On-Call “Standby” Pay In California Leaves Employers Without A Leg To Stand On

It should come as no surprise that California laws are more demanding than their federal counterparts and that especially holds true when it comes to compensating employees for on-call (or “standby”) time.

Time and again, I hear employers in California say things like:

• “Why should I have to pay someone just to answer the phone if it rings after hours?”
• “I give them a flat $100 for the weekend—shouldn’t that cover it?”
• “We offer two hours of base pay just for being on call, plus regular wages if they actually work.”

Unfortunately, none of these approaches guarantees compliance under California law.

California mandates that employees must receive at least minimum wage for each hour worked. But when is on-call time considered “hours worked”? California’s Industrial Welfare Commission Wage Orders define “hours worked” as any amount of time during which an “employee is subject to the control of an employer and includes all the time the employee is suffered or permitted to work” regardless of whether or not the employee is actually performing any work.

So, to determine if on-call time counts as compensable work time, courts focus on the level of restriction placed on the employee. The more limitations imposed, the more likely that time must be paid at least at minimum wage – and possibly overtime. A key case on this issue, Berry v. County of Sonoma, highlights a multi-factor analysis that is highly fact driven and based on the specific circumstances in each situation. Employers must consider a variety of factors in order to make a determination:

• Geographic restrictions (e.g., must the employee stay within 30 minutes of the worksite?)
• Frequency of calls (how often is their personal time disrupted?)
• Response time limits (is the employee required to respond within a few minutes?)
• Ability to trade shifts (can they swap on-call duties with others?)
• Freedom to engage in personal activities (can they go to a movie, run errands, or take a nap?)

If the answers to these questions paint a picture of an employee tethered to their phone or home, chances are you’ve got compensable time on your hands. “Wait—you’re telling me I have to pay employees just to sit around all weekend in case they get a call?” Yes…maybe. Like everything in California employment law, it depends.

Some common pitfalls employers should avoid include:

1. Assuming exempt employees are safe. Using exempt employees for on-call shifts might seem like a great solution but remember, in California, exempt employees must spend more than 50% of their time performing exempt duties. Most on-call duties do not meet that threshold. If the on-call time makes up a substantial portion of the employee’s duties, you risk a claim of misclassification which can expose the company to significant liability.
2. Paying a flat stipend. If the employee performs any work, they must be paid at least minimum wage for all hours worked—and potentially overtime. Also,
   1. If the employee is contacted and required to work outside of their scheduled hours, California’s reporting time pay rules kick in. This means the employee may be owed a minimum of two hours pay per contact.
   2. Stipends must be included in regular rate of pay calculations when computing overtime, penalties for missed breaks, or paid sick leave within the same pay period.
3. Shifting to lower-paid on-call workers. This solution can work as long as the employee covering the on-call shift adheres to company policies regarding the timing of rest and meal periods.
4. Using an answering service. Outsourcing to a trained answering service to triage after-hour calls can be a compliance win as long as the service understands when not to escalate so that only true emergencies are routed to employees.

California’s rules around standby time are nuanced, complex, and often misunderstood. Employers must carefully evaluate on-call policies, practices, and employee classifications to ensure compliance.