What are California On-Call Laws?
On-call employment laws in California concern non-exempt employees who must be available for work but do not have a set shift. For example, a school or county employee who is on-call or called back to work outside of their regular hours. Under California Wage Order 4-2001 (regulating California private schools), Industrial Welfare Commission Wage Order 5-2001 (regulating rest breaks), and Wage Orders 1-2001, 2-2001, 7-2001, and 9-2001 (applying to employee organizations/associations), employers for covered industries must compensate on call employees for at least half the time they were scheduled to work or half the time they were required to be "on call," whichever is greater . Non-exempt on-call employees are also entitled to overtime pay and employer-mandated rest and/or meal breaks. Covered employers must pay on-call employees of public schools and community colleges in California for the exercise of rights or privileges granted by laws pertaining to such employment for the periods specified in those laws.
On-Call Laws In California: A Brief History
On-call employment has been an integral part of California employment law for many years. Its origins may be traced to the 1999 the Supreme Court’s ruling in Brinker Restaurant Corp. v. Superior Court. While Brinker is largely known for its demolition of the meal period law, it also announced the "time of commencement" rule, which had previously been announced in the nonpreceddial case of Mendiola v. CPS Security Solutions, Inc. In that case, the Court held that: Like those items of work that are performed by the employee at his home or other locations away from the employer’s premises, time spent in waiting for a call, so long as it is reasonable, is not time the employee is "subject to the control of an employer." Brinker, 165 Cal. App. 4th 179, 215 (2008); emphasize in original. However, with the proliferation of cell phones, pagers, and other technologies that allow an employer to contact their employees any time and any place, the 2000s ushered in a surge of litigation. A barrage of decisions, such as Ayers v. City of Los Angeles, 35 Cal.App.4th 1802 (2005), Montgomery v. Workers’ Comp. Appeals Bd., 234 Cal.App.4th 1630 (2015), Garza v. Brinderson Corp., 168 Cal.App.4th 994 (2008), Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554 (2007), Bell v. Farmers Ins. Exch., 87 Cal.App.4th 805 (2001), reconciling the application of the "time of commencement" rule and the general Aramark rule, came to a head with the passage of the on-call on-call pay law.
Employer Responsibilities Under California On-Call Laws
Employers who employ covered employees under an on-call law must provide at least seven calendar days’ notice prior to any workweek that is subject to on-call. A failure to provide this notice can result in damages for each workday on which the employee was required to report to work, after being notified by the employer that on-call would not be needed, but who in fact worked (i.e., a day’s pay).
Failure to notify employees means an employer cannot require an employee to return to work during on-call hours, and will be liable for any hours an employee performs work when not needed. Damages for failure to provide required notice includes one hour of pay (computed at the employee’s regular rate) for each shift or portion of a shift for which the employer fails to provide no less than seven days of notification, not to exceed the number of shifts that fall within the required notice period.
Penalties can also result in the refusal to pay for work performed during on-call hours.
Employee Rights Concerning On-Call Obligations
Employees who are "on call" must be paid for the time spent on call, and employees who are not free to spend their off duty time as they choose are considered "controlled standby time." Employees who are on stand by must also be provided with meal and rest breaks under California law.
Labor Code Section 515(a) permits wages to be paid on a "piece rate basis," but only if the employee is compensated for all hours worked. In other words, piece rate employees must be paid their minimum wage hourly rate for time spent in work that cannot be measured by the piece — known as "control time" or "standby time." However, employers are not required to compensate employees at the regular hourly rate for all time spent off premises. For example, it is lawful for employers to calculate pay under California Wage Orders for periods of time when employees are required to be on call at home, but are not actually working. No more than four hours of pay would be required for the entire period of working on call.
Labor Code Section 551 provides: "No employer shall cause his employees to work more than six days in seven days in any one week." "[D]ay of rest" means any consecutive 24-hours period of time during which an employee is relieved of all work duties." Wage Orders similarly provide: "Every employer shall allow to each employee in an occupation in which a day’s work is sufficient," at minimum, one day’s rest in each seven-day period.
Labor Code Section 516 exempts working on Sunday or the sixth or seventh day of the week from the rest day requirements. Notwithstanding this exemption, Employees working a "seven day schedule" must still receive one day of rest in a calendar month.
