California Court of Appeal Holds Reporting Time Pay Is Triggered When Employees Are Required to Call In But Are Not Put to Work

02.21.2019

On February 4, 2019, a California Court of Appeal held that a non-exempt employee is entitled to “reporting time pay” if the employer requires the employee to call in to the employer on a scheduled work day to find out whether the employee should report to work that workday but is not put to work. (Ward v. Tilly’s Inc., No. B280151, Ct. App., 2^nd Dist. Div 3, February 4, 2019).

Before this decision, it was perfectly reasonable for California employers to believe an obligation to pay “reporting time” pay would be triggered when the employer required the employee to physically report to work but did not put the employee to work or provided less than half the employee’s scheduled hours.

Background

The wages, hours, and working conditions of all California employees are governed in large part by the California Industrial Welfare Commission’s (“IWC”) Wage Orders, which have the force of law. Each industry or occupation is covered by one of 17 Wage Orders, which must be posted at the workplace in a location where employees can easily read it. Each of those Wage Orders contains the following “reporting time” pay provision:

REPORTING TIME PAY

Each workday an employee is required to report to 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.

Wage Order 16, applicable to all on-site construction occupations, contains those same provisions with the addition of a narrow exception stating, “[t]his section shall apply to any employees covered by a valid collective bargaining agreement unless the collective bargaining agreement expressly provides otherwise.”

Skylar Ward worked as a sales clerk for Irvine-based Tilly’s, a clothing retailer. Tilly’s implemented a policy requiring non-exempt employees assigned to “call-in” shifts to call in two hours before the start of each scheduled “call-in” shift to find out whether to report to work that workday. If they were told to come to work, they were paid for their shift; if they were told not to come into work that day, they received no pay for that workday.

Ward filed a wage and hour class action lawsuit alleging Tilly’s employees were owed reporting time pay for call-in shifts. The trial court agreed with Tilly’s’ argument that “reporting time” pay is owed only when a non-exempt employee is required to physically report to work but is not put to work or is provided less than half the non-exempt employee’s scheduled workday, and dismissed the lawsuit.

On appeal, the California Court of Appeal reversed the trial court and agreed with Ward that the “reporting time” pay requirements are triggered by any manner of reporting required by an employer, whether it be in person, by telephone, or otherwise. The Court of Appeal reasoned in part as follows:

. . . . Like requiring employees to come to a workplace at the start of a shift without a guarantee of work, unpaid [call-in] shifts are enormously beneficial to employers: They create a large pool of contingent workers whom the employer can call on if a store’s foot traffic warrants it, or can tell not to come in if it does not, without any financial consequences to the employers. This permits employers to keep their labor costs low when business is slow, while having workers at the ready when business picks up. It thus creates no incentive for employers to competently anticipate their labor needs and to schedule according.

Like other kinds of contingent shifts, unpaid [call-in] shifts impose tremendous costs on employees. Because Tilly’s requires employees to be available to work [call-in] shifts, they cannot commit to other jobs or schedule classes during those shifts. If they have children or care for elders, they must make contingent childcare or elder care arrangements, which they may have to pay for even if they are not called to work. And they cannot commit to social plans with friends or family because they will not know until two hours before a shift’s start whether they will be available to keep those plans. In short, [call-in] shifts significantly limit employees’ ability to earn income, pursue an education, care for dependent family members, and enjoy recreation time.

What this Means for Employers

Tilly’s may petition the California Supreme Court for review of the decision. However, review by the Supreme Court is discretionary, meaning the Court can and does pick and choose which petitions for review it will hear on the merits, and, given the marked tendency of the Supreme Court to side with employees, California employers should not assume the Court will reverse the decision. California employers in any industry with policies similar to those at issue in this case should promptly review those policies and consider taking prompt corrective action if warranted.