One of the many rules that HR consultants and professionals must be aware of, is how to handle standby pay.
Assume the following hypothetical: Company has employees that are on a standby basis and must return to work for a myriad of reasons after notification. They must have their cell phones “at the ready”, be able to communicate within approximately 15 minutes and return to work in the neighborhood of 20 minutes. Through the HR department, do they have to be paid for this standby time, and if so, at what rate?
Standby or on-call Pay:
Bottom line: if the standby time is considered “unrestricted”, no compensation need be paid by HR, even at the minimum hourly rate. If it is considered “restricted”, the employee must be paid, but the Company can get away with merely paying the minimum wage.
The difference between restricted and unrestricted has to do with the control exercised by the employer. Control means they are not unrestricted in pursuit of their personal activities. In other words, their private activities can be interfered with at any time at the will of the employer. Under the California Supreme Court case of Madera Police Officers Association v. City of Madera (1984) 36 Cal.3d 403, the test is whether the employee is “substantially restricted so as to be unable to attend to private pursuits”.
Court’s will consider the following factors:
- The employee cannot be more than a certain number of miles away from the main office;
- The frequency of the calls;
- Whether there is a required response time;
- Whether the employee can “trade” on-call responsibilities with another, and
- The ability to engage in personal activities.
An example of restricted time HR consultants have to be mindful of, would be if the Company requires the employee to remain at the Company’s premises (i.e. in the lunchroom). Or be close thereby–no further than the coffee shop in the next block. In one case, it was considered restricted when the employee had to be within three minutes of the premises. Other examples: the seamstress waiting for a customer to arrive requiring alteration or a technical support guy who was waiting for a call from a disgruntled customer.
Examples of cases where the court found the standby to be unrestricted and not entitled to compensation are as follows:
- A hospital biomedical repair technician was required to respond to all calls, received about four or five per week, carried a beeper, had to respond within 20 minutes, and could not be intoxicated if called;
- An ambulance dispatcher was on call, but was allowed to visit friends, entertain guests, sleep, watch television, do laundry and babysit;
- A K-9 officer was required to carry a pager, avoid alcohol and respond within 10 to 20 minutes.
The mere requirement of wearing a cell phone and being on standby—alone–does not require compensation. We know this from a reading of Madera Police Officers Assn. v. City of Madera (1984) 36 Cal.3d.403. But in that case, based on other circumstances, the employees were entitled to extra compensation. Police officers had an unpaid 45 minute meal break each shift. They were on call during this period and heavily restricted, namely having the requirements to stay fully armed, stay in uniform, not have lunch at home, and be available to respond to emergencies at a moment’s notice. The court observed:
The case at bench involves restrictions in addition to the on-call status. Indeed, that opinion of the Attorney General implicitly recognizes that on-call status, coupled with other factors, could entitle an employee to compensation. It argues: “While standing by, subject to being directed to return to work, as a general proposition, the employee is not entitled to credit for work performed.” (39 Ops.Cal.Atty.Gen. 261, 264 (1962).) However, when the employee is on call during his or her regularly scheduled shift, compensation may be required . . .
As is well known, the California labor Commissioner zealously defends employees and there is always a risk of not paying compensation. However, a reasonable argument could be made that our standby is unrestricted under the following circumstances: the employee can perform any personal activities they wish; they can take other calls; are not required to stay at home; must respond to a call within 15 minutes; must return to the premises within 20 minutes; must return unintoxicated.
If your HR department still has concerns of liability, then simply pay the employees the minimum wage during standby. This will at least soften possible damages if it is ever contested.
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