On February 4, 2019, a divided panel of the California Court of Appeal issued their majority and dissenting opinion in Ward v. Tilly’s, Inc.  It appears to be a precedent-setting decision in California, holding that an employee scheduled for an on-call shift may be entitled to certain wages for that shift despite never physically reporting to work.

Each of California’s Industrial Welfare Commission (“IWC”) wage orders requires employers to pay employees “reporting time pay” for each workday “an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work.”

In Ward, the plaintiff alleged that when on-call employees contact their employer two hours before on-call shifts, they are effectively “report[ing] for work” and thus are owed reporting time pay.  The employer disagreed, arguing that employees “report for work” only by physically appearing at the work site at the start of a scheduled shift.  That is, the Ward employer argued that employees who merely call in and are told not to come to work are not owed reporting time pay.

Two justices of the California Court of Appeal took a public policy-centric position and agreed with the employee’s view of the law, concluding “that the on-call scheduling alleged in th[at] case triggers Wage Order 7’s reporting time pay requirements” because “on-call shifts burden employees, who cannot take other jobs, go to school, or make social plans during on-call shifts – but who nonetheless receive no compensation from [the employer] unless they ultimately are called in to work.”

After concluding that it is not clear from the phrase “report for work,” whether that means a requirement that the employee be physically present at the work site or whether it may also mean “presenting himself or herself in whatever manner the employer has directed, including, as in th[at] case, by telephone, two hours before the scheduled start of an on-call shift,” the Ward majority considered other methods of statutory construction.  After considering other cases where statutes were enacted before developing technologies, the Ward majority concluded that “Wage Order 7 does not reference telephonic reporting, nor is there evidence that the IWC ever considered whether telephonic reporting should trigger the reporting time pay requirement.”

After rejecting the Ward employer’s interpretation of “report for work,” the Ward majority announced a new interpretation for the reporting time pay requirement of California’s IWC wage orders:

“If an employer directs employees to present themselves for work by physically appearing at the workplace at the shift’s start, then the reporting time requirement is triggered by the employee’s appearance at the job site.  But if the employer directs employees to present themselves for work by logging on to a computer remotely, or by appearing at a client’s job site, or by setting out on a trucking route, then the employee “reports for work” by doing those things.  And if . . . the employer directs employees to present themselves for work by telephoning the store two hours prior to the start of a shift, then the reporting time requirement is triggered by the telephonic contact.”

The Hon. Anne H. Egerton dissented in Ward, concluding that the “legislative history of the phrase ‘report for work’ reflects the drafters’ intent that – to qualify for reporting time pay – a retail salesperson must physically appear at the workplace: the store.”  Supporting that conclusion, Justice Egerton cited a federal district court decision made by the Hon. George Wu, where he concluded that a court’s “fundamental task in interpreting Wage Orders is ascertaining the drafters’ intent, not drawing up interpretations that promote the Court’s view of good policy,” and held that “call-in shifts do not trigger reporting-time penalties, even if the scheduling practice is inconvenient and employee-unfriendly.”

Given the well-reasoned dissent, this may be a case for the California Supreme Court to review.  In the interim, however, the Ward majority is arguably the precedent in California.

Following Ward, entities doing business in California will want to review their on-call scheduling and payment practices.

In Naylor v. Securiguard, Inc., the Fifth Circuit Court of Appeals held that an employer may be required to compensate employees for meal breaks if the employees are required to spend a significant portion of that period traveling to a required break area.

Facts Black white striped sentry box

Securiguard employees guarded several gates to a Naval air station.  During their shifts, the guards received two scheduled thirty-minute meal breaks.  The guards expressed a desire to eat at their posts, but Securiguard prohibited them from doing so (out of concern that the customer would think they were shirking their security duties).

Accordingly, the guards were required to travel to designated break areas on the base.  Some traveled only a few yards, while others had twelve-minute roundtrip drives to the nearest meal area.

The District Court for the Southern District of Mississippi granted Securiguard’s motion for summary judgment. It held that the FLSA requires compensation for a meal break only when an employer imposes “substantial duties or restrictions” during the designated time, and found Securiguard’s restrictions too insubstantial to make the breaks compensable.

Rest periods, meal periods & on-call time

On appeal, the Fifth Circuit cited to 29 C.F.R. § 785.19 for the proposition that bona fide meal periods “are not worktime,” and noted the regulations state: “Ordinarily 30 minutes or more is long enough for a bona fide meal period. A shorter period may be long enough under special conditions.”

Conversely, under 29 C.F.R. § 785.18,  rest periods are “of short duration, running from 5 minutes to about 20 minutes, … promote the efficiency of the employee and … must be counted as hours worked.”

The Fifth Circuit noted that the District Court and the parties compared the restrictions imposed on Securiguard meal breaks to on-call time, in which “the critical question is whether the meal period is used predominantly or primarily for the benefit of the employer or for the benefit of the employee.”

Sufficient time “to use the break for their own purposes”

The Fifth Circuit affirmed summary judgment for Securiguard as to the gates where break areas were “a few yards away,” less than a minute’s drive or “across the street.”

As to the remaining gates, the Fifth Circuit reversed summary judgment for Securiguard and remanded the case because it concluded a jury could decide that, in some cases, the travel time was “a meaningful limitation on the employee’s freedom” during the meal period, and was imposed for benefit of the employer – rendering that time compensable.

The Court also stated that a jury could further conclude that the remaining time was not long enough for employees to qualify as a noncompensable meal period under FLSA.

Accordingly, employers (particularly those in the Fifth Circuit) should evaluate any restrictions imposed on employee meal-periods in light of the ruling in Naylor v. Securiguard, Inc.