SEVEN ALTERNATIVE PAY PRACTICES YOU SHOULD KNOW
by Shannon Jenkins, Esq.
Partner at Tredway, Lumsdaine & Doyle LLP
Most employers will at some time or another have to deal with an hourly (non-exempt) employee’s intermittent request to alter their work schedule to accommodate personal or professional circumstances. Below, are 7 common alternative pay practices that you should familiarize yourself with.
Scenario: You have an hourly worker who is scheduled to work 8 hours per day, 5 days per week. One day, there is a need to have that employee work 2 hours of overtime. Rather than get paid overtime, the employee requests to leave 2 hours early on a different day. Is this legal?
Response: Probably not. Under California law, both public and some private sector employees can earn compensatory time in place of overtime (see California Labor Code section 204.3). However, under current federal law, compensatory time is only available to public employees. Thus, private sector employers who allow or require compensatory time off are in violation of the law. A bill now pending before the U.S. Congress, called the “Family Friendly Workplace Act” (S. 1626), would change the federal rule and permit compensatory time for both public and private employers. Until that bill is signed into law, private sector employers that permit employees to earn compensatory time off run the risk that they may be sued under federal law for the value of overtime wages that were paid out as compensatory time.
Scenario: Your hourly worker is scheduled for an 8 hour shift, but needs to leave 2 hours early to tend to personal obligations. Your worker would like to avoid having his/her vacation or PTO bank docked and so would like to “make up” the missed time. Can this be done?
Response: Probably; see Wage Order 4-2001, Section 3, “Hours and Days of Work” section (M). Employees may take time off and then make up the time later in the same workweek, or may work extra hours earlier in the workweek to make up for time that will be taken off later in the workweek. Makeup time worked will does not have to be paid at an overtime rate. However, there are rules that must be followed in order to properly designate time worked as “make up” time. Your Employee Handbook should have the following provisions:
“Makeup time requests must be submitted in writing to your supervisor, with your signature, on the form provided by <Company name>. Requests will be considered for approval based on the legitimate business needs of <Company name> at the time the request is submitted. A separate written request is required for each occasion the employee requests makeup time.
If you request time off that you will make up later in the week, you must submit your request at least <ex. 24 hours> in advance of the desired time off. If you request to work makeup time first in order to take time off later in the week, you must submit your request at least <ex. 24 hours> before working the makeup time. Your makeup time request must be approved in writing by your supervisor, before you take the requested time off or work makeup time, whichever is first.
All makeup time must be worked in the same workweek as the time taken off. <Company name>’s seven (7) day workweek is <ex. Sunday through Saturday>. Employees may not work more than eleven (11) hours in a day or forty (40) hours in a workweek as a result of making up time that was or would be lost due to a personal obligation.
If you take time off and are unable to work the scheduled makeup time for any reason, the hours missed will normally be unpaid. However, your supervisor may arrange with you another day to make up the time if possible, based on scheduling needs. If you work makeup time in advance of time you plan to take off, you must take that time off, even if you no longer need the time off for any reason.
An employee’s use of makeup time is completely voluntary. <Company name> does not encourage, discourage, or solicit the use of makeup time.”
Meeting and Training Pay
Scenario: Your hourly worker requests time off to attend continuing education classes which are necessary to maintain the license which is required by their position. Are you required to pay for this time?
Response: It depends; see 29 CFR sections 785.27 through 785.31. An employer is responsible for compensating its hourly employees for their attendance at meetings, lectures, and training programs under the following conditions:
- Attendance is mandatory;
- The meeting, course, or lecture is directly related to the employee’s job;
- The employee who is required to attend such meetings, lectures, or training programs will be notified of the necessity for such attendance by his or her supervisor;
- Employees who do perform productive work during attendance at meetings, lectures or training programs will be compensated at their regular rate of pay.
The same employer obligation to compensate “training pay” would also be true for in-house “lunch-and-learn” meeting scenarios. Keep in mind that any hours in excess of 8 in a day or 40 in a week will need to be paid at the appropriate overtime rate, using the hourly rate in effect at the time the overtime work is being performed.
