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On Monday, in a split decision, the California Court of Appeal Second District ruled that employees who are required to call in before an on-call shift, but never physically report to work, may be entitled to reporting time pay.

Plaintiff Skylar Ward (“Ward”) worked for Tilly’s, a retail clothing store with locations throughout California and the United States. In 2012, Ward worked as a sales clerk at the Torrance, California location. During her employment with Tilly’s, plaintiff and other employees were scheduled to work a combination of “regular” and “on-call” shifts (also referred to as “call-in” shifts”). For on-call shifts, Tilly’s required that employees call the store two hours before the start of their on-call shift (or by 9:00 p.m. the night before if their on-call shift was scheduled to begin earlier than 10:00 a.m.) to ascertain whether or not they would come into work that day depending on the foot traffic at the store. Tilly’s told employees that they should consider their on-call shift a “definite thing” until they are actually told they do not need to come in and were disciplined if they failed to contact their stores before on-call shifts. Importantly, and the crux of this case, is that employees were only paid if they were required to actually come into the store and work.

Ward challenged Tilly’s on-call scheduling practices as violating Wage Order 7’s reporting time pay provisions. Under the reporting time provisions, 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.

Here, the appellate court reversed the lower court’s ruling and agreed with Ward that Tilly’s violated California’s reporting time provisions. Tilly’s argued that “reporting for work” requires an employee’s physical presence at the workplace at the start of a shift based on the plain meaning of the reporting time law. The appellate court disagreed, concluding that “report for work” does not have a single meaning but instead is defined by the employer’s method in which they direct an employee to report to work. Thus, the appellate court defined a new interpretation of “reporting time” as follows: “If an employer directs employees to present themselves for work by physically appearing at the workplace at the shift’s start, then the reporting time requirement is triggered by the employee’s appearance at the job site. But if the employer directs employees to present themselves for work by logging on to a computer remotely, or by appearing at a client’s job site, or by setting out on a trucking route, then the employee ‘reports for work’ by doing those things.  And if . . . the employer directs employees to present themselves for work by telephoning the store two hours prior to the start of a shift, then the reporting time requirement is triggered by the telephonic contact.”

The rationale behind the appellate court’s decision to expand what is considered compensable “reporting time” beyond a requirement that employees physically appear at the worksite was a practical one as, per the appellate court, “[employees] cannot commit to other jobs or schedule classes during those shifts. If [employees] have children or care for elders, they must make contingent childcare or elder care arrangements, which they may have to pay for even if they are not called to work. [Employees] cannot commit to social plans with friends or family because they will not know until two hours before a shift’s start whether they will be available to keep those plans. In short, on-call shifts significantly limit employees’ ability to earn income, pursue an education, care for dependent family members and enjoy recreation time.”

COUNSEL TO MANAGEMENT:

This case could potentially be a major shift for employers who use a similar “on-call” structure as Tilly’s where employees are required to call-in to the workplace or face discipline. However, it must be noted that there is a major difference in requiring employees to call in themselves at a specific time and employers who themselves call their employees to inquire about working a shift they were not previously scheduled to work. As stated by the appellate court, the key here is an employer who “directs employees to report” to the employer at a specific time or in a specific manner pursuant to a scheduled on-call shift. While the appellate court did not address “on-call” in the sense when an employee is simply required by the employer to be available by phone but is free to do as they please otherwise, such “on-call” policies are considered “uncontrolled standby” and, generally, will not be considered compensable hours worked.

However, this matter is prime for review by the California Supreme Court as the dissenting opinion provided well-reasoned counter arguments, including arguments concerning the court’s role in interpreting Wage Orders, the black letter of the law on its face, and federal cases which ruled that on-call shifts do not trigger reporting-time penalties, even if the scheduling practice is inconvenient and unfriendly to employees.

Should you have any questions regarding your company’s reporting time pay please do not hesitate to contact the experts at the Saqui Law Group, a division of Dowling Aaron Incorporated.

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