The Supreme Court of California recently clarified an employer’s duty to pay employees during “on-call” hours. [Mendiola, et al. v. CPS Security Solutions, Inc., et. al. Los Angeles County Superior Court, S212704.]
CPS Security Solutions, Inc. (“CPS”) employed guards to provide security at construction worksites on an “on call” basis. During the week, each guard was required to patrol for eight hours and be on-call for eight hours. On weekends, each guard was on patrol for 16 hours and on-call for eight hours (thus requiring each guard to work a 24-hour shift). The guards received no compensation for the time they spent on-call unless they were called to investigate a disturbance; in those cases they were paid only for the actual time spent investigating the disturbance. However, if a guard worked for at least three hours during the on-call period, the guard would be paid for the entire eight hours.
During each on-call shift, CPS required the guard on duty to reside in a trailer and spend all on-call hours in the trailer unless investigating a disturbance at a worksite. All on-call guards were further obligated to respond immediately and in uniform if they were contacted by a dispatcher or became aware of suspicious activity. If a guard wished to leave the site during the on-call shift, the guard was required to obtain relief from another guard, report where they were going and how long they would be gone, carry a pager or radio telephone and stay within a 30-minute radius of the site. If another guard was not available to provide relief, the guard was not permitted to leave the worksite, even in the case of an emergency. The guards could generally use on-call time as they chose, but pets, children and alcohol were prohibited while onsite and adult visitors were permitted only if authorized by CPS’s clients.
A class action lawsuit was filed against CPS for alleged violations of minimum wage and overtime obligations imposed by the applicable Industrial Welfare Commission (“IWC”) wage orders (specifically Wage Order No. 4-2001, California Code of Regulations Title 8, §11040, (“Wage Order No. 4”) which applies to all persons employed in professional, technical, clerical, mechanical and similar occupations). The guards claimed CPS violated the Wage Order No. 4 by failing to pay the guards for all on-call hours and improperly excluded sleeping time from payment during their 24-hour shifts.
Wage Order No. 4 requires employers to pay each employee not less than the applicable minimum wage for all hours worked in the payroll period, as well as one and a half times their regular rate of pay for all hours worked in excess of 40 hours per week and eight hours in any workday. The issue raised by Mendiola was whether the time spent “on-call” constituted hours worked within the meaning of Wage Order Number 4. If so, CPS was required to pay their guards for all on-call hours.
In determining whether on-call time constitutes hours worked, California courts focus primarily on the extent of an employer’s control. The court will analyze various factors in determining whether an employer’s control will render an employee’s on-call hour compensable. These factors include: 1) whether there is an on-premises living requirement; 2) whether there are excessive geographical restrictions on the employee’s movements during the on- call period; 3) whether a fixed time limit for an employee’s response to a call is unduly restrictive; 4) whether the on-call employee can easily trade on-call responsibilities; 5) whether the use of a pager could ease restrictions; 6) whether the employee has engaged in personal activities during on-call hours; and 7) whether the on-call waiting time is primarily for the benefit of the employer and its business.
The Supreme Court in Mendiola held that the control exerted by CPS during the guard’s on-call hours rendered all on-call hours compensable under Wage Order Number 4. CPS argued that the on-call time should not be compensable since the guards engaged in personal activities during on-call hours, including sleeping, showering, eating, watching television, and browsing the internet. Although CPS guards could engage in some personal activities, the Court held that such activities did not minimize the extent of CPS’ control, which was significant. It is the extent of employer control that renders on-call time compensable.
The Mendiola Court further analyzed whether a period of eight hours for sleep time could be excluded from the guards’ 24-hour shifts. CPS argued that a federal regulation (permitting an eight-hour period for sleep time to be excluded from compensation for all 24-hour shifts) should be incorporated into Wage Order No. 4. The Court rejected that argument, holding that if the IWC intended to incorporate the federal regulation into Wage Order Number 4, it would have expressly done so. Reviewing the language of Wage Order Number 4 itself, the Court concluded the wage order does not permit the exclusion of sleep time from compensable hours worked in a 24-hour shift.
California employers using on-call employees subject to Wage Order No. 4 should evaluate their policies regarding on-call employees in light of the ruling in Mendiola. Employers should ask themselves the following questions:
If your policies are too restrictive and you are not compensating your employees for all of their on-call hours, you may be in violation of California law. If you are uncertain whether your employees are subject to Wage Order No. 4 or whether your policies may be in violation of the law, please do not hesitate to contact us for assistance.
Jennifer Riso is an attorney in the San Francisco office. She can be reached at 415.362.7126 or .