Labor & Employment Law Daily Retailer’s ‘Call-In’ scheduling practice triggered reporting time pay requirements
Monday, March 23, 2020

Retailer’s ‘Call-In’ scheduling practice triggered reporting time pay requirements

By Ronald Miller, J.D.

California law requires employers to provide partial compensation (reporting-time pay) to retail employees who report for work but are not actually provided work.

It is not necessary for an employee to “report for work” in person in order to trigger the reporting time pay requirements in California’s Wage Order 7, ruled the Ninth Circuit. Rather, it was enough that a retail employer’s “Call-In” policy required employees to call their manager 30 minutes to an hour before a scheduled shift. As a California appeals court had found in a recent decision, the employees were not compensated but were nevertheless burdened because they cannot take other jobs, go to school, or make social plans during the Call-In shift. Thus, the employer’s Call-In shift practice imposed significant restrictions on employees’ off-duty time. However, the appeals court reversed the district court’s denial of judgment on the pleadings as to the employee’s indemnification claim regarding the costs of making calls. Judge Berzon and Judge Nelson each filed separate concurring opinions (Herrera v. Zumiez, Inc., March 19, 2020, Paez, R.).

Call-In shifts. The employee worked as a sales associate for a retail store in California. She and other employees worked according to two scheduling policies. First, the employer scheduled employees for “Show-Up” shifts, requiring them to report for the scheduled work shift by physically showing up at the store. Second, the employer scheduled employees for “Call-In” shifts. If an employee was scheduled for a Show-Up shift immediately before a Call-In shift, the employee had to wait to the end of the Show-Up shift to ask her manager if she would be required to work the required Call-In shift.

An employee scheduled for a Call-In shift must make herself available to work during the shift and then call her manager 30 minutes to one hour before the shift. The employee would then wait for the manager to determine whether the employee would be permitted to work during the scheduled shift. Phone calls for Call-In shifts generally lasted five to 15 minutes.

Employees burdened. Whether the employee had a shift before the Call-In shift or not, she was required to be available to work the Call-In shift. Employees could be subject to discipline for not working Call-In shifts. Consequently, the employee could not schedule classes or doctor appointments, or work for other employers during the Call-In shift, and she had to make childcare or eldercare arrangements under the assumption that she would work. Employees were not paid for Call-In shifts unless they worked and were not paid for the time spent on the phone with their managers. Employees were scheduled for Call-In shifts three to four times per week and worked approximately half of those shifts.

The employee brought a putative class action alleging that her employer failed to pay its employees reporting time pay for “Call-In” shifts. Additionally, she alleged that the employer failed to pay minimum wages and failed to indemnify employees for the expense of phone calls needed to comply with the Call-In policy. After the district court denied the employer’s motion for judgment on the pleadings, it granted the employer’s permission to file this interlocutory appeal.

Reporting time pay. The employee alleged that the employer failed to comply with the reporting time pay requirements of Wage Order 7 by denying employees compensation for Call-In shifts when employees made themselves available for work during scheduled shifts, called or contacted the employer at an appointed time, and were told they would not be working. Under Section (5) of Wage Order 7, each day an employee is required to report for work and does report, but is not put to work or is furnished less than half of the employee’s usual or scheduled day’s work, the employee is to be paid for half of the usual or scheduled day’s work in an amount not less than two hours’ wages and no more than four hours’ wages.

Ward v. Tilly’s, Inc. While this appeal was pending, a California appeals court issued Ward v. Tilly’s, Inc., which addressed the question whether retail store employees were due reporting time pay under Wage Order 7 when they contacted the store two hours before their Call-In shift, as required by the employer, and were told not to come to work. The state appellate court concluded that the on-call scheduling triggered Wage Order 7’s reporting time pay requirements, reasoning that such shifts “burden employees,” who receive no compensation unless ultimately called in to work.

On appeal, the employer argued that the Ninth Circuit should not follow Ward because there was persuasive evidence that the California Supreme Court would reach a different result. Alternatively, the employer argued that the appeals court should certify the question of Wage Order 7’s reporting time pay provision to the California Supreme Court. Finding that the California Supreme Court would reach an outcome consistent with Ward, the appeals court declined to certify the question.

Phone call versus physical presence. Here, the parties disputed whether calling one’s employer at an appointed time before a scheduled shift constitutes “reporting for work” under subsection (5)(A) of Wage Order 7. The employer argued that one can only “report for work” in person and therefore only an employee’s physical presence may trigger the reporting time pay requirement. The Ninth Circuit concluded that the California appeals court resolved this dispute in Ward, finding that because one can report to a place or for a task, the plain language of the text of “reporting for work” under subsection (5)(A) remained susceptible to more than one meaning.

Moreover, looking to the history and purpose of Wage Order 7’s reporting time pay requirement, the Ward court concluded that it was twofold: to “compensate employees” and to “encourage proper notice and scheduling.” Thus, the Ward court concluded that, had the Industrial Welfare Commission considered the issue, it would have concluded that telephonic call-in requirements trigger reporting time pay obligations. Therefore, under Ward,an employee need not necessarily physically appear at the workplace to “report for work.”

Additionally, the Ward court determined that its conclusion about reporting time pay for call-in shifts was consistent with the California Supreme Court’s 2016 decision in Augustus v. ABM Security. In Augustus, the California high court held that a policy in which employees were required to carry a device during their breaks so that they could be reached by the employer was “irreconcilable with employees’ retention of freedom to use rest periods for their own purposes,” and did not satisfy the wage order’s rest period requirement.

In sum, the Ninth Circuit concluded that under subsection (5)(A) of Wage Order 7, a requirement that employees call their manager 30 minutes to one hour before a scheduled shift constitutes “reporting for work.”

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