Scenario: Your hourly worker is called in to work from 8-11 in the morning, is required to take a 3 hour break by the employer, and then is called back to work from 2-5 in the afternoon. Should this employee be paid for any hours between 11 and 2?
Response: Yes, the employee should be paid for 2 hours as a “split shift”; see Wage Order 4-2001, Section 4, “Minimum Wages” section (C). A split shift is defined as work schedule that is interrupted by a non-paid, non-working period established by the employer that is not a rest or meal period. If an employee initiates a break in his or her work schedule for personal reasons (for example, to accommodate childcare or personal business), that interruption is not considered a split shift since the break was not established by the employer. The Department of Labor Standards and Enforcement (DLSE) has historically considered a break longer than one hour to require a split shift premium.
When an employer requires an employee to work a split shift, the employer must pay the employee a split shift premium, which is one hour’s pay at minimum wage in addition to the employee’s regular earnings paid for that shift. If an employer pays the employee more than minimum wage, the employer is only required to pay the minimum wage rate, not the employee’s regular rate, for the split shift premium. Additionally, if an employer pays the employee more than minimum wage, the excess will be credited toward the split shift premium.
Reporting Time Pay
Scenario: Your hourly worker is regularly scheduled to report to work at 8 a.m. the next morning for an 8 hour shift. Upon arrival, the employee is told that he/she is no longer needed. Must the employee be paid anything for that shift not worked.
Response: Yes; see Wage Order 4-2001, Section 5, “Reporting Time Pay”. Reporting time pay is to be paid to hourly employees when that employee reports to work at his/her regularly scheduled time, but is not put to work or is given less than half the usual or scheduled day’s work. Reporting time pay is computed as at least half of the hours that employee is scheduled to work during the shift, but no more than four (4) hours of pay. Your Employee Handbook should reference Reporting Time pay and include the following disclaimers:
“Reporting time will not be paid under the following circumstances:
• On a paid “on call” status, called to work at times other than your usual shift
• When operations cannot begin due to threats to the Company or the Company’s property or when recommended by civil authority;
• When public utilities fail, such as water, gas, electricity, or sewer; and
• When work is interrupted by an act of God or other causes not within the Company’s control.
Additionally, the Company is not obligated to pay reporting time pay under the following circumstances:
• If the employee is not fit to work.
• If the employee has not reported to work on time and is fired or sent home as a disciplinary action.”
“Called In” Pay
Scenario: Your hourly employee is called in to work on a day other than his/her normal work schedule (when there is no specified number of hours the employee is scheduled to work) but is quickly sent home. Must that employee be paid regardless of whether or for how long that employee is put to work?
Response: Yes; see, generally, Price v. Starbucks Corp. (2011) 192 Cal. App. 4th 1136. That employee will need to be paid at least 2 hours pay.
Scenario: You anticipate there may be an urgent staffing need for your hourly employee to come in to work on the weekend and you need that person “stand by” and be ready. Must that employee be paid for the time they are waiting for your call?
Response: It depends; generally, see Berry v. County of Sonoma (1994) 30 F.3d 1174. Some employees may be required to stay at home or at work on “on-call” status. On-call time will not be paid if the employee can use the time spent on-call primarily for his/her own benefit. If an employee is assigned to carry a beeper or similar pocket pager but there are no other restrictions, this generally will not constitute hours worked. In determining whether on-call time is work time and must be compensated, an employer should consider the following factors:
- Geographic restrictions on the employee’s movements;
- Required response time;
- Any other limitation on the employee’s ability to use the time for his/her own benefit.
All time spent on callbacks during an on-call period is counted as time worked. Callback time is paid at an employee’s regular rate of pay, as well as any overtime incurred. This includes a reasonable time for travel from the location where the employee was summoned to return to work, to the work site and return.
ORed Flag Tips
Make sure your Employee Handbook covers these alternative pay scenarios and that your scheduler understands the relationship between hours worked and lawful pay practices.
If you have any questions or comments, please contact us!
Shannon Marie Jenkins, Esq.
1920 Main St., Suite 1000
Irvine, CA. 92614
Phone: (949) 756-0684
Direct: (949) 265-3512
Fax: (866) 298-9254