Caution: some content in this post may be considered at least a little snarky.  But if your organization requires employees to call-in to see if they’re required to work later that day, it’s probably worth the read.    

Two out of three justices of the court of appeal just decided “reporting time” pay is due when employees have to call to see if they are on the schedule for that day.  As a result of this decision, employers who require employees to do so may be on the hook for substantial liability unless the Supreme Court rights this wrong by republishing the case or granting review.  Here’s why:

Reporting Time Pay

Most of the California Industrial Welfare Commission Wage Orders applicable to non-exempt employees contain a provision like this one, quoted in part:

“(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, 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 the minimum wage.

“(B) If an employee is required to report for work a second time in any one workday and is furnished less than two (2) hours of work on the second reporting, said employee shall be paid for two (2) hours at the employee’s regular rate of pay, which shall not be less than the minimum wage.

The majority and dissent traced the history of this provision.  Plainly, it applied only to employees who arrived at work and were sent home without work, or sent home after less than half the usual shift. But the two justices in the majority don’t think call-in requirements are fair to employees. So, they extended the reporting time obligation.  

Whether or not requiring employees to call in for shifts is “fair,” and I certainly see why it’s a burden on employees, it’s up to the Legislature to create a remedy or not after holding hearings and engaging in the legislative process.  Two judges do not have the ability to weigh the costs and benefits and hear from constituents and stakeholders.  Oh, that’s not me talking, that’s the dissenting justice in this case:

the uncertainty of not knowing whether an employee will have to work an on-call shift can constitute a significant hardship to that employee. I also assume employers like Tilly’s have legitimate business reasons for needing the flexibility to schedule employees based on unexpected surges or lulls in customers, absences of other employees due to illness or family emergencies, and the like. It would be surprising if retailers maintain on-call policies just to torture employees. Balancing these competing needs and interests of employers and employees is a task for the Legislature, not this court. The Legislature can give notice to all interested parties, learn the social costs and benefits of various alternatives, and engineer compromises acceptable to all. We cannot. 

This Case

Tilly’s is a retailer, governed by IWC Wage Order 7.  Tilly’s required employees  “on call” to call in 2 hours before the shift to see if they were scheduled for that day.  If they were called in, they naturally were paid.  But employees who called in and found out they were not on schedule sued, claiming they were due reporting time pay of “half the usual or scheduled day’s work,” at least 2 hours but no more than 4.  

In a nutshell:

Plaintiff contends that when on-call employees contact Tilly’s two hours before on-call shifts, they are “report[ing] for work” within the meaning of the wage order, and thus are owed reporting time pay. Tilly’s disagrees, urging that employees “report for work” only by physically appearing at the work site at the start of a scheduled shift, and thus that employees who call in and are told not to come to work are not owed reporting time pay. 

Even the plaintiff’s lawyer conceded that an employer’s requiring employees to check their schedule in advance, by itself, was not compensable time. Rather, the issue was the two-hour, same-day window; the fact that the employee did not know until two hours before the shift began whether he or she would be required to work. Those issues offended the Court of Appeal’s majority, justifying the judicial extension of a provision that has nothing to do with the facts:

on-call shifts burden employees, who cannot take other jobs, go to school, or make social plans during on-call shifts—but who nonetheless receive no compensation from Tilly’s unless they ultimately are called in to work. This is precisely the kind of abuse that reporting time pay was designed to discourage.

The court failed to explain how requiring employees to call in to see if they are on the schedule is more burdensome than requiring employees to wear a beeper over the weekend or at night, without compensation, in case they are needed to come to work.  The latter scenario is uncompensated time, unless the employer places too many restrictions on the employee’s activities. We wrote an article examining the factors courts consider here

The Majority’s Analysis

The Court admitted:

Wage Order 7 does not reference telephonic reporting, nor is there evidence that the IWC ever considered whether telephonic reporting should trigger the reporting time pay requirement.

Nevertheless, the Court decided that increased technology, such as the use of cell phones, made it easier for employees and employers to reach each other by telephone. Therefore, whether the employee “reported” to work on the phone, or “reported to work” in person, no longer was significant. 

Telephonic reporting requirements appear to be of recent vintage, and, indeed, the cell phone technology that makes such telephonic reporting feasible did not exist until many decades after the reporting time pay requirement was enacted. We therefore agree with Tilly’s and the dissent that “ ‘at least in 1947, the phrase ‘report [for] work’ meant physically showing up.’ ” (Dis. & conc. opn. of Egerton, J., p. 3, post, citing Casas v. Victoria’s Secret Stores, LLC (C.D. Cal., Dec. 1, 2014, No. CV 14-6412-GW) 2014 WL 12644922, at *4 (Casas).) Put simply, that is how an employee reported for work in the 1940’s.

And

neither the practice of on-call scheduling nor the cell phone technology that makes such scheduling possible existed when the IWC adopted the reporting time pay requirement in the 1940’s. 

