In California, On-Call Scheduling May Lead to Reporting Time Pay

It applies when an employee reports for work, but then either is not put to work at all or for less than half of the scheduled or usual hours of work. A new decision from the California Court of Appeal in Ward v. Tilly’s, Inc. holds that an employer can be required to pay reporting time pay even without requiring the employee to physically report to work. It concluded that “on-call scheduling,” in which an employer at least tentatively schedules an employee to work, but then requires an employee to contact the employer at a certain time to learn whether the employee in fact will have to work, triggers the obligation to pay reporting time pay.

California’s Reporting Time Pay Requirements

California’s Industrial Welfare Commission (“IWC”) wage orders mandate reporting time pay. They require that, for each workday an employee “is required to report for work and does report,” but then “is not put to work or is furnished less than half” of the employee’s “usual or scheduled day’s work,” the employer must pay the employee “half the usual or scheduled day’s work.” The wage orders set a minimum of two hours, and a maximum of four hours, for this reporting time pay.

The orders have a separate requirement that an employer must pay at least two hours when an employee “is required to report for work a second time in any one workday.” They contain three exceptions for situations when work cannot begin or continue because of circumstances beyond the employer’s control.

What Does It Mean to “Report for Work”?

The issue in Ward was what the “report for work” requirement means. Does it require that an employee physically report in person? Or, does reporting by telephone or other means that the employer directed qualify?

In this case, where the court considered only the allegations as stated in the lawsuit and not any facts determined after a trial, the employer allegedly imposed “on-call scheduling.” According to the allegations, the employer assigned call-in shifts, but would not tell the employees whether they actually had to come work until the employees called in two hours before the scheduled start of their shifts. Employees whose shifts started early in the morning had to call at a specified time on the night before they might have to work. On some occasions, the employer allegedly scheduled employees for on-call shifts either before or after scheduled shifts on days when it otherwise scheduled the employees to work. If the employer told employees to come to work as scheduled for an on-call shift, it paid employees for the time they then worked. If not, the employees received no pay for having been “on call.”

In a potential class action lawsuit, the plaintiff argued that employees report for work when they contact the employer, as required, before the on-call shift. The employer, however, contended that employees report for work only when they physically appear for work at the start of a scheduled shift.

In a 2-1 decision reversing the lower court, the Court of Appeal concluded that the on-call scheduling, as alleged in this case, triggered the reporting time pay requirements. The wage orders do not define “report for work.” The court agreed that, when the IWC adopted the first reporting time pay requirement in the 1940s, the phrase meant physically showing up for work. Still, it decided to consider whether the IWC would have intended reporting to work to include telephonic reporting, if the commission considered reporting time pay requirements in light of today’s technology and call-in practices. The purpose of reporting time pay has been to encourage proper notice and scheduling. The court emphasized the burden that on-call scheduling could place on employees, who must be available to work on-call shifts. Among the burdens, employees cannot commit to other jobs or obligations because they must be available to work, if directed to do so. The court explained that reporting time pay “requires employers to internalize some of the costs of overscheduling, thus encouraging employers to accurately project their labor needs and schedule accordingly.” Thus, the court determined that requiring reporting time pay for on-call shifts “is consistent with the IWC’s goals” in having adopted the reporting time pay mandate.

The court concluded that the phrase “report for work” means not only physically reporting, but also an employee “presenting oneself as ordered.” Instead of a single meaning, such as physically appearing at the job site, the court held that the manner of reporting “is defined” by the manner that the employer requires. It elaborated that reporting for work also could include telephonic contact before a scheduled shift, logging onto a computer remotely, or appearing at a client’s job site, if those methods are how the employer directed an employee to present himself or herself for work.

Finally, the court made clear that reporting time pay will not be required simply whenever employees call or contact their employers to determine their schedules – perhaps even if an employee must call to learn his or her schedule. Rather, the court distinguished such an inquiry with the situation as alleged in the case, with reporting time pay required when an employer demands an employee call at a particular time before the start of a scheduled shift and the employee does so, but then is not put to work.

What Should Employers Do?

This decision raises a number of questions, including how it might apply in various other situations. It has potentially far-reaching ramifications in California. The court recognized that the wage order “potentially creates some difficult line-drawing challenges,” which the court concluded it did not need to resolve at this point. The court also expressly noted that it did not decide whether its interpretation applies retroactively or only going forward.

California employers, especially employers with any type of on-call or contingent scheduling practice, should pay attention to this decision and review their policies and practices now.  All employers also should consider reviewing their reporting time pay compliance in any event. Even now, employers often are not aware of when reporting time pay requirements apply, misunderstand their application, or do not pay for the correct amount of time.  For example, many employers sometimes incorrectly assume that two hours will cover a reporting time pay obligation, when it does not fully do so in the situation. Compliance with the reporting time pay requirements is even more important because the California Supreme Court has recognized reporting time pay to constitute “wages,” for which waiting time or other penalties may apply for unpaid reporting time pay.

Several cases have challenged various types of on-call or unpredictable scheduling. A few federal district court decisions have held that reporting time pay requires a physical reporting, contrary to the Ward decision. The U.S. Ninth Circuit Court of Appeals currently has a case pending on these issues. Given the importance of the issues, the split of authority, and the strong dissent in Ward, the California Supreme Court may decide to hear that case or decide these issues itself. At the same time, the California Legislature has considered bills to require predicable scheduling. San Francisco adopted the Predictable Scheduling and Fair Treatment for Formula Retail Employees Ordinance, requiring larger retail employers to post schedules two weeks in advance and pay two or four hours’ pay for certain changes or cancellations. These issues are likely to continue, so employers also should continue to follow further developments.