Travel Time Pay and the Construction Industry

California employers are likely aware that non-exempt employees must be compensated for any time traveling beyond their ordinary commute to and from work. Employers may also be aware that the law generally permits employers to pay a lower rate for travel time as long as the reduced rate does not drop below the minimum wage. What employers in construction-related industries may not know is that the Industrial Welfare Commission Order No. 16, which applies to the construction industry, places a unique restriction on their ability to compensate travel time at a different, reduced rate. Section 5, subsection A of Wage Order 16 states that all employer-mandated travel that occurs after the first location where the employee’s presence is required by the employer shall be compensated at the employee’s regular rate of pay or overtime rate if applicable. This means is that if employees are required to first report to the office or shop before traveling to the day’s job site, an employer subject to Wage Order 16 cannot pay the employees a reduced rate for their travel time. For example, if an employer has employees report to the office or shop first, to participate in a brief five minute meeting regarding the day’s activities, they must pay employees the calculated “regular rate of pay” when they subsequently drive to the job site. There may also be an obligation to pay for the return trip and this can, depending upon the length of the work day, require the overtime rate for the travel. Because of this unique restriction, employers should strongly consider conducting daily meetings at the job site and having employees drive directly there. With the application of specific policies, the employees’ work day can begin and end at the job site in most cases. Not only will the employer avoid application of this quirky rule, but they may be able to avoid paying travel time altogether because the employee’s travel to and from the job site may qualify as non-compensable commute time. The law pertaining to travel time is particularly tricky and employers should consult with experienced counsel regarding their current travel time policies.