has ushered in a significant change in California’s reporting time pay rules, which will now prohibit a common scheduling practice used by employers in California.

In Ward v. Tilly’s Inc., the Court held that California employers who require employees to call in two hours before a shift to determine whether or not they are needed, are now required to pay that employee, at a minimum, for two hours of work even if the employee is informed that there is no need to report to work that day. Unfortunately, the case left many questions unanswered and, as a result, employers should be careful to review their scheduling policies to make sure they avoid the same problems seen in this case.

Background

Under Tilly’s scheduling policy, Skylar Ward was required to call in approximately two hours before the start of her shift to see whether she needed to report to work. If Tilly’s told her to report to work, she was required to do so and would be paid for that shift as usual. However, if Tilly’s notified her that she did not need to come in, Ward would not be paid.

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 constituted “report[ing] to work,” which entitled Ms. Ward and her co-workers to a minimum of two hours of reporting time pay under the applicable wage order. In relevant part, the court examined the following language from the reporting time rule contained within Wage Order No. 7(A):

“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.”

Prior to this case, courts had disagreed about what it actually meant to “report to work,” with many courts holding that this required the employee to physically report to the workplace to be eligible for reporting time pay. When an employee physically reports to work but is furnished less than half of his or her scheduled hours, providing the employee with at least two hours of pay was justified to compensate them for the inconvenience and expense of essentially showing up for nothing. According to the Court, however, modern technology had advanced to the point where “reporting” could mean far more than just physical presence at the work site.

Court’s Reasoning

The Court ultimately reasoned that even having to place a telephone call as part of a mandatory on-call schedule fell within the scope of this “reporting” rule for two main reasons. First, 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.” Second, 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 work site.” In relying on these public policy considerations, the court aligned itself with prior California cases that linked the compensability of work time to the degree of employer control over an employee’s activities.

Specifically, the Court cited the 2016 California Supreme Court decision in Augustus v. ABM Securities, which prohibited employers from having their employees carry radios and remain on-call during rest periods. The decision was made on the basis that “compelling employees to remain at the ready, tethered by time and policy to particular locations or communication devices” was inconsistent with the concept of having truly “relieved employees of all work duties and employer control.” Like in Tilly’s, the Court in Augustus was clear that this rule applied even if the employees were never actually called upon.

What Should Employers Do Now?

In light of this decision, employers should review their scheduling policies and be sure to avoid the dangers inherent in Tilly’s scheduling policy. Specifically, the court identified several issues with Tilly’s policy that were problematic:

(a) requiring the employees to call the employer;

(b) independently disciplining employees for late or missed call-ins;

(c) making call-in and reporting mandatory.

Though certainly not foolproof, there are steps an employer can take to lessen the chances that your scheduling policy will fail the smell test as with Tilly’s. For instance:

  • Have the employer call the employee, not require them to call you. This is typically accomplished by having a manager call employees from a list of potential on-call employees. This practice has been approved by various courts in related “on-call” contexts.
  • Don’t discipline employees for failing to respond to your call to check for availability. Without fear of discipline, it would be much more difficult for the employee to argue that the policy constrained the employee’s freedom and activity.
  • Don’t make reporting when called mandatory. If an employee answers and doesn’t wish or can’t 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.

Even with these guidelines, however, no policy is a sure thing, and even minor changes could affect the way a court may interpret it. We will monitor this decision to see if a subsequent appeal is filed and whether the California Supreme Court ultimately decides to address this case in the near future.

It is important to note that every employment law situation is unique and this update is not a replacement for legal counsel. If you have further questions or would like additional information, contact Jerry Pearson at jpearson@youngwooldridge.com.

About the Author: Jerry Pearson is a Managing Partner at Young Wooldridge, LLP and leads the firm’s Business Department. Pearson represents management in labor and employment issues and ensures his clients stay in compliance with the State and Federal labor laws.

By | 2019-03-15T03:27:04+00:00 March 14th, 2019|Business Law, Employment Law, Jerry Pearson|Comments Off on A Significant Change in California’s Reporting Time Pay Rules