A California Court of Appeal recently issued its decision in Ward v. Tilly's, instituting a sweeping change in California's reporting-time pay rules and now prohibiting a common scheduling practice used by employers throughout the state. Following the Feb. 4 decision, California employers who require employees to call in two hours before a shift to determine whether or not they are needed, and report to work if called in, are now obligated to pay that employee, at a minimum, for two hours of work even if the employee is informed that there is no need to come in to work that day. As a result of this decision, employers should be careful to craft scheduling policies that avoid the same pitfalls seen in this case.

Background and Decision

Under Tilly's scheduling policy, Skylar Ward was required to call in approximately two hours before the start of her shift to determine whether she needed to come to work. If Tilly's told her to report to work, she was required to do so and would be paid for that shift as normal. However, if Tilly's informed her that there was no need to come in, Ward would receive no compensation—after all, according to Tilly's, all she did was make a single call and never actually reported to the worksite.

Nevertheless, in a precedent-setting ruling, the court held that, under the facts of this case, merely calling in for mandatory on-call shifts constitutes “reporting to work,” which entitled Ward and her coworkers to a minimum of two hours of reporting-time pay under the applicable wage order.

Prior to the case, various courts had disagreed about what it truly meant to “report to work,” with many courts—not to mention employers—understandably believing that this required the employee to physically report to the work location to be eligible for reporting-time pay. According to the court, however, modern technology has advanced to the point where “reporting” could mean far more than just physical presence at the worksite.

Court's Reasoning, Explained

In short, the court ultimately reasoned that even having to place a telephone call as part of a mandatory on-call schedule fell within the ambit of this “reporting” rule for two main reasons. First, requiring reporting-time pay would “require employers to internalize some of the costs of over-scheduling, thus encouraging employers to accurately project their labor needs and to schedule accordingly.” Second, it would also compensate employees for the “inconvenience and expense associated with making themselves available to work on-call shifts, including forgoing other employment, hiring caregivers for children or elders, and traveling to a worksite.” In relying on these public policy considerations, the court aligned itself with prior California cases that tended to tie the compensability of worktime to the degree of employer control over an employee's activities.

Notwithstanding its 33-page analysis, the court in Ward v. Tilly's left several key questions unanswered. Most notably, the court failed to address the issue of whether its holding would apply retroactively—potentially exposing countless employers across the state that utilize similar on-call scheduling policies to staggering class action liability. The court also neglected to address the inherent line-drawing problem contained within its decision; that is, how long before a shift could an employee call in and still have it constitute compensable reporting? If not two hours, then how long?

What Should Employers Do Now?

Employers should be careful to avoid the pitfalls of the Tilly's scheduling policy. In its decision, the court identified several distinguishing features of the Tilly's scheduling policy that led to its downfall, including: requiring the employees to call the employer; independently disciplining employees for late or missed call-ins; and making call-in and reporting mandatory. To mitigate against these pitfalls, employers should craft alternative scheduling policies, using the following guidelines:

• Call the employee, do not require them to call in. Create a call list of employees who might be available prior to the upcoming shift. Managers can then make their way through the list to meet scheduling needs. This practice has been approved by various courts in related “on-call” contexts.
• Don't discipline employees for failing to respond to your call to check for availability. Without a fear of discipline, it would be much more difficult for the employee to argue that the policy truly constrained the employee's freedom and activity.
• Don't make reporting mandatory. If an employee answers and doesn't wish to report to work, simply move on to the next person on the list. This practice has also been approved by various courts in related “on-call” contexts.

Even with these guidelines, however, no policy is a sure thing, and even minor changes could affect the way a court may view it—meaning that some employers may wish to abandon such practices altogether. Nevertheless, there is hope. Unlike most decisions coming out of the Court of Appeal, Ward v. Tilly's is one of the rare cases that comes with a robust dissenting opinion that condemns the new rule and cautions against retroactivity. To that end, employers should keep up-to-date on whether a subsequent appeal is filed and whether the California Supreme Court ultimately decides to take another look at this sweeping change in the near future.

Shaun J. Voigt is a partner with Fisher Phillips in Los Angeles. He may be reached at [email protected].

Aaron D. Langberg is an associate with the firm in San Francisco. He may be reached at [email protected].

Anthony Guzman is an associate with the firm in San Francisco. He may be reached at [email protected].