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Employer’s on-call scheduling practice triggered California ‘reporting time pay’ requirements

By Ronald Miller, J.D.

An employee’s physical presence at work at the start of a shift is not required by the phrase “report for work” as used in Wage Order 7. Telephonic call-in requirements trigger reporting time pay because on-call shifts limit the ability to earn income, go to school, or enjoy leisure time.

An employer’s on-call scheduling practice triggered the reporting time pay requirements of California’s Wage Order No. 7-2001, ruled a California Court of Appeal. Agreeing with a retail store employee who argued that when on-call employees contact the employer two hours before on-call shifts, they are “reporting for work” within the meaning of the wage order, and so are owed reporting time pay, the court reasoned that on-call shifts burden employees who cannot take other jobs, go to school, or make social plans during on-call shifts—but receive no compensation from the employer unless they ultimately are called to work. Reversing the judgment of the lower court, the appeals court concluded that this was precisely the kind of abuse that reporting time pay was designed to discourage. Justice Egerton filed a separate opinion concurring in part and dissenting in part (Ward v. Tilly’s, Inc., February 4, 2019, Edmon, L.).

On-call scheduling practice. During her employment as a store sales clerk, the employee was scheduled for a combination of regular and “on call” shifts. Employees were required to contact their store two hours before the start of their on-call shifts to determine whether they were needed to work those shifts. The employer informed employees to “consider an on-call shift a definite thing until they were actually told they did 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.

However, the employer did not include on-call shifts as part of an employee’s “scheduled day’s work” when calculating pay unless the employee was required to work the on-call shift. Further, it did not consider the employee to have “reported to work” if he or she called the store prior to the on-call shift, but was told he or she was not needed.

Wage Order 7. The employee challenged the on-call scheduling practice of her employer as violating Wage Order No. 7-2001, which regulates the wages, hours, and working conditions in the mercantile industry. Among other things, Wage Order 7 requires employers to pay employees “reporting time pay” for 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 of the employee’s usual or scheduled day’s work.”

In this instance, the employee contended that when on-call employees contact the employer two hours before on-call shifts, they are “report[ing] for work” within the meaning of the wage order, and thus are owed reporting time pay. The employer disagreed, arguing that employees “report for work” only by physically appearing at the work site at the start of a scheduled shift, and thus that employees who call in and are told not to come to work are not owed reporting time pay.

In the trial court, the employer demurred to the complaint, contending that requiring employees to call in to ask whether to report to work did not constitute “reporting to work” within the meaning of Wage Order 7. The trial court sustained the demurrer, finding that by merely calling in to learn whether an employee will work a call-in shift, the employee did not report to work. Thus, the employee was not entitled to reporting-time pay. The employee appealed.

“Report for work.” The appeals court first examined the plain language of Wage Order 7, concluding that this dispute turned on the meaning of “report for work,” a phrase Wage Order 7 uses but does not define. The parties interpreted the phrase in very different ways. The employer argued that “reporting to work” requires an employee’s physical presence at the workplace at the start of a scheduled shift. By contrast, the employee asserted that Wage Order 7 is triggered by any manner of reporting, whether in person, telephonic, or otherwise. However, the appeals court found that the text of Wage Order 7, alone, was not determinative of the question.

The appeals court concluded that it was not limited by the Industrial Wage Commission’s (IWC) understanding of Wage Order 7 at the time it was adopted. In the 1940s, the phrase “report to work” meant physically showing up. Telephonic reporting requirements are of a more recent vintage, and did not exist until decades after the reporting time pay requirement was enacted. Thus, the court reasoned that had the IWC been “prescient enough to anticipate” cell phones and telephonic call-in requirements, it “would have intended” the reporting time pay requirement to apply.

Beneficial to employers. Moreover, the appeals court concluded that had the IWC confronted the issue, the telephonic call-in requirements alleged in this case would trigger reporting time pay. It noted that the on-call practices alleged here had much in common with the specific abuse the IWC sought to combat by enacting a reporting time pay requirement in 1942. Unpaid on-call shifts are enormously beneficial to employers. They create a large pool of contingent workers whom the employer can call on if a store’s foot traffic warrants it, or can tell not to come in if it does not, without any financial consequence to the employer.

Tremendous cost to employees. On the other hand, unpaid on-call shifts impose tremendous costs on employees. Because employees must be available to work on-call shifts, they cannot commit to other jobs, or schedule classes during those shifts. If they have children or care for elders, they must make contingent arrangements. Further, they cannot commit to social plans during on-call shifts because they will not know whether they will be available to keep those plans. Accordingly, the court concluded that requiring reporting time pay for on-call shifts was consistent with the IWC’s goals in adopting Wage Order 7. The case was remanded to the trial court for further proceedings.

Partial concurrence and partial dissent. Although Justice Egerton agreed that this case must be remanded to the trial court, she argued that the legislative history of the phrase “report to work” reflects the drafters’ intent that—to qualify for reporting time pay—a retail salesperson must physically appear at the workplace. Accordingly, she would affirm the trial court’s order sustaining the employer’s demurrer, except to the legal theory regarding the employee having reported to work, in person, but was sent home before her add-on shift and not paid.