Under certain circumstances, rest periods must be paid under California law. Wage Order No. 5-2001 requires one 10-minute rest period per work period for all shifts longer than 3 ½ hours that do not exceed 6 hours. A 30-minute meal period is required for all work days in excess of 5 hours. Employees working more than 8 hours per day must have at least 2 10-minute rest breaks and a 30-minute meal break. The first 10 minutes of any rest period must be counted as paid time; and Hourly employees must be paid one hour of premium pay for all initial meal periods not provided to them. "Timing and length of breaks only need to be more than 10 minutes to avoid premium pay if the duration and timing of the break is regular."
Several California courts have addressed whether employees who are required to carry a cell phone outside of regular working hours must be compensated for time spent carrying the phone. Some courts have held that no compensation is required. "In order to be compensable ‘work’ it is sufficient if an employee is subject to a requirement that he be available to respond to a call and as a result, the employee is restrained from engaging in other pursuits that, in cognizance with other substantial factors, may render the time work under the provisions of the rest and meal period laws’; Trial court ruled that State law ‘does such a disservice to employees who are required to provide after hours services to clients."
However, other courts have held that working while on call is nonetheless compensable. "If the after-hours call interfered with plaintiff’s sleep but did not require that he leave his house, he was not working for purposes of the California rest and meal period laws." Employees who are on call solely while off the company’s premises are not considered to be working. The question is not whether the employee may be called into work at some time, but whether the employee must remain on the employer’s premises or so close as to be unable to use the time effectively for his or her own purposes. Thus, employees who are required to remain within the vicinity of their workplaces, or specifically respond to such issues as phone calls regarding the employer’s business, or to carry paging devices, may be paid for such time . . . ."
Legal Consequences for Not Complying with California On-Call Laws
California’s on-call employment laws are strict. Companies that willfully disregard these laws face significant legal implications. The penalties are enforced both by civil liability and by fines assessed by the Labor Board.
A California employee has the right to receive minimum wage under California Labor Code § 1197 in exchange for labor provided at the employer’s request. When an employee is forced to stay on call, he or she should be compensated at their usual wage if called into work. If an employee does not receive compensation for time spent on call, then they should bring a private cause of action for the time period that they did not receive minimum wage. A prevailing plaintiff is entitled to actual damages, costs and a reasonable attorney’s fee under Labor Code § 1194(a).
The Court of Appeals for the State of California granted summary judgment for a plaintiff in an on-call lawsuit based upon the failure to provide meal and rest periods. However, the Court denied summary judgment for the plaintiff on the on-call minimum wage issue. The Court found that Triad of California v. Workers’ Comp. Appeals Bd. 20 Cal. App. 4th 676, issued on May 16, 1993, and described in detail above, operated to establish a minimum wage payment only if the employee was to remain ready to work and needed to respond immediately within a short period of time, i.e. 5 minutes. They made clear in this case that, "As interpreted in Triad, the statute weakens the requirement with the passage of time. After a reasonable time has passed, the statute merely requires that the on-call employee be available for work or prepared to work. [Citation] This means that the employee must be ready willing and able to work and must be able to get to work within a reasonable time after being summoned."
The Court of Appeals further stated that, "In Triad we held that an ‘on call’ employee is only entitled to be paid for each separate 5-minute period [of on-call time] during which the employee remains away from the workplace without compensation, and which can be assessed without difficulty in terms of time and monetary value and established with reasonable certainty." [citation omitted] Triad itself has been criticized as using arguments of convenience and a false analogy with kelly services’ search time (for temporary employment), to eliminate payment to the employee when there was more than five minutes travel time from the employees home.
No case had addressed whether an on-call employee required to be on call 24/7 would be paid for such time. This Court in Diegan v. N.Y.Motors, supra, has addressed that question and held that the employee shall be paid for all 24 hours of his or her being on call, unconcerned about the amount of time it takes the employee to arrive and report for work. The issue in dispute was the on-call time for which the employer would have to pay for all hours an employee was on call, including those times that the employee was asleep. About two-thirds of the Court’s opinion was devoted to discussing the legislative history of Labor Code § 5160(a) and other similar statutes in other states’ laws.
The Labor Board has the right to seek administrative fines for violations of § 1198.5 and § 1194. The Labor Board has authority to assess a fine up to $50 for each one day period of the violation and an additional $50 for each one-day period that the violation continues. A citation for the administrative fine must be made by a civil penalty without exhausting any other alternative remedy such as private litigation. Again, the administrative fine is not exclusive of civil litigation liability, but is an additional penalty that may be imposed by the Labor Board.
