ON-CALL TIME – WHEN IS IT COMPENSABLE?
In today’s age of instant communication, and particularly with the ability of more and more employees to stay connected to their work with an iPhone, blackberry or some other form of mobile communication wizardry, customers expect businesses to be open 24/7. To meet this demand, a number of companies require their employees to be “on-call” to respond to customer inquiries or other business needs after normal business hours. One question that consistently trips-up employers is whether the Fair Labor Standards Act (“FLSA”) requires compensation to these employees for on-call time.
The answer basically depends on whether the employee is actually working while “on-call”. The Department of Labor’s (“DOL”) regulations interpreting the FLSA provide that “[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.’” In this situation, the employee needs to be compensated for the on-call time.
In situations where employees are not required to remain on or even near the employer’s premises while on-call, the DOL regulations provide that “[a]n 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.” Here, compensation is not required.
Although this two-pronged approach seems fairly straightforward, this issue arises in plenty of other contexts than just those two situations. In most of them, the focus of the compensability inquiry should be on whether the employee can use the on-call time for his or her own purposes.
The nature of the restrictions placed on the employee while on-call is one important key to this inquiry, but there are several other factors that the DOL and federal courts will usually consider when examining this issue. The application of these factors has been somewhat inconsistent from case to case over the years, but some general trends have emerged.
One important factor is the frequency of calls during the on-call period. The greater the number of calls, the more likely a court will find that the on-call time is compensable because the calls restrict the employee from engaging in personal tasks. Another factor that courts consider is whether the employee has the flexibility to swap on-call periods with coworkers.
The time frame in which the employee must respond to a call is also relevant. The DOL has found that a requirement for a home healthcare worker to respond to a call within 20 minutes was not overly restrictive. In contrast, at least one court has found that a requirement for a firefighter to respond to a call within 30 minutes was restrictive because the firefighter had to be mentally and physically capable of fighting a fire, which restricts personal activities.
As mentioned earlier, the restrictions placed on an employee while on-call are important, and one of the specific restrictions that is often examined by courts looking at this question is the restrictions on the employee’s movements. For example, some employees will be confined to a certain geographic area while on call so that they can be reached by radio or so that they can travel to a site within a specified period. The more significant the geographic restrictions are, the greater the likelihood that a court or the DOL will find the time to be compensable.
Employers should remember that even if the on-call time is generally not compensable, the time the employee spends responding to the call likely will be compensable. Also, if on-call time is compensable, employers must include this compensation in the employer’s regular rate of pay when calculating overtime.
The headaches employers have to deal with in this area aren’t likely to ease anytime soon, unfortunately. Worse, because the area of inquiry here is very fact-specific, employers don’t have the benefit of applying simple, bright-line rules. For these reasons – and because the penalties may be stiff if you get it wrong – doubts about whether to treat on-call time as compensable or not are often best resolved by contacting competent legal counsel.