Take Care with “On-Call” Shifts of Any Kind

If you have not heard; employers are getting sued left and right for technical wage and hour violations and the liability is HUGE! One area for such liability is anything labeled or looking like an “on-call” shift. The liability can come from the failure to properly compensate for the shift and from failing to properly pay reporting time pay related to the shift. Several months ago the California Court of Appeal decided a significant case relating to reporting time pay that appears to have been missed by many employers.

The case involved the retailer Tilly’s, Inc. The store assigned employees to “on-call” shifts. The employees were told to expect to work an on-call shift, but the employees were required to call the store two hours before start of the shift to confirm that they were actually going to be required to come in to work the shift. The company did not pay reporting time pay to employees who were not actually required to come in and work.

The company’s policy and practice was challenged in a class action lawsuit claiming that the employees were entitled to reporting time pay when they called in and told not to come to work. The company argued that reporting time pay was required only when an employee physically reported to work. In other words, the parties assigned different meanings to the words “report to work” found in Wage Order 7.

Because there is no definition for the words “report to work” in the Wage Order, the court had to determine the appropriate meaning. The court first noted that the company’s call-in system created the same problem as on-site reporting systems:  The employer obtains a daily pool of willing employees at its disposal without having to provide a consistent scheduling system on which employees can depend for steady work.

The court also focused on the employees’ uncompensated opportunity-cost under the company policy. Those costs included (1) the employees’ inability to schedule shifts at other jobs, attend classes at school, and commit to social activities; (2) the cost of child or elder care which the employee must commit to even if a work shift is not provided; and (3) the employee’s inability to commit to any other activity incompatible with making a phone call to the employer two hours before the potential shift.

Ultimately, the court ruled that the act of calling in under the company’s policy was “reporting to work” and the employer was obligated to pay the employees’ reporting time pay when no actual work shift was provided. The decision included a strong dissenting opinion. So, an appeal is possible. But, for now, employers should carefully re-examine any form of an “on-call” shift.

Ward v. Tilly’s, Inc., 31 Cal.App.5th 1167  (2019)