The Court in Tien v. Tenorchick, 164 Cal.App. 4th 528, 78 Cal.Rptr. 3d 856 (2008) stated: Labor Code § 558.2 is aimed at discouraging employers from willfully ignoring the requirements of the IWC wage orders, and thus was intended to address the misconduct of employers who knowingly falsify payroll records to avoid paying minimum wages to their employees. The statute operates to make employers responsible for minimizing the harm to their employees. The Court concluded that civil liability under this statute was ‘either or’ with administrative liability.
A Look at Recent Cases and Rulings Involving California On-Call Laws
Recent cases and legal rulings regarding on-call employment in California.
As technology advances, some employers are finding themselves in need of more flexible employment arrangements, where the traditional model of setting a concrete amount of hours for an employee does not match the employer’s operations. Given this increasing demand for on-call work arrangements, courts are sure to give attention to more of these types of cases.
In 2009, the California Department of Fair Employment and Housing issued a decision in Alvarado v. Dart Container Corporation. In that case, an employee filed a claim with the California Department of Fair Employment and Housing alleging that her employer violated California Labor Code section 551, which requires an employer to provide at least one day’s rest in seven in every calendar week. The employer contended that the employee was a part-time employee and therefore exempt from the requirement.
The DFEH considered whether the employee’s hours worked fell into Labor Code section 551’s exception for "[e]very person employed in any occupation covered by the Eight-Hour Day Restoration and Research Compensation Act (Chapter 6 commencing with Section 510 of Part 1 of Division 2) , other than minors and persons whose health would be injured or aggravated by the work in which they would be required to perform." After conducting a detailed analysis of the statute and its exceptions, the DFEH ultimately ruled that that the employer had violated Labor Code section 551 and determined that it owed the employee about $80,000 in wage penalties, reinstatement rights, attorneys’ fees, and interest.
Cases such as these, which involve violations of the day of rest requirement, have the potential to result in substantial damage awards against employers. Although the California Labor Code usually makes employers liable to only their own employees, this case demonstrates that employers who use on-call employment arrangements may face substantial risks when these arrangements are not supported by clear contractual representation that their employees are non-full time workers.
The Future of On-Call Laws in California
Challenges to California’s on-call employment have already emerged in 2019, so employers may want to prepare for upcoming legislative on-call employment issues and/or make changes to their on-call employment policies to try to anticipate how this issue may affect their companies in the future. On March 22, 2019 Governor Gavin Newsom signed into law the "AB 5" Bill that codified in the California Labor Code the ABC test for determining employees and independent contractors. A high volume of new AB 5 litigation has followed, including claims that employees who are working as independent contractors are actually employees performing "on call" work that should have been compensated. There have even been a few lawsuits putting forth the argument that California’s existing "6 hour rule" (Cal. Labor Code § 514) doesn’t apply to employees working as independent contractors. This litigation has extended to on call janitorial work, on call work for delivery service drives and, of course, on call work for the technology giants referenced frequently by the media as being responsible for the on demand economy. Although those are merely some pending claims, we anticipate that many more claims are on the horizon and may move forward to groundbreaking decisions in future cases. We will monitor and provide updates on these cases in upcoming Client Alerts.
Governor Gavin Newsom also just signed into law SB 3 (Labor Code 1002.4) which will require employers to offer their workers shifts when the employer cancels or adds a shift less than one full workday prior to the commence of the originally scheduled shift. Failure to do so is deemed a refusal to work and therefore an unlawful termination. Other than the mandated notice, the bill does not provide any specific procedures for cancellation or addition of the shift. It also does not include any hot button issues that are often part of these types of bills, such as "wait time" obligations, and mandatory right of refusals for subsequent shifts. However it is possible we will see these additional issues raised in the subsequent legislative session, as the Governor mid-session deadline for bills was recently extended by a month to June 15th. We will provide you with timely updates on any new developments, including proposed bills, which could affect employers’ on call employment structures. It is entirely likely that the upcoming November 2020 election will lead to the introduction of additional restrictive labor bills in many other areas, including on call employment. Oregon is expected to be at the forefront of on call statewide legislation and could be a precursor of what will be coming to California. Employers are advised to stay alert for upcoming on call bills and prepare accordingly.