With all due respect, many people in the 1940’s could call in on a landline or a payphone (Google it). If the employee complement did not have phones, the employer would likely not require them to call in or they’d have no labor pool. Now they can call-in to see if they are on the schedule on a landline or cell phone. As the dissent pointed out

Nothing turns on whether a cord or a cell tower connects the phone. The notion that phones were unfamiliar in the 1940s is ahistorical: spend some enjoyable time listening to Glenn Miller’s 1940 hit PEnnsylvania 6-5000. (The Andrews Sisters’ rendition is delightful.)3 When the Legislature defunded the IWC effective July 1, 2004,4 cellular or mobile phones had been in use for some time. 

After assuming history to support their conclusion that the Wage Order covers a practice that the IWC did not consider, the Court decided that the IWC would have extended reporting time pay to calling in, if it had anticipated the use of the phone instead of physically reporting to work. 

We conclude that had the IWC confronted the issue, it would have determined, as we do, that the telephonic call-in requirements alleged in the operative complaint trigger reporting time pay. 

The point of this is that the reporting time requirement as drafted was targeted at employers who scheduled employees for actual work, only to deny them the work when they showed up.  The pay offset the inconvenience and expense of commuting to a job that did not materialize, and discouraged over-scheduling “just in case.”  Had the Legislature or IWC wished to compensate employees for calling in to see if they were on the schedule at all, they would have said so. 

The dissenting justice in essence believed that the majority was simply “legislating from the bench,” as they say:

The legislative history of the phrase “report for work” reflects the drafters’ intent that―to qualify for reporting time pay―a retail salesperson must physically appear at the workplace: the store. As one federal judge has observed, our “fundamental task in interpreting Wage Orders is ascertaining the drafters’ intent, not drawing up interpretations that promote the Court’s view of good policy.” (Casas v. Victoria’s Secret Stores, LLC (C.D.Cal., Dec. 1, 2014, No. CV 14-6412-GW) 2014 WL 12644922, at *5 [nonpub. opn.] (Casas).) It is our Legislature’s responsibility to enact any necessary legislation to address any hardship to employees who are required to call their employers to discover if they must report for work.

The dissent also explained why it’s not appropriate for the majority to make a policy deicision and issue a new rule such as this:

How are we―an appellate court limited to the narrow record before us―to determine how much notice is enough to avoid a violation of the wage order? What if employees are required to call in eight hours in advance instead of two? How about 12 hours? Twenty-four? Three days? A week? At oral argument, Ward’s counsel seemed to offer a concession that a requirement employees call in 24 hours in advance would be legal. But a concession by one attorney in one case cannot bind all of the plaintiffs’ lawyers across the state who might choose to file similar lawsuits. 

And what about a situation in which an on-call employee is needed to come in to the store because another employee called in sick, or has a family emergency, or just didn’t show up? Does the rule we announce today apply to all retailers in our state of 40 million people, regardless of how many employees or locations it has? Does it apply to almost every other industry in our state? Fifteen of California’s 18 wage orders6―governing everything from manufacturing to transportation to “amusement and recreation” to “handling products after harvest”―contain the identical phrase: to report for work. 

What to Do?

As I wrote at the beginning, it may be the California Supreme Court  decides to “depublish” this opinion, or accepts review if the employer seeks it.  The 2-1 margin increases the likelihood of review, as does the retroactivity of the decision, and the wholesale rewriting of the wage order.  If this case stands, and is deemed to apply retroactively, it could lead to liability for unpaid reporting time, waiting time penalties, failure to pay for hours worked, and more.  We shall see. 

It also bears noting that the Legislature has recently considered bills that would require employers to schedule workers in advance, and to pay them for changes without sufficient notice. The majority and dissent noted these efforts in the opinion.  Also, local jurisdictions such as San Francisco have enacted “fair scheduling” ordinances.  So, the days of uncompensated call-in time may be numbered, even without this opinion. 

As things stand, employers requiring employees to call-in to find out if they are working later that day must consider changing their practices (assuming the applicable Wage Order contains a reporting time provision as most do).

As of now, absent an ordinance like San Francisco’s, there is no legal requirement to issue a fixed schedule, or to provide advance notice of changes.  There also is no need to require employees to call-in to see if they’re on the schedule. The Court’s opinion here could be rendered irrelevant if employers simply call employees into work without requiring the employees to do the calling. (That is, unless the San Francisco ordinance applies to your business, or the Legislature enacts a statewide law.)  Employers could compile a list of workers who want more shifts, or who would be willing and able to come in on short notice. They might even offer a wage differential to those employees who agree to do so. If the need for more workers arises on a given day, employers could call in employees on those lists. Not a perfect solution, but one that does not require reporting time pay.

Employers also are free to schedule workers to appear at work, and provide them with more than half of their shift without incurring reporting time pay obligations. They can assign work to excess employees that might otherwise not get done. Employers also can schedule employees and then cut workers after they show up, and pay the reporting time.  I imagine workers would have appreciated the opportunity to call and find out if they’re needed, but the Court has spoken.

If you’d like to read the opinion in Ward v. Tilly’s, Inc. it’s available here.  We’ll have an article on this issue in the near future. Sign up for our newsletter or browse our hundreds of articles on employment law issues at shawlawgroup.com

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