Certain businesses have a need for employees to be “on-call”. If the employer limits the employees’ movement and time while they wait for work to start, the employee may be entitled to on-call pay. On-call pay is compensation for hours when non-exempt employees are “engaged to wait.” Non-exempt employees who are on-call receive their regular pay rate unless they work or are “engaged to wait” more than 40 hours a week. When that happens, the Fair Labor Standards Act (FLSA) states that on-call pay should be paid at the overtime rate. Calculating hourly pay for on-call employees means multiplying the applicable pay rate by the number of hours spent working or on-call.
When to pay on-call pay:
The Fair Labor Standards Act does not define when an employee is “engaged to wait” for the employer if the employee is “on-call”. The courts have construed the Act to determine that an employee’s time is compensable work for purposes of the Act if it is spent predominantly for the benefit of the employer. Whether time is spent predominantly for the employer’s benefit or for the employee is a question dependent upon all the circumstances of the facts of the case. If employers limit the freedom of non-exempt employees, they may have to provide on-call pay. This concept generally means the employees are obligated to wait for work and must remain at the employer’s location or within a certain proximity of the workplace.
For example, a firefighter who is on-call and required to stay in the fire station until a fire occurs may be entitled to on-call pay. On-call pay is not necessary when employees are “waiting to be engaged” rather than “engaged to wait”. They may be on-call at home while attending to personal matters or may notify their employer where they can be reached if they go out. In such cases, because the employer has not restricted the employee’s physical movement or use of time, the hours spent waiting for work are not compensated. The facts may show the employee was “engaged to wait”, or the facts may show that the employee is “waiting to be engaged”.
An employer may require the employee to be accessible by telephone or paging device, or may establish rules governing use of alcohol or participation in other activities while the employee is on-call, and the employee could still be able to use the on-call time to engage in personal activities, such as cutting the grass, going to the movies, going to a ball game, or engaging in other activities of his or her choosing.
On-call schedules:
An on-call schedule outlines which employees will be on-call and at what times. This advanced notice helps employers meet their operational needs and allows employees to arrange their personal lives accordingly. To avoid burnout and keep a positive work-life balance, employers usually rotate on-call shifts.
The line between compensable and non-compensable on-call time is often difficult to draw. Another consideration in deciding whether an employee can use the on-call time for his or her own purpose is the frequency of the work calls received during the employee’s on-call time. If the employee is interrupted to such an extent that he or she cannot conduct his or her regular activities, the employee cannot use the on-call time for his or her own purposes. For example, if he or she is unable to finish a meal, read a story to his or her child or read a newspaper during the same on-call period, the employee cannot use the time effectively for his or her own purposes.
An employee who can use their time for their own purposes and do so without significant interruptions is not “engaged to wait” but is “waiting to be engaged” and the time would not be compensated at the employee’s regular rate of pay. The difference between “engaged to wait” and “waiting to be engaged” depends on the individual circumstances and facts of each individual case. Employers unsure of their employees’ entitlement to on-call pay should consult an employment attorney to help them analyze the situation.
If your small or mid-size business has human resource or employment law questions, please contact Holden Law Firm at (952) 943-3960 for a consultation.
