Your Employee Is On-Call, But Is Your Employee Working?

Category: Published Articles
Date: Feb 24, 2015 01:50 PM

Law360, New York (February 20, 2015, 11:44 AM ET) --

The term on-call pay is subject to various interpretations. There is on-call pay where an employer pays an employee a flat rate or small hourly amount to be available to the employer, such as $100 per week or $2 per hour. But wage and hour law may require all of the on-call time to be paid, at least at minimum wage, if the time is considered "controlled." As with many wage and hour areas, the issue as to whether the on-call time must be paid depends on the factual circumstances surrounding the situation. This area is often complicated by an agency's on-call policy/agreement. In the event of a later claim, a clear on-call policy can be essential in determining whether the parties characterized the time spent waiting on-call as actual work.

Employers must generally pay employees for actual work performed for the employer, whether the work is performed on the employer's premises or off-site. The key factor is whether the employee is actually engaging in work. For example, an on-call employee who is not required to remain on the employer's premises, but merely required to notify the employer where he or she may be reached, is not working compensable hours under the Fair Labor Standards Act so long as the employee is not prevented from effectively using the time to engage in personal pursuits.

The Ninth Circuit has held that the two predominant factors in determining whether an employee's on-call waiting time is compensable overtime are:

  1. the degree to which the employee is free to engage in personal activities; and
  2. the agreements between the parties.


Engaged to Wait or Waiting to Be Engaged?

The proper inquiry into the first factor is whether an employee is so restricted during on-call hours as to be "effectively engaged to wait." The Ninth Circuit has provided an illustrative, nonexhaustive list of factors to be analyzed in determining the degree to which an employee is free to engage in personal activities while on-call:

  1. whether there was an on-premises living requirement;
  2. whether there were excessive geographical restrictions on employee's movements;
  3. whether the frequency of calls was unduly restrictive;
  4. whether a fixed time limit for response was unduly restrictive;
  5. whether the on-call employee could easily trade on-call responsibilities;
  6. whether use of a pager could ease restrictions; and
  7. whether the employee had actually engaged in personal activities during call-in time.


What Did You Say?

The second factor involves evaluating the agreements between the parties. An agreement between the parties which provides at least some type of compensation for on-call waiting time may suggest the parties characterize waiting time as work. Conversely, an agreement pursuant to which the employees are to be paid only for time spent actually working, and not merely waiting to work, may suggest the parties do not consider waiting time to be work. Although it is important to note that the parties' agreement is a predominant factor and will be afforded deference by the court, it is not a controlling factor. An agreement will not, in and of itself, shield an employer from on-call liability. Thus, even if there is an agreement providing that certain categories of time will not be considered hours worked, if the degree to which the employees are free to engage in personal activities is sufficiently restricted, the time will be considered actual hours worked. Since on-call pay is a common perk for employees, employers should consider including specific language in the on-call agreements stating that the payment is not to compensate the employees for working while on call, but rather it is to compensate employees for the small inconvenience of potentially being called to work.

Unfortunately, there is no bright-line test to determine when an employee's time becomes so restricted that it converts to work time. No one of the aforementioned factors is dispositive. Therefore, when considering whether on-call time is unduly restrictive, courts balance the factors permitting personal pursuits against the factors restricting personal pursuits to determine whether the employee is so restricted that he is effectively engaged to wait. The following cases illustrate how individual factual circumstances can vary a court's determination of the compensability of on-call time.

In Berry v. County of Sonoma, 30 F.3d 1174 (9th Cir. 1994), deputy coroners employed by the Sonoma County's Sheriff's Department argued that that the following facts constituted "on-call waiting time" for which they were entitled to compensation:

  1. the coroners were not able to leave Sonoma County to engage in hobbies or activities such as camping, hunting, socializing and attending sporting events;
  2. the coroners were required to carry pagers and remain in areas accessible by pager. They also had to respond by telephone within 15 minutes;
  3. the coroners were hindered in engaging in activities where they could be subject to unwanted interruptions by pager, such as shopping, dining out and attending movies;
  4. the coroners had to be prepared to meet the public by not engaging in activities where they could become dirty; and
  5. the coroners could not consume alcohol in amounts that could affect their sobriety while on-call.


Notwithstanding these restrictions, the Berry court concluded that the deputy coroners' time while on-call was not sufficiently restricted to convert the time to hours worked.

Conversely, in Brigham v. Eugene Water & Electric Board, 357 F.3d 931 (9th Cir. 2004), the court evaluated whether the on-call time of four employees who lived with their families at the hydroelectric dam they operated was compensable. The court determined that the following restrictions on the employees' personal pursuits while on-call weighed in favor of the shifts being compensable working time due to the constant pressure of having to stay close to home and respond immediately to calls:

  1. the employees had to be fit for duty and remain within earshot of their homephone and the dam system installed in their houses;
  2. the employees were required to respond immediately to phone calls or alarms;
  3. the employees were called out one to two times per month and routinely engaged in personal activities while on-call; and
  4. the employees were usually able to trade on-call shifts if necessary.


Conclusion

Ultimately, whether employees are entitled to be paid for every hour they are on-call requires a fact-intensive analysis and must be determined on a case-by-case basis. Therefore, it is essential to understand the appropriate circumstances under which nonexempt employees can be designated as on-call, how to properly structure on-call assignments and how to effectively draft on-call policies/agreements in order to avoid triggering hourly compensation requirements. Employers should also periodically evaluate the on-call assignments and how often employees are called out so they can make sure the organization is operating efficiently and employees are paid properly.

—By Jennifer Palagi, Liebert Cassidy Whitmore

Jennifer Palagi is an associate in Liebert Cassidy Whitmore's Los Angeles office.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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