In the past several months, close to a dozen new class action lawsuits have been filed against California companies over their use of so-called "on-call" shifts. On-call shifts are very common in the retail and hospitality industries, where staffing levels may vary greatly based on the expected number of customers.

In a typical on-call situation, employees must call or text their employer a few hours before their shift is scheduled to start to confirm whether they are needed to work the shift.  If business is slow, the employee may be instructed to stay home, and the on-call shift is cancelled. In that event, the employee never physically reports to work and is not paid for the time spent waiting to work.

This common practice is now under attack in a spate of class action lawsuits which have been filed against a number of large retail chains. These lawsuits generally contend that the state-mandated "reporting pay" provisions found in the California Wage Orders should apply to these on-call shifts, even though the employees do not report to work.

Under these so-called "reporting time" provisions, employers are required to pay employees half of their scheduled hours (but not less than two or more than four hours) if the employee reports to work but is sent home early.

Up until now, only employees that actually physically report to work were thought to be entitled to receive reporting pay if they are not allowed to work at least half of their scheduled shift. However, these lawsuits seek to change all that by extending the reporting pay rules to employees who are scheduled to work an on-call shift, but are then told not to report to work.

Most of these cases are in the early stages of litigation.  However, in one case that was filed against Victoria's Secret, a federal judge in Los Angeles recently ruled that the Wage Order's reporting pay provisions only apply when employees physically report to work and are sent home early, not when they merely call in or text to confirm if they are needed to work an on-call shift.   The employee in that case has filed an appeal of the ruling, and the appeal is now pending before the Ninth Circuit Court of Appeals.  A ruling is expected next year.

In the meantime, many national retail chains, such as Gap, Abercrombie & Fitch, Urban Outfitters and JCrew, have announced they are discontinuing their on-call scheduling practices.

In addition to the recent class actions, the City of San Francisco adopted a local ordinance earlier this year that applies to large retail chains. The ordinance requires covered employers to pay their employees up to four hours of "predictability pay" if their on-call shifts are cancelled with less than 24 hours' notice. Similar ordinances are under consideration by other cities.

Further, on-call shifts can result in other legal challenges.  In some industries, it is common for employees to be on stand-by to respond to emergencies that may arise when the employee is off duty.  For example, service or IT technicians may be required to remain available in case they are needed for after-hours trouble shooting or repairs.  Depending on the degree of restrictions placed on the employees by their employer when on call, such as the length of time in which they must respond to the call, the employees may be entitled to compensation for the time they spend waiting for a call.  This practice is referred to as "controlled stand-by," and may be considered compensable work hours under state and federal law if the restrictions on the employees' personal time are considered too stringent.

In addition to the unpaid wages that may be owed to employees due to on-call shifts, employers also have potential exposure to significant penalties, such as "waiting time" penalties to former employees of up to 30 days' of wages, and civil penalties of up to $200 per employee per pay period under the Private Attorneys General Act (PAGA).

Employers should review their on-call practices to make sure they are in compliance, and to minimize their potential exposure as the law continues to develop on this issue.  If you have any questions, please call your firm contact at 818.508.3700, or visit us online at www.brgslaw.com.

Sincerely,
Jeffrey P. Fuchsman 

Richard S. Rosenberg 
Ballard Rosenberg Golper & Savitt, LLP