IMPORTANT UPDATES FOR EMPLOYERS
Rules for Compensation to "On-Call" Employees
Several of our clients have employees that are on-call periodically, to respond to service calls or go into work, if needed. Sometimes it is unclear whether "on-call" time constitutes hours worked under California and federal law. Basically, under both federal and California law, on-call time must be compensated if it is characterized as "controlled" rather than "uncontrolled" time. Thus, whether or not the "on-call" time must be compensated depends on the facts of each case.
The Federal Rules state that an employee who is required to remain on call on the employer's premises or so close thereto that he cannot use the time effectively for his own purposes is working while "on call." 29 C.F.R. § 785.17 The Federal Rules further state that an employee who is not required to remain on the employer's premises but is merely required to leave word at his home or with the employer where he may be reached is not working while on call.
In Owens v. Local No. 169, Ass'n of Western Pulp and Paper Workers 971 F.2d 347 (9th Cir. 1992), the court analyzed whether the employee spent time on call "primarily for the benefit of the employer." Two factors are important in the "benefit of the employer" test: 1) the degree to which employees are free to engage in personal activities, and 2) the agreements between the parties.
Courts have considered a number of factors in determining whether an employee plaintiff had use of on-call time for personal purposes: (1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on employee's movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during call-in time. No one factor is dispositive. See Berry v. County of Sonoma, 763 F.Supp. 1055, 1058 (N.D.Cal.1991).
In Oliver v. Mercy Medical Center, Inc. 695 F.2d 379 (9th Cir. 1982), the court held that a three minute response time was too restrictive. In other federal jurisdictions, 20 minute response time requirements have been upheld has not unduly restrictive. Pilkenton v. Appalachian Regional Hospitals, Inc., 336 F Supp. 334 (W.D. Va. 1971), Bright v. Houston Northwest Medical Center Survivor, Inc., 934 F.2d 671 (5th Cir. 1991), cert. Denied, 112 S.Ct. 882(1992). In the Bright case, a hospital biomedical repair technician was not entitled to compensation for on call time even though he was the only on-call technician, was required to respond to all calls, responded to an average of four to five calls a week, was required to be reachable by beeper and could not be intoxicated if called.
Included in Regular Rate Calculation. Although payment for time spent on uncontrolled on call time is technically not required because it does not constitute hours worked, some employers do pay compensation to employees for such time. The Wage and Hour Division considers such payments to be compensation for the performance of a duty, and therefore, it must be included in the employee's regular rate.
The employee's regular rate is used to calculate overtime pay. The regular rate is calculated as follows:
For example, an employee is paid an additional $75.00 for the week that he is on call to respond to service calls. The total compensation figure would include, for example, the $75.00 that the employee was paid for being on call for that week.
The number of hours actually worked would only include the number of hours actually worked. For example, if the employee worked 40 straight time hours and 10 overtime hours, the number of hours actually worked would be 50 hours. Any hours spent on uncontrolled standby time would not be counted.
The California Division of Labor Standards Enforcement (DLSE) also utilizes the benefit of the employer test, described above. The test is applied to the facts of each individual case. However, the focus of the inquiry is how much control does the employer have over the employee during the on call time. In determining whether on call time is compensable, the DLSE considers the following factors: (1) geographical restrictions on the employees' movements; (2) required response time; (3) the nature of the employment; and (4) the extent the employer's policy impacts personal activities during on call time.
If the employee is required to remain at the employer's place of business and respond to emergency calls, the on call time is considered hours worked and is compensable, even if the employee is doing nothing more than waiting for something to happen.
The simple requirement that the employee wear a beeper, standing alone, does not require the employee be paid for all hours the beeper is on.
There appear to be no state court cases directly on point with regard to on call time. However, in Madera Police Officers Assn. v. City of Madera (1984) 36 Cal.3d 403, the court examined whether officers were subject to sufficient control while on their lunch break to constitute hours worked. The court compared the uncontrolled standby time of the officers to the lunch break time. The court stated that the restrictions placed on the employee must be examined to determine whether they are substantial enough to prevent the employee from attending to private pursuits.
Payment for Uncontrolled On Call Time Included in Regular Rate Calculation. (See above discussion.)
This update is only a summary. The Law Offices of Peter A. Singler can help you understand the full impact this law may have on your business. If you have any question, please contact Sandra G. Wickland at (707) 823-8719 or SGW@singler-law.com.