When an employee is called into work, but is not put to work or is given less than half of his or her usual or scheduled day's work, that employee is guaranteed a minimum amount of compensation, or "reporting time" pay. Section 5(A) of the Industrial Welfare Commission's Wage Orders mandates that "[e]ach 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." (8 Cal. Code of Regs. § 11040(5)(A).)
In Price v. Starbucks Corporation, the California Court of Appeal considered whether an employee is still entitled to half of his or her scheduled or usual day's work, when that employee is called into work to attend a meeting on the employee's day off. Drake Price was an entry level barista at Starbucks for less than one month, when he was terminated. He was scheduled to work on November 11, but called the store to notify his coworker that he was unable to work. When Price called in later that same day, he was informed by his coworker that he was not scheduled to work for the rest of the week and to call the branch manager to discuss his schedule.
The next day, the branch manager asked Price to come to the store on November 16 to meet with him. On that day, Price met with the manager, who informed Price that Starbucks was terminating his employment. The manager provided Price with two paychecks, one for the work Price performed through November 10 and the second for two hours of reporting time pay for their meeting on November 16.
Price sued Starbucks on behalf of himself and a putative class, alleging, in part, that Starbucks (1) violated Labor Code section 203 by failing to pay timely wages upon his discharge; and (2) violated Labor Code sections 204 and 1198 by failing to pay all reporting time pay due him for the November 16 meeting. Starbucks' motion for summary judgment on Price's complaint was granted by the trial court. Price then appealed.
The Court of Appeal first analyzed Price's section 203 claim. Labor Code section 203 mandates that, when an employee is terminated or resigns from employment, his or her final wages are generally due and payable immediately. This section also provides that, if an employer willfully fails to pay timely final wages, those wages continue as a penalty from the due date until they are paid or until an action is commenced to recover the wages, but shall not continue for more than 30 days. As such, if an employer pays untimely final wages, it can be subject to a lawsuit to recover penalties, known as waiting time penalties, arising from the late payment.
Here, the Court quickly disposed of Price's cause of action for section 203 waiting time penalties. Price alleged that he should have received his final pay check on November 11, when he was taken off schedule, and not on November 16, when he was terminated. Price did not allege, however, that he was notified of his termination on November 11, or that he quit on November 11. As such, the Court determined that Price was terminated on November 16, and properly received his final pay check at that time.
With regard to Price's claim for reporting time pay, he claimed Starbucks should have compensated him for 3.3 hours, or half of the average of his scheduled shifts, for the November 16 meeting, instead of the minimum of two hours. As support, Price argued that the term "usual" in section 5(a) of the Wage Order means that an employee is entitled to the average of his or her previously scheduled workdays. The Court disagreed and explained that the basic rules of statutory construction apply to the interpretation of regulations. The Court thus interpreted section 5(a) using the plain and common sense meaning of the regulatory language. It stated that, the term "usual" refers to the employee's expectation of the hours in the customary workday, whereas the term "scheduled" refers to the formalized expectation of the hours worked.
The Court further determined that the use of the disjunctive "or" in the regulation suggested alternative scenarios. The Court held that under section 5(a) if an employee is required to work, reports to work and is not put to work or does not work half of his or her usual or scheduled day's work, then the employee is entitled to be paid a half-shift reporting wage, not to exceed four hours. If an employee is not scheduled to work or does not expect to work his or her usual shift, however, but must report to work, the employee is entitled to the minimum reporting time.
Here, the parties did not dispute that Price was not scheduled to work on November 16. Rather, he was called into work on his day off by his manager for a meeting. Price thus did not have any expectation that he would work his regular shift. As such, the Court held that he was entitled only to the minimum reporting time of two hours under Section 5, which he did receive from Starbucks. Accordingly, the Court affirmed the trial court's judgment.
Price v. Starbucks clarifies the employer's obligations to compensate employees who are called into work on their days off or when the employees do not expect to work their usual shifts. This decision is one of the few that discusses reporting time pay, an issue that frequently arises when employees are required to attend meetings, trainings or other mandated staff events. Employers who have a firm understanding of these reporting time compensation requirements can schedule trainings and meetings to minimize reporting time compensation obligations.
Caveat: although Starbucks did prevail in this matter, this case also serves as a reminder that California wage and hour laws can be very technical. Claims made pursuant to them can also be costly to defend and penalties for non-compliance can be severe. It is thus important for employers to audit their compensation practices periodically to ensure that they are in full compliance.
This article was written by Grace Chan, an attorney with the labor and employment law firm of Liebert Cassidy Whitmore. Ms. Chan is an Associate in the San Francisco office and can be reached at (415) 512-3000 or at email@example.com. For more information regarding the discussion above or on our firm please contact one of our offices below.
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