When Do You Have To Pay Employees For Being On Call?
By Pete McPherson
The pay rules under the federal Fair Labor Standards Act (FLSA) for "on call" time are a source of confusion - and potential liability. Questions may arise in the context of nonexempt employees who have just been notified that they're on call because of a weather-related service issue, computer personnel who are on call if the system goes down, maintenance workers who are on call for service issues, or customer service personnel who are on call for a customer who needs to have a problem resolved outside of regular hours.
Of course, you don't have to pay exempt, salaried employees extra for being on call. This article focuses on nonexempt, hourly employees.
Background and examples
The U.S. Department of Labor's (DOL) guidance on the on-call issue consists of only two sentences:
An 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.As the U.S. Supreme Court framed the issue many years ago, the test is whether the employee has been "engaged to wait" or is "waiting to be engaged." An employee who's required to stay so close to the workplace in time and distance that she has very little freedom to use the time as her own has been "engaged to wait," and the on-call time constitutes "hours worked" for purposes of the FLSA.
Conversely, if an employee has only minimal restrictions on the use of his time while on call and has a fair amount of time to respond to a call, then he's "waiting to be engaged." In that case, the on-call time isn't "hours worked" for compensation purposes unless and until he's called on to perform services.
Here's an extreme example to illustrate factors that establish that an individual has been engaged to wait and therefore is on the clock. Consider a maintenance worker who's on call every weekend, must respond to every call, must be able to reach the employer's facility within 10 minutes of a call, will be called at her home telephone number unless she buys a cellular telephone at her own expense and pays for the service, and is called several times each weekend. The on-call time constitutes work time and must be paid as such. When the on- call time pushes the nonexempt worker over 40 hours in a workweek, she must be paid at overtime rates.
Conversely, when very few restrictions or limitations are imposed on an employee, then the on-call time is merely time in which he's waiting to be engaged. Consider a worker who's on call only one weekend day each month, shares the on-call duty with another employee and has to respond to only 50 percent of the calls, is given one hour to reach the employer's facility, is provided with a cellular telephone or pager by the company, and has been called only once in the previous six months. You wouldn't have to pay him for being on call unless he actually gets called.
Determining whether on-call time constitutes 'hours worked'
Of course, rarely does real life fit neatly into those examples. The following five factors should be considered in determining whether an employee's on-call time constitutes hours worked for compensation purposes. As with most legal issues, there's no clear-cut test for making that determination, and you must consider all the factors together.
- What's the geographic or response-time limitation placed on an on-call employee? A narrow geographic or time restriction, such as staying within two miles of the home or workplace or being required to respond within 10 minutes, is indicative of a person engaged to wait. A person who has no geographic restriction but must respond within one hour of the call has a much greater area he can cover and is able to move about more freely.
You should consider how narrowly to draw the response-time restriction and make it as broad as possible. Establishing a response time, rather than a geographic restriction, is more likely to get the desired result. A two-hour response time seems to give enough freedom to support an argument that the on-call time isn't hours worked for FLSA purposes. A 30-minute restriction is a closer call, but it may be acceptable if the employee lives within 30 minutes of the facility and there are other places for him to go within the 30-minute range, such as a theater, grocery store, restaurant, or bank.
- How often is the employee actually required to respond to calls while on call? If it's virtually certain that the employee will be required to respond to a call every time he's on call, the on-call duty is more disruptive to his nonworking time and is more indicative of a person engaged to wait. To illustrate the interaction among the several factors to be considered, note that even if there are very tight response-time restrictions but actual calls are rare, you'll be in a better position to argue that the on-call time shouldn't be considered working time.
- Is the employee allowed to use a pager or cell phone? The widespread availability and use of cell phones and pagers is probably the major factor in recent years that has made on-call time less onerous to employees and less likely to be considered working time for FLSA purposes. Employees no longer need to stay at home near the telephone while waiting to be called. An issue that comes up occasionally involves the ownership of the cell phone or pager. You strengthen your position when you provide the communication device and pay for the service.
- What are the consequences of failing to respond? The likelihood that on-call duty won't be deemed hours worked increases with your flexibility regarding responses. Generally, the larger the group of potential responders, the more flexible you can be. For example, if there are 50 potential responders for weekend calls, you could afford to have several employees on call every weekend, go down the list of employees on call, and keep calling until someone's available. For that to work, there has to be some base-line standard, such as requiring each employee to respond to calls 75 percent of the time. Another alternative would be to ask for a list of volunteers and make on-call duty mandatory only when no one volunteers.
- Is there an agreement between the employee and the company concerning on-call time? An agreement between you and on-call employees isn't dispositive, but as with many issues arising under the FLSA, if you and the employee share a mutual understanding of the arrangement, there's less likelihood that he'll complain to the DOL. The likelihood of prevailing on the on-call work-time issue increases if you have conferred with employees before adopting an on-call policy and work with them to implement a policy that provides reasonable flexibility for them away from work when on call.
Even if you determine that the on-call time need not be compensated - i.e., that the employee is waiting to be engaged - you must pay for all time worked by the employee in response to a call. So if the employee receives a call, discusses the situation, and determines she doesn't have to report to the office, the time spent discussing the matter over the telephone constitutes hours worked.
Travel time in response to a call is a more difficult issue. The DOL takes the position that travel time must be paid time if it involves traveling to a customer's place of business during nonregular hours. But the DOL hasn't taken a position on whether travel time must be paid if the employee is traveling to his regular place of business during nonregular hours.
Certainly, an employee who spends a substantial amount of time traveling to and from the workplace on his day off but can provide the necessary service in only 15 minutes after responding will be resentful if he's paid only for the 15 minutes of work performed. While some employers elect to pay for the time spent in travel, those who don't often establish a minimum period of time (often two or four hours) that will be paid to any employee who's called and actually has to report to work.