Hunton Employment & Labor Perspectives

The California Second Appellate District has held that retail employees who were required to “call in” two hours before their scheduled shift to find out if they actually needed to report to work were entitled to reporting time pay. The Court held that California retail employees do not need to physically appear at the workplace in order to “report for work,” and be entitled to reporting time pay, under the Industrial Welfare Commission (“IWC”) Wage Order 7.  Given the robust dissent and sweeping change this decision could bring about, this is a case to watch as it may find its way to the California Supreme Court.

In Ward v. Tilly’s Inc., the plaintiff alleged that her employer’s on-call scheduling practices triggered reporting pay obligations. Wage Order 7 requires mercantile employers to pay “reporting time pay” when 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.” (Emphasis added)  Tilly’s policy was to assign on-call shifts to employees, which the employees were expected to work if necessary.  The employees were not told whether they needed to report for an on-call shift until they contacted the store two hours before the shift was scheduled to begin.  If the employee was told not to come in, Tilly’s did not consider the employee to have “reported for work” and the employee did not receive any compensation for being on-call.

Tilly’s argued that Wage Order 7 did not apply to its “call in” policy because the only way an employee could “report for work” was by physically appearing at the store at the start of a shift.  The trial court agreed with Tilly’s, dismissing the plaintiff’s proposed class action.

In overturning the trial court’s dismissal, a divided panel of the California Court of Appeals concluded that Tilly’s on-call scheduling  triggered reporting time pay requirements.  “As we explain, 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. This is precisely the kind of abuse that reporting time pay was designed to discourage.”  The Court also rejected Tilly’s argument that the language of Wage Order 7 requires employees to be physically present at the start of a shift in order to “report for work.”

In her dissenting opinion, Judge Edgerton noted that it was for the legislature, not the courts, to change the law.  She argued that the legislative history of Wage Order 7  “reflects the drafters’ intent that―to qualify for reporting time pay―a retail salesperson must physically appear at the workplace: the store.”  As the dissent also notes, the majority’s decision leaves many key questions unanswered, not least of which is whether the Court’s holding should be applied retroactively and whether on-call shifts where the employee is required to call in more than two hours before the shift would be permissible.

Pressures have been mounting on employers over the last few years to discontinue the use of mandatory on-call scheduling practices and some localities have implemented predictable scheduling laws to discourage such practices.  For California employers who have continued to use on-call scheduling policies, this decision is another reason to review and evaluate those practices.