California Court of Appeal Rules Employers Must Pay Employees for On-Call Shifts

The California Court of Appeal recently ruled that a clothing retailer employer’s on-call scheduling policy triggers the California Industrial Welfare Commission’s (IWC) Wage Orders’ reporting time pay requirements.  This decision substantially broadens the scope and applicability of California’s reporting time pay requirement.

This case stemmed from a lawsuit regarding the clothing retailer employer’s on-call policy in which employees were assigned on-call shifts, but were not told until they called in two hours before their shifts were scheduled to start whether they were actually required to show up to work.  If they were told to come in, they were paid for the shifts.  If the employees were not told to report to work, however, they did not receive any compensation for having been “on call.”

Among other things, the IWC’s Wage Order 7 (the Wage Order at issue in this case) 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 said employee’s usual or scheduled day’s work.”  In a 2-1 decision, the court held that the employer’s on-call policy triggered the obligation to pay reporting time pay for instances when employees had to call in to find out if they were required to work and were told not to come in.  According to the majority decision, on-call shifts burden employees, who cannot take other jobs, go to school, or make social plans during on-call shifts, but who nonetheless receive no compensation from the employer unless they ultimately are called in to work.  The court reasoned that this was “precisely the kind of abuse that reporting time pay was designed to discourage.”  As such, the court reversed the trial court’s judgment in favor of the employer and remanded the case to the trial court for further proceedings.