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Hospitals Should Review Policies on Reporting Time Pay

California appellate court issues new decision

Earlier this week, a California appellate court issued a published decision interpreting California’s reporting time pay requirement. While the decision in Ward v. Tilly’s Inc. was not unanimous and could be appealed to the California Supreme Court, employers should take note of the case’s reasoning.

Hospitals do not generally schedule unpaid on-call shifts similar to Tilly’s but may have scheduling practices that raise concerns similar to those articulated by the majority in this case.

Tilly’s operates retail stores. Because of fluctuation in customer traffic, it schedules using a mix of regularly scheduled shifts and “on-call” shifts. Generally, it schedules on-call shifts in advance and requires the employee to call the store two hours before the start of the shift to find out whether they are needed. If told to come in, they are paid for the shift; if not, they do not receive any compensation for having been “on call.” The plaintiff argued that reporting time pay, contained in Section 5 in most wage orders, including Wage Orders 4 and 5, is triggered when an employee is scheduled for an on-call shift but is told they are not needed. 

California’s reporting time pay obligation has been in place for over 70 years. Reporting time pay requires an employer to pay an employee a minimum of two hours and a maximum of four hours for each workday when 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.”

Section 5 of the wage orders contains other provisions pertaining to reporting time, including an exception that makes clear it does not apply when an employee is on paid standby status and is “called to perform assigned work at a time other than the employee’s scheduled reporting time.”

Two of the three appellate judges agreed with the plaintiff’s position that reporting time pay was due when an employee was required to call the employer two hours before the start of the on-call shift and was then informed they were not needed.  The majority opinion concludes that the primary purpose of reporting time pay is to “guarantee at least partial compensation for employees who expect to work a specified number of hours and who are deprived of that amount by the employer.”

The majority rejected Tilly’s argument that reporting time pay is only triggered if the employee physically arrives at the workplace and is provided less than half of their scheduled shift. 

One judge dissented and concluded that “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.”

Concerns articulated by the majority in this case included that the unpaid on-call shifts required employees to be available, so they could not commit to other jobs, schedule classes or make plans with friends or family. In addition, employees with child or elder care responsibilities would have to make contingent care arrangements, which they have to pay for even if they are not called to work. 

Hospitals should review scheduling practices and monitor this issue.