In our last Advisory, we discussed the rules that regulate the payment of employees during time spent traveling. Just as employers sometimes mistreat travel time when calculating the hours worked by their employees, so, too, do they sometimes misunderstand how time spent “on call” should be treated for payroll purposes.
The nature of some jobs requires employees to be “on call” or “on standby,” ready to respond to business or customer needs whenever they may arise. Some employees carry pagers or cellular telephones, for example, so that their supervisors can contact them and direct them to respond quickly to emergencies. This common scenario creates a number of interesting legal issues relating to the employer’s obligation to pay wages.
As a threshold matter, the question of whether time spent “on call” is compensable is relevant only to non-exempt employees. Exempt employees, of course, are paid on a salary basis and an exempt employee’s salary generally compensates him or her for all work performed, regardless of the number of hours worked. Exempt employees are not entitled to, and generally should not receive, any additional compensation based on the number of hours they may spend “on call.”
Time spent “on call” by non-exempt employees represents time worked, and is compensable, if the employee is (a) required to remain on the employer’s premises, or (b) required to remain so close to the workplace that the employee cannot effectively use the time for personal purposes. Courts and the Labor Commissioner determine on a case-by-case basis whether the restrictions imposed upon an employee “on call” are so strong that the employee cannot use the time in question for personal purposes.
Several courts have concluded that employees required to return to the workplace within 20 minutes of receiving a call were not controlled so tightly that they were entitled to compensation for the time they spent on call. If an employer’s facilities were located far from residential areas, however, a policy requiring the employee to report to work within 20 minutes of a call could be viewed as quite restrictive, causing the time spent by the employee in “on call” status to be compensable. Time spent “on call” by employees who are required only to be available to answer questions by phone, but are otherwise able to do as they please, is unlikely to be regarded as time worked.
If a non-exempt employee is actually required to report to work when “on call” during a day he or she was not otherwise regularly scheduled to work, the employer’s payment obligation varies depending on the number of hours worked:
If the employee works more than half of his or her usually-scheduled day of work, the employer must pay the employee for all hours worked.
If the employee works less than half of his or her usually-scheduled day of work, the employee is entitled to be paid half of the wages earned on a usual day, provided that the amount paid shall be equivalent to no less than two hours of pay and no more than four hours of pay. A full-time employee required to work for three hours while on call is thus entitled to payment for four hours.
If an employee is required to report to work for the second time in a single day (regardless of whether the employee was regularly scheduled to work on that day or not) and works less than two hours after reporting for the second time in the day, the company must pay the employee for a minimum of two hours of work.
Employers should recall that time spent “on call”, if compensable as hours worked, may be payable at overtime rates if the employee has worked a total of more than eight hours in a given day or more than 40 hours in a given week or as otherwise required by wage and hour law. To the extent that the time for which an employee is paid for being “on call” exceeds the actual amount of time worked due to the minimums described above, the excess time does not count as hours worked for overtime purposes, however. A full-time employee who works eight hours on a given date and then is required to report to work again for half an hour after going home “on call” is thus entitled to a total of ten hours of pay for the day (consisting of the eight hours worked during the regular day and the two-hour minimum for after being required to report to work a second time during the day), but the overtime premium would apply only to the additional 30 minutes of work performed by the employee after being called back to work, rather than to the entire two hours of pay attributable to the work performed while on call.
Calculation of hours worked is a seemingly basic step in the payroll process. Many mistakes result from misunderstanding the rules relating to “on call” time, however. Whether “on call” or “standby” time should be treated as compensable hours worked can be a complex question that must be answered on a case-by-case basis rather than by mechanically applying a set of rigid rules. If you have any questions about “on call” time or any other issue relating to employment law, please contact one of our attorneys:
Daniel F. Pyne III
Richard M. Noack
Ernest M. Malaspina
Erik P. Khoobyarian