When Employees Earn On-Call Pay

Some employers require workers to remain “on-call” or on “standby” outside scheduled hours, either at the worksite or off the premises. Depending on the circumstances, a company may be required to pay an hourly employee for on-call time, including all resultant overtime at the correct overtime rate. See The Basics of Overtime; Calculating Overtime with Employee Bonuses in California.

California and federal law standards include:

• On-Premises Standby – The California Supreme Court has ruled that an employee required to remain on a business’s premises after-hours to protect against crime or potential emergencies must be paid for all such time under Wage Hour 4, even if some of those hours are idle or spent sleeping. Mendiola v. CPS Security Solutions, Inc. The rules related to payment of on-call workers vary in different Wage Orders, so it is important to check the applicable Wage Order for any special rules applicable to a particular industry or type of worker. For example, for employees who are required to reside on the premises under Wage Order 5, Public Housekeeping Industry, only “time spent carrying out assigned duties shall be counted as hours worked.”

• Uncontrolled Standby – An on-call employee required to respond to an employer’s request to return to work during an otherwise off-duty time, but not restricted in any manner or having only minor restrictions as to off-work activities, response time, or location does not need to be paid as he or she is not considered under the control of the employer for those wide-open standby hours.

• Controlled Standby – On the other hand, if an employee’s activities or location are sufficiently restricted during the off-hours, the employer is considered to have control of the employee and, therefore, must pay for the waiting time. Such “controlled standby” restrictions include: (1) geographical restrictions on employee’s movements; (2) required response time; (3) required readiness standards (such as no alcoholic consumption); (4) the extent the employer’s policy would otherwise impact on personal activities during the on-call time (for example, no travel to a zone where there is no cell phone coverage); (5) unlimited number of times employer may contact the employee; and (6) cannot easily trade his/her on-call responsibilities with another employee.

The line between uncontrolled and controlled standby is not always clear, moving in either direction on the relative degree of “uncontrol” and control factors present.

For instance, a policy that provides employees an option of responding to a call probably does not require the company to pay the employees for choosing to be available. Thus, a business that puts out the word of a hot prospect to several salespeople, with the referral going to the first employee to call in, is most likely an uncontrolled and thus uncompensated standby/on-call situation.

On the other hand, a policy that requires a designated worker to stay within specific geographic limits, to maintain open telephone or text message contact during specific hours and to arrive at the worksite (or otherwise begin working) within a limited amount of time after receiving employer’s instruction to appear is almost certainly a paid controlled standby or on-call arrangement.

Whatever the standby arrangement, once an employer engages a worker for labors during his or her off-hours, the time is compensable. Thus, a business must pay an hourly employee for all time spent responding to an off-hours question or emergency via phone, text, email, or other communication channel.

It is thus important to have clear written policy for on-call requirements, one way or the other.

An employer who doesn’t pay for standby, but vaguely announces “negative consequences” for failing to respond to a call, risks a later government or court finding that it has failed to pay for required standby time.

On the other hand, a business with a clear, paid, mandatory on-call policy can legitimately take adverse action against the individual who fails to comply.  Certainly, the policy should spell out the range of consequences possible. On the degree of discipline to be consistently applied for a particular violation, there is no substitute for management experience and judgment and, as needed, appropriate legal advice.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

August 10, 2018