“Reporting time” pay must be paid when an employee is required to call in before their shift to find out if they have to work that shift. On March 19, 2020, the United States Court of Appeals for the 9th Circuit in Herrera v. Zumiez, Inc. sided with the California Court of Appeal in Ward v. Tilly’s Inc., 243 Cal. Rptr 3d 461 (Ct. App. 2019), review denied (May 15, 2019), holding as much. In light of the California Supreme Court’s decision to not review the Ward decision, employers must follow Herrera and Ward and must carefully review their call-in practices to avoid reporting time pay liability.

Reporting Time Pay Requirement

California employers must generally pay "reporting time" 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." Wage Order 7-2001 (Cal. Code Regs. Tit. 8, § 11070) (emphasis added). The amount of pay owed is half the usual or scheduled day's work, but in no event less than two hours or more than four hours (except that the two-hour minimum does not apply to scheduled days of less than two hours). See our blog here.

Factual Background

Plaintiff Alexia Herrera, a former sales associate at a clothing retailer, filed a class action in 2016 alleging that her employer failed to pay employees reporting time pay for participating in the company’s mandatory “Call-In” shifts. Herrera alleged that employees were required to call their managers 30 minutes to one hour before their shifts to determine if they would be required to work that shift, and were required to be available to work.

Herrera alleged that, if the manager did not need the employee to work the shift, the employer did not pay the employee any reporting time pay for the cancelled shift, and did not compensate employees for the time spent calling in. Herrera asserted a related claim for failure to indemnify for phone call expenses related to participating in the “Call-In” practice.

The employer moved for judgment on the pleadings as to all claims, which the district court denied. The 9th Circuit granted employer’s petition to appeal the district court’s decision.

While the appeal was pending, the California Court of Appeal in Ward issued a holding in a case with analogous facts: under Wage Order No. 7, an employer must pay reporting time pay when employees are required to call their employers two hours before an on-call shift to determine whether they are needed for work that day. See our blog post here. The California Supreme Court denied a petition to review the Ward decision.

Court's Decision

Reporting Time Pay

The 9th Circuit’s three-judge panel followed Ward’s holding and concluded that, under Wage Order No. 7, the employer’s requirement that employees call their manager 30 minutes to one hour prior to the scheduled shift constituted “reporting for work,” which triggers reporting time pay.

Citing to the Ward decision, the court rejected the employer’s arguments that employees "report" for work under Wage Order No. 7 only when they physically show up to work, and that calling in using telephones did not constitute “reporting for work.” Like the Ward court, the 9th Circuit emphasized that the employer’s Call-In practices imposed “tremendous” cost for employees who have to hold their schedules open only to have their shifts canceled, because employees cannot commit to other jobs or schedule classes during those shifts.

Off-The-Clock Work

The court held that Herrera properly pled her minimum wage claim for unpaid wages for the time employees spent calling their managers. The court found that Herrera pleaded sufficient facts showing that employees were subject to the employer’s control during these calls, including that employees were required to make these calls three to four times per week, that the calls lasted five to 15 minutes, and that employees could be disciplined for not complying with the Call-In shift policy.

Expense Reimbursement

The court, however, reversed the district court’s denial as to Herrera’s indemnification claim, finding that Herrera failed to include specific, non-conclusory facts about how the calls were made (i.e., with their personal phone or with a company phone) or what costs were incurred in making the calls. The court remanded that issue to the district court to allow Herrera leave to amend the complaint to include more specific allegations.

The court declined to certify the issue to the California Supreme Court because it had “no reason to doubt that the California Supreme Court would reach an outcome consistent with Ward.” Judge R. Nelson concurred with the decision, but wrote that “by publishing [the decision] without first seeking the views of the California Supreme Court, the panel risked undermining cooperative judicial federalism.”

Key Takeaways for Employers

Ward and Herrera are the controlling precedent in California. Employers in all industries who continue to require employees to call-in to find out if work is available should consult with counsel to review their on-call scheduling practices. Employers should contact on-call employees who are required to report to work, rather than depending on employees to call in or log into a computer or phone app.

Although Ward dealt with the issue of reporting time pay triggered by a mandatory requirement that the employee call in (thereby “reporting to work”), this should be distinguished from mandatory on-call shifts, where an employee is on-call waiting to be called to work. Mandatory on-call shifts remain lawful post-Ward, depending on the on-call policy’s language, and subject to compliance with compensation requirements for controlled on-call time.