In a scenario that has been common in retail and food service establishments, an employer tells its employees that fluctuating demands make it necessary for some employees to be placed on call to await a summons to work, if they are needed. The employees are not paid unless they are actually called in to work. Although resistance from employees and state enforcement authorities has led some employers to back away from the practice, it is still fairly common and is the subject of several pending lawsuits. For example, see this article from the December 31, 2016 Forbes Magazine issue, which reports the announcement that several national retailers have abandoned the practice.
Under the federal Fair Labor Standards Act, employers must include all "hours worked" in their calculations to determine whether an employee is entitled to overtime. The Department of Labor's regulations on hours worked explain that "all hours are hours worked which the employee is required to give his employer." Those regulations describe the application of that definition to on call time as follows: "An employee who is required to remain on call on the employer's premises or so close thereto that he cannot use the time effectively for his own purposes is working while 'on call.' An employee who is not required to remain on the employer's premises but is merely required to leave word at his home or with company officials where he may be reached is not working while on call."
A 2008 opinion letter from the Wage and Hour Division provides additional guidance on the subject. In that letter, the Division opined that an employee would not be working while on call if the employer's policy provided only that the on-call employee must be reachable at all times, abstain from alcohol or other substances, and report to work within one hour of notification, and if call-backs are rare.
The wage orders that regulate wage and hour condition in California define "hours worked" as "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so, and in the case of an employee who is required to reside on the employment premises, that time spent carrying out assigned duties shall be counted as hours worked." In its Enforcement Manual, the California Division of Labor Standards Enforcement has explained that the application of that definition to on call situations depends upon consideration of the following factors:
"(1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on employee’s movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during call-in time."
The wage orders contain another provision that requires payment of wages when an employee is called to work, but not actually put to work, as follows: "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 the minimum wage."
In the decision mentioned at the beginning of this post, Judge Elihu Berle denied an employer's motion to dismiss a claim by a potential class of employees of a Japanese-inspired fast food chain claimed that they were do reporting time pay under the California wage orders. That employer's policy required an employee who was scheduled to be on call to call a manager two hours before the his or her anticipated start time. If the manager directed the employee to go into work, he or she had to do so immediately. Failure to call in or to go into work if summoned subjected an employee to discipline. On the basis of those facts, Judge Berle concluded that it was possible for an employee to "report" to work by calling in.
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