This blog post was authored by Jennifer Palagi.
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 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 FLSA 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, non-exhaustive 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, but not a controlling factor.
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 non-exempt 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.