Sweeping Change in California Time Pay Rules

A California Court of Appeal announced a sweeping change in California’s reporting time pay rules which now prohibits a common scheduling practice used by employers throughout the state in the case entitled, Ward v. Tilly’s, Inc. Under Ward, California employers who require employees to call in two hours before a shift to determine whether or not they are needed, and report to work if called in, are now obligated to pay that employee, at a minimum, for two hours of work even if the employee is informed that there is no need to come in to work that day. Unfortunately, the case left many questions unanswered and, as a result, employers should be careful to craft scheduling policies that avoid the same pitfalls seen in that case.

The Facts of the Case:

Under Tilly’s scheduling policy, plaintiff Skylar Ward was required to call in approximately two hours before the start of her shift to determine whether she was required to come to work. If Tilly’s told her to report to work, she was required to do so and would be paid for that shift. If Tilly’s informed her that there was no need to come in, she would receive no pay at all. This is because she never actually reported to the worksite and never performed any work. The Ward Court held that, under the facts of this case, calling in for one of these mandatory on-call shifts constitutes “report[ing] to work,” which entitled Ward and her coworkers to a minimum of two hours of reporting time pay under the applicable wage order.

In doing so, the Ward court examined the following language from the reporting time rule contained within Wage Order No. 7(A): “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 employee shall be paid for half the usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than minimum wage.”

Prior to this case, employers have taken the position that an employee must physically report to the workplace location in order to be eligible for reporting time pay. When an employee physically reports to work but is furnished less than half of his or her scheduled hours, providing the employee with at least two hours of pay compensated them for the inconvenience and expense of, merely showing up and not performing any work. The Ward court held that modern technology has advanced to the point where “reporting” could mean far more than just physical presence at the worksite, holding that even having to place a telephone call as part of a mandatory on-call schedule fell within the ambit of this “reporting” rule. The Court stated that 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.” In addition, the Court stated that 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.

The Ward Court relied on the 2016 California Supreme Court decision in Augustus v. ABM Securities—a case which prohibited employers from having employees carry radios and remain on-call during rest periods on the basis that “compelling employees to remain at the ready, tethered by time and policy to particular locations or communication devices” was inconsistent with the concept of having fully “relieved employees of all work duties and employer control.” The Augustus court was clear that this rule applied even if the employees were never actually called to work

Unanswered Questions in the Wake of Ward:

The Ward court did not address the issue of whether its holding would apply retroactively—potentially exposing countless employers across the state that use similar on-call scheduling policies that would result in significant class action liability. Also not addressed is how long before a shift can an employee call in and still have it constitute compensable reporting? If an employee calls in 24 hours before a shift, is it still compensable?

Employer Take-Aways:

The Ward court criticized three components of Tilly’s scheduling policy: (1) requiring employees to call the employer; (2) disciplining employees for late or missed call-ins; and (3) mandatory call-in reporting. Employers should craft alternative scheduling policies that:

Management should call the employee; do not require the employee to call management based on a list of employees who might be available to work.
Do not take any disciplinary action against employees who fail to respond to management’s call to check their availability to work.
Do not make reporting mandatory. If an employee does not wish to report to work, simply move on to calling the next employee on the list.