What Employers Need to Know about California On-Call Laws
Implement and enforce an accurate hour tracking policy: Now more than ever, employees tracking their own time is unacceptable. Ensure you have a time tracking system in place ensuring employees are accurately recording their hours worked. By having such a policy, you may avoid having to defend a substantial class action trial that revolves around the simple question of whether the employees recorded their own hours or not.
Involve your employees in the process: The more you openly discuss the reasoning behind your on-call policy, the more accepting your employees will be toward complying with it. For example, if you disclose that the reason your on-call policy does not require clocking in and out for rest periods is to ensure employees are taking those breaks, your employees will understand the necessity of the policy. Additionally, employees understanding these policies avoids any feeling of being singled out or "targeted" by the company.
When communicating with your employees, be clear, truthful and consistent: Too often, I come across clients or cases where aspects of the policy are not fully explained to employees or conflicting language is provided to the employee and the court. As with timekeeping policy, the simplest things can lead to problems. Position yourself in the best light with the judge or jury by sitting down with your employees and explaining all aspects of your on-call, rest period, and directing employees to clock in and out policies – thereby confirming the company’s understanding of these policies as well.
Revisit and revise your policies: If policies are not currently in place or if you are unsure whether your policies are compliant, consider consulting with your skilled wage and hour attorney to ensure that your policies withstand an attack if needed.
For Employees: What You Need to Understand About On-Call Laws
While employers have a significant array of obligations to provide information and notices, employees should also know their rights. This is particularly true as it relates to right to information and enforcement of those rights. Employees may obtain general information about California employment laws from the Division of Labor Standards Enforcement (DLSE), a division of the Labor Workforce Development Agency (LWDA). In line with the enforcement authority of DLSE, the LWDA has created a further subdivision known as Labor Compliance and General Enforcement Policy, or the Department of Industrial Relations (DIR), one of the many departments of the Labor and Workforce Development Agency. DIR provides a list of current policies to be used by the LWDA’s enforcement agencies to assure women and men are paid equal pay for equal work, including all on-call issues. The DIR also maintains an Educational Publications website where employees can find the relevant "Educational Publications" regarding their rights under California employment laws such as "California’s Labor Laws: A Guide for Wokers", "FAQs on Common Labor Law Problems", and "Wage Claims, Statute of Limitations and Limitation or Waiver" whether it be in any of the several languages provided. The California Legislature has established a six-year statute of limitations for civil wage and hour violations. Which means an employee may pursue claims for payment of wages or difference in wages going back to their initial date of employment or 6 years prior to filing a lawsuit. Money for on-call time, waiting to be engaged, or after-hours time, could add up quickly. In the event that any employee feels there has been time spent "on-call" without compensation, they must address that issue as quickly as possible. But they must also be conscious of any retaliation, harassment or interference with their ability to continue their jobs . Retaliatory, harassing or interfering actions can include but are not limited to: giving them extra work hours, changing their shift hours or schedule, making them stay at work longer than needed, and taking other adverse employment actions against the employee such as transfers, demotions, or threats of firing. Legal Rights, Remedies, Potential Damages and Proof Employees are afforded remedies for violations of on-call codes current cases consider as including restitution, injunctive relief, and civil penalties, under Labor Code §§ 551, 552, 1771, 1774, 1775, 1776, 1811, 1812, 1813, 2810, and amendment 1793.2. Employees may file a claim with the Division of Labor Standards Enforcement, which serves as a state administrative agency to the Labor and Workforce Development Agency. Regardless of which method is utilized to seek damages, the burden of proof falls on the employee to show in each instance of being scheduled for "on-call" and having it apply, the employer was not payed them for that time. This means in some instances, the employee would be required to show more than just that they were on-call and the time scales provided. Employees may have to seek written notices outlining each amount, date, and time to prove damages. California provides wage statements, which are fairly detailed, showing which amounts are earned for what duties. Employees should be able to reference these to show prior "on-call" amounts, and use those as proof of lost wages. Failing to keep such records could be considered unreasonable, as every wage statement is automatically provided every itemized hour, down to the exact minute, showing which amounts were earned in what time period. This may be enough to cover for any missing time and amounts, in the following claim. Consideration can be paid to the amount of on-call time directly preceding the date the employee was last on-call and the next successive payroll date. Having as much proof as possible allows an employee to reduce the time spent potentially investigating the claim, and the damages themselves.