Employers often struggle with what they have to pay employees who are placed on call. The Department of Labor’s (“DOL”) regulations governing the Fair Labor Standards Act (“FLSA”) provides some guidance on this issue. Generally speaking, only the most restrictive of on call scenarios requires pay for all hours spent on call. The law recognizes two categories of on-call employees: (1) those who are engaged to wait, and (2) those that are waiting to be engaged.
Only employees who are truly “engaged to wait” need to be paid for all of the hours spent waiting. These employees are so restricted by the needs of the employer to have them immediately available that their time is not their own. An example of such a situation would be one where the employee stays at the employer’s place of business and waits to be called to work. So for instance, if a bad storm was in the forecast and a municipal employer ordered all of its police officers to spend the night in the police station so that they could be prepared for an immediate response to an emergency, the officers would have to be paid for all hours spent waiting.
On the other hand, if the same officers were told to be available by phone in case they were needed, but they were allowed to stay at home and go about their business, the DOL regulations indicate that payment would not be due for the time spend waiting to be engaged. The key to this analysis is whether or not the employee is free to do with their time as they please.
To determine if an employee’s time is truly their own, one of the most important factors for the courts is whether or not the employee absolutely has to report to work and what the consequences will be if they don’t. If an employee does not have to report to work when called, they do not have to be paid for being on call. If, on the other hand, the employee will be punished for not going in when called, such circumstances have led courts to conclude that the employees time is really not his own.
To incentivize employees to respond when on call, many employers provide stipends or incentives. For example, some employers will pay a set number of hours at the employee’s overtime rate as an incentive to respond in a timely fashion while on call. If the employee does not respond, the stipend can be withheld. This is not, per se, punishment. The stipend is a reward for responding to the call in a timely fashion. Failure to do so forfeits the stipend.
Employers should evaluate their on call needs regularly. The less restrictive the on call standards are, the less likely pay will be due for the time spent waiting. Finally, incentives are a good way to insure that employees who are on call respond when and if they are needed. Don’t hesitate to call Ancel Glink with any on call questions that you may have.
