On-Call Time: To Pay or Not to Pay?

With new technology such as BlackBerries®, cellphones, etc., the practice of requiring employees to be available on call is becoming even more widespread. Now, not only are healthcare and emergency workers required to be on call, but workers in many other industries are also expected to be available 24/7. AT&T workers in California just joined together to bring a class action, filed August 12, 2009 in the Southern District of California, claiming that they should have been paid for being on call 24/7 to handle IT maintenance services for customers’ hardware, software, applications and desktop computers. 

What constitutes “on-call” time that is deemed to be work requiring compensation? The Wage and Hour Division of the Department of Labor issued a letter earlier this year (see) explaining some of the criteria:  

“Under 29 C.F.R. § 785.17, ‘[a]n employee who is required to remain on call on the employer’s premises or so close thereto that he cannot use the time effectively for his own purposes is working while “on call.” An employee who is not required to remain on the employer’s premises but is merely required to leave word at his home or with company officials where he may be reached is not working while on call.’”  

Some of the key issues to consider in determining whether to pay for on-call time are: 

  • Is the employee required to stay at home or required only to carry a cellphone or other device to receive calls?
  • How close to the work location (whether it be the company office or a customer location) is the employee required to be? In other words, what is the required response time?
  • Are employees on call 24/7, or only certain hours per week or month, and can they switch their on-call time with colleagues if necessary for their personal purposes?
  • Does the “on-call” obligation significantly limit the employee’s use of the time for personal purposes?
  • How frequent are the calls? Are the calls likely to occupy most of the on-call time and will being on call therefore significantly interfere with the employee’s use of the time for personal purposes? Or are the calls only infrequent?
  • Is the employee required to wear a uniform while on call?

Based on these criteria, if it is determined that the on-call time constitutes work, non-exempt employees must be compensated for all of the on-call time in accordance with the standard rates and laws for regular and overtime pay. Additionally, even if the on-call time is not considered to be work requiring compensation, any time in which an employee actually does perform work in responding to a call must be compensated. 

Overtime That Is Worked Must Be Paid: 2nd Circuit Reaffirms Overtime Rate for Unauthorized Work

In the current economy, it is essential for employers to avoid paying out unnecessary overtime compensation. While getting a handle on overtime is certainly a worthy goal, it can only be achieved through skilled management – not by unilaterally denying overtime pay for overtime that was legitimately worked. In Chao v. Gotham Registry, 514 F.3d 280 (January 2008)  the U.S. Court of Appeals for the Second Circuit resoundingly reaffirmed the U.S. Department of Labor’s long-held position that any work that is “suffered or permitted”  by an employer must be compensated.  It also created a standard for evaluating time worked by off-site employees, whose decisions about when to start and stop work cannot always be monitored by employers.

Gotham Registry is a placement agency that provides nurses to fill temporary vacancies at hospitals. As a consequence of a consent judgment issued in a 1994 DOL enforcement action against the company, Gotham’s nurses are considered employees. Since the nurses work away from Gotham’s site, Gotham does not have the ability to directly supervise their activities. The hospitals that are Gotham’s clients sometimes ask Gotham’s nurses to stay beyond their agreed-to shifts. Despite a policy requiring nurses to call in before accepting work that will put them over the 40-hour mark for a single work week, the nurses are not always able to get timely approval from Gotham due to the 24-hour nature of hospital work. Gotham cannot always recover its costs from hospitals for overtime when rates are not negotiated in advance. Gotham was generally paying nurses who worked overtime without getting approval straight time for hours worked in excess of 40.  Despite the fact that Gotham may neither control nor always benefit from this overtime work, the Chao court reasoned that Gotham had “imputed knowledge” of the work (albeit after the fact when it got the nurses’ time sheets), and that “work is work” and must be compensated.

The Chao decision puts Gotham between a rock and a hard place, since a nurse in Gotham’s employ could literally have to choose between saving a life and notifying Gotham of a hospital’s request that s/he stay on the job on an overtime basis, generating costs that may not be recompensed by Gotham’s client. In most other industries, however, there is no reason why an employee cannot be expected to seek authorization before working overtime. An employee who fails to do so has to be compensated for the work, but can be disciplined in other ways.