A California Court of Appeal just made a sweeping change in California’s reporting time pay rules which now limits a common “on-call” scheduling practice used by employers throughout the state.
In 2012, Skylar Ward worked as a sales clerk in a Tilly’s, Inc., store in Torrance, California.
Under Tilly’s scheduling policy, Ward was required to call in approximately two hours before the start of her shift to determine whether she needed to come to work. If Tilly’s told her to report to work, she was required to do so and would be paid for that shift as normal. However, if Tilly’s informed her that there was no need to come in, Ms. Ward would receive no compensation.
Ward filed a putative class action complaint in 2015. The trial court sustained a demurrer without leave to amend, finding that by merely calling in to learn whether an employee will work a call-in shift, Ward and other employees do not report to work as contemplated by Wage Order 7. The court of appeal reversed in the published case of Ward v. Tilly’s, Inc.
The court held that merely calling in for one of these mandatory on-call shifts constitutes “report[ing] to work,” which entitled Ms. Ward and her coworkers to a minimum of two hours of reporting time pay under the applicable wage order.
Prior to the case, various courts had disagreed about what it truly meant to “report to work” within the context of this provision, with many courts – not to mention employers – understandably believing that this required the employee to physically report to the workplace location in order to be eligible for reporting time pay.
In relevant part, the court examined the language from the reporting time rule contained within Wage Order No. 7-2001 codified at California Code of Regulations, title 8, section 11070.
The court ultimately reasoned that even having to place a telephone call as part of a mandatory on-call schedule fell within this “reporting” rule for two main reasons. First, requiring reporting time pay would “require employers to internalize some of the costs of overscheduling, thus encouraging employers to accurately project their labor needs and to schedule accordingly.”
Second, it would also “compensate employees for the inconvenience and expense associated with making themselves available to work on-call shifts, including forgoing other employment, hiring caregivers for children or elders, and traveling to a worksite. In relying on these public policy considerations, the court aligned itself with prior California cases that tended to tie the compensability of worktime to the degree of employer control over an employee’s activities.
The court left several key questions unanswered. Most notably, the court failed to address the issue of whether its holding would apply retroactively – potentially exposing countless employers across the state that utilize similar on-call scheduling policies to staggering class action liability.
The court also neglected to address the inherent line-drawing problem contained within its decision; that is, how long before a shift could an employee call in and still have it constitute compensable reporting? If not two hours, then how long?