NEW CASE: Major Changes to California’s Reporting Time Pay Requirements

Does your organization require employees to call-in before a scheduled shift to determine if an employee actually needs to report to work that day?  If the answer is yes, then this new California Court of Appeals case imposes new reporting time pay requirements on your organization.

In a recent case (Ward v. Tilly’s Inc.), the California Court of Appeals has held that employers who require employees to call-in prior to a scheduled shift to determine whether the employee is needed that day, is required to pay the employee reporting time pay (at a minimum for 2 hours of work) even if the employee is told that he does not need to work that day.

Background

This case arises from a scheduling policy of a retailer (Tilly’s).  Under the policy, employees were required to call in approximately two hours before the start of a scheduled shift to determine whether they needed to come to work for that shift.  If the employee was told to come into work, the employee was paid for his scheduled shift.  However, if the employee was told not to come into work, the employee received no pay for the day.

An employee filed a class action lawsuit against the employer claiming that she was owed reporting time pay because the employer’s requirement that employees call in prior to their shift amounted to the employee reporting to work and, if the employee was told not to report to work, then the reporting pay requirements in the Wage Order were triggered.  (Under the applicable Wage Order, employers are required 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.”)

The employer contended that employees did not report to work until they actually appeared at the worksite for the scheduled shift; therefore, no reporting time pay was owed to those employees who call in and are told not to come to work.

The Holding

The Court disagreed with the employer and found that the company’s on-call scheduling policy triggers the Wage Order’s reporting time pay requirements.  This means that if an employee is required to call into work (like under the Tilly’s scheduling policy) and is not subsequently put to work, then reporting time pay is owed.

The Court found that requiring an employee to call in prior to a scheduled shift constituted “reporting to work” for purposes of reporting time pay for two reasons.

First, requiring reporting time pay would “require employers to internalize some of the costs of overscheduling, thus encouraging employers to accurately project their labor needs and to schedule accordingly.”

Second, it would also “compensate employees for the inconvenience and expense associated with making themselves available to work on-call shifts, including forgoing other employment, hiring caregivers for children or elders, and traveling to a worksite.

Key Issues, Unaddressed

While this case certainly changed the reporting time pay landscape for many employers, there were two important questions left unanswered by the Court.

#1 — Does this ruling apply retroactively?

If it does, employers who have been operating under scheduling policies similar to Tilly’s could face wage and hour class actions on this issue.

#2 — How long before a shift could an employee call in and still have it constitute compensable reporting to work?

Take Home for Employers

The policy at issue in this case is not unique to Tilly’s and is a common policy for many retailers and restaurant employers.

Therefore, it is strongly recommended that employers who have an on call scheduling policy similar to that of Tilly’s review their policies to ensure that their policies do not contain the “problems” the Court identified with the Tilly’s policy, including:

  • Requiring the employees to call in within a specified timeframe prior to the shift;
  • Disciplining employees for late or missed call-ins; and
  • Making call-in and reporting mandatory

It is also recommended that employers consult with an HR Professional or an employment attorney about possible adjustments that could be made to a scheduling policy to avoid triggering reporting time pay.  Some options may include:

  • Employer-generated calling. Rather than requiring the employees to call in to see if they are needed to report to work, the employer can call the employee to see if they are available to work that day, should the need arise.  (NOTE – this approach may not work in a jurisdiction with a predictive scheduling law)
  • Eliminate discipline. Don’t discipline employees for failing to respond to an supervisor’s call to the employee about the employee’s availability to work later that day.
  • Make reporting optional. Don’t require an employee to report to work if they receive an “availability call” from a supervisor.  Make it clear to the employees that they can refuse the offer of an extra shift.