Employers are constantly trying to find ways to reduce their payroll costs, and are often tempted to use “on call” scheduling systems that do not commit them to the costs of having an employee show up to work when the employee is simply not needed. These “on call” practices are often scrutinized, resulting in debate over whether an employee is being “engaged to wait” (which is compensable), or if the employee is merely “waiting to be engaged” (which is non-compensable). Now, there is another layer that may give rise to liability: whether an employee on call is being asked to “report to work” by calling in prior to the start of a shift. A California Court of Appeal recently decided that, under certain circumstances, if an employer requires an employee to call in before their shift to see if they are needed, the employee may be considered as having “reported to work,” and entitled to reporting time pay even if they never actually show up in person for their shift.
In Ward v. Tilly’s, Inc., retail store Tilly’s assigned employees to on-call shifts, but the employees were not told whether they should actually come in to work until they called in two hours before their shifts started. If they were told to come in, they would be paid for their shifts as usual; if they were told not to come in, the employee would not receive any compensation for having been “on call.”
A former Tilly’s retail worker filed a class action lawsuit against the company, alleging that when on-call employees contacted Tilly’s two hours before their on-call shifts, as Tilly’s required them to do, they were “report[ing] for work”, and thus owed reporting time pay. Under Wage Order 7, as well as most of the other Wage Orders in California, employers must pay non-exempt employees “reporting time pay” if the employee is either “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” or “required to report for work a second time in any one workday and is furnished less than two (2) hours of work on the second reporting.” Tilly’s denied liability, urging that employees “report for work” only by physically appearing at the work site at the start of a scheduled shift, and that employees who call in and are told not to come to work are not owed reporting time pay.
The Court of Appeal rejected each of Tilly’s arguments and confirmed that the on-call scheduling system triggered reporting time pay requirements under Wage Order 7. The Court noted that Tilly’s use of on-call shifts burdened its employees, preventing them from taking other jobs, going to school, or making social plans during their assigned on-call shifts, while denying them any compensation from Tilly’s unless they ultimately were called in to work. “This is precisely the kind of abuse that reporting time pay was designed to discourage.”
The specifics of the scheduling system at issue are key to determining how this decision might apply to other scheduling systems. Under Tilly’s system:
- Employees were scheduled for a combination of regular and “on-call” shifts (also referred to as “call-in” shifts), which had “a designated beginning time and quitting time”;
- Employees were required to contact their stores two hours before the start of their on-call shifts to determine whether they were needed to work those shifts;
- Tilly’s informed its employees to “consider an on-call shift a definite thing until they are actually told they do not need to come in”;
- Employees were disciplined if they failed to contact their stores before on-call shifts, if they contacted the stores late, or if they refused to work on-call shifts. Discipline included formal written reprimands and, upon three violations, could include termination; and
- Tilly’s did not include on-call shifts as part of the employee’s “scheduled day’s work” when calculating pay unless the employee actually worked during the on-call shift, and it did not consider an employee to have “reported for work” if he or she called the store prior to an on-call shift, but was told he or she was not needed.
While employers whose scheduling systems are similar to Tilly’s certainly run the risk of liability for unpaid reporting-time pay, any employer that uses or intends to use an on-call scheduling system should carefully assess whether the system may be viewed as requiring employees to report to work, thereby triggering a wage payment obligation. The risk may be most acute for employers in industries where shift schedules change rapidly in order to remain flexible with customer demand or other unknowns, and where employees are burdened with reserving time for shifts that are subject to change at the last minute and require pre-shift check-ins.
Accordingly, employers should proceed with caution. If you have questions regarding whether your particular scheduling system would trigger reporting time pay, how to tailor a pre-existing system to avoid such reporting-time-pay requirements, or any other issue related to employment law, please contact one of our attorneys: