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Paid Work Time Just Got More Complicated!

by Jennifer Shaw and Melissa Whitehead | | April 2, 2024

Last week, the California Supreme Court published a much-anticipated opinion related to when an employer’s control over an employee’s activities constitutes “hours worked.” Although the Huerta v. CSI Electrical Contractors opinion primarily relates to rules governing the construction, drilling, logging, and mining industries covered by Industrial Welfare Commission Wage Order No. 16, the Court emphasized that its analysis of “hours worked” and employer control is widely applicable to other industries.

As you may recall, all wage orders define “hours worked” as “the 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, whether or not required to do so.” (Wage Order Nos. 4 and 5 also include additional language in the definition).

The Court answered three questions based on the facts at issue:

Question 1: “Is time spent on an employer’s premises in a personal vehicle and waiting to scan an identification badge, have security guards peer into the vehicle, and then exit a Security Gate compensable as ‘hours worked’ within the meaning of … Wage Order No. 16?”

CSI employees underwent daily security checks at a security gate. There were often long lines of vehicles waiting to both enter and exit the worksite, and the exit procedure caused delays of between five and more than 30 minutes. Employees were not paid for the time waiting to enter or exit the security gate.

To determine whether the time employees spent during the exit process was compensable, the Court looked at several factors, including: (1)  the activity’s mandatory nature; (2) the location of the activity; (3) the degree of employer control; (4) whether the activity primarily benefits the employee or employer; and (5) whether the activity is enforced through disciplinary measures.

The Court decided that the time was compensable because of the “indicia of employer control” – the exit procedure was mandatory and onsite, required employees to perform specific and supervised tasks, and primarily benefited the employer.

Question 2: “Is time spent on the employer’s premises in a personal vehicle, driving between the Security Gate and the employee parking lots, while subject to certain rules from the employer, compensable as ‘hours worked’ or as ‘employer-mandated travel’…?”

CSI employees were not paid for the 10 to 15 minutes they spent driving between the employee parking lot and security gate at the start and end of each shift. Notably, there was only one road in and out on the private land where they were working, and employees were required to obey posted speed limits and rules restricting music volume and prohibiting honking horns.

The Court held that the drive time may be compensable as employer-mandated travel, but not as “hours worked.” In the Court’s view, the employer’s level of control over the employee is irrelevant to determine whether time is compensable as “employer-mandated travel.” Instead, Wage Order 16 requires employees to be paid for any travel undertaken at the direction and command of the employer after the employee’s arrival at the “first location,” if the employer requires the employee’s presence. Factors relevant to this analysis include, (1) the purpose served by the employee’s presence at the location; (2) the activities occurring at the location; and (3) the amount of time spent there at the location.

The Court did not have sufficient facts to rule on whether employees’ time driving from the security gate to the parking lot was “employer-mandated travel.” The Court was clear, though, that the drive time was not compensable “hours worked” because there was insufficient indicia of employer control. The rules in place during that drive time were designed to ensure “safe, lawful, and orderly conduct while traveling on the employer’s premises,” which are “necessary and appropriate in virtually every workplace.”

Question 3: “Is time spent on the employer’s premises, when workers are prohibited from leaving but not required to engage in employer-mandated activities compensable as ‘hours worked’… when that time was designated as an unpaid ‘meal period’ under a qualifying CBA?”

The Court answered this question in the affirmative, and ruled that time spent on a designated “unpaid meal period” is nonetheless compensable as “hours worked” if the employer prohibits the employee from leaving the employer’s premises or a designated area during the meal period, and if this prohibition prevents the employee from engaging in otherwise feasible personal activities.

The collective bargaining agreements (CBAs) applicable to CSI employees included an unpaid 30-minute meal period. However, CSI did not permit employees to leave the site for meals. Instead, employees were required to take their meal periods at designated areas near their worksite, and were not paid for the time.

The Court stated that it had insufficient information to rule on whether employees’ meal periods were so restricted as to be compensable “hours worked.” However, it confirmed the rule that “an unpaid, off-duty meal period requires that the employee ‘(1) has at least 30 minutes uninterrupted, (2) is free to leave the premises, and (3) is relieved of all duty for the entire period.” (Emphasis in original).

There’s lots to learn from this decision.  The takeaway?  Employers must ensure they compensate employees for all hours worked.  Depending on the circumstances, time spent undergoing entry and exit procedures may qualify as hours worked.  And employer-mandated travel must always be paid under California law. 

Hmmm…we need a webinar on this one!  Stay tuned for more information soon!

Read the full opinion in Huerta v. CSI Electrical Contractors here.

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