Landmark California Decision Limits Employee “Reporting-Time” Pay

By John Skousen

A California appellate court has just handed down a major decision on reporting-time pay in California, limiting situations where such pay would be due, and rejecting an enforcement guideline used by the California Labor Commissioner.

The court also clarified the law regarding split-shift premiums in Michael Aleman, et al v. AirTouch Cellular.

During the past few years, California employers have been increasingly vulnerable to “reporting time” claims,” which typically arise when employees show up for work and are not given at least half of the usual or scheduled day’s work.

Clarifying pay for special employee meetings

In such situations, the Wage Order provides that each workday when an employee is required to report for work and does report, but is furnished less than half the usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two hours nor more than four hours, at the employee’s regular rate of pay.

If the employee is required to report a second time, and is furnished less than two hours of work on the second reporting, said employee shall be paid for two hours at the employee’s regular rate of pay. The Labor Commissioner traditionally has taken an aggressive position against employers, requiring them to pay employees either two or four hours reporting-time pay when they show up for previously scheduled meetings of short duration.

In this class action, the employees sought a minimum of two hours reporting time pay for instances when they attended semi-monthly or monthly “store meetings” scheduled at least four days in advance.

Rejecting the Labor Commissioner’s approach, the Second Appellate District ruled that because the employees showing up for the meetings were furnished “work” of at least half of the scheduled meeting time, they were not entitled to any reporting-time pay. The court further held that, in instances where work of a specific duration was previously scheduled, the length of the employees’ “usual” work day was irrelevant in determining the amount of minimum reporting time pay due.

A further clarification was provided regarding split-shift premiums.

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To protect employees paid at minimum wage, California requires employers to pay employees a “split shift” premium of one hour at the minimum wage, if the employee works two separate shifts in a day. The court rejected the employees’ claim for split-shift premiums, ruling that, because they were paid an hourly rate over the state minimum wage, the surplus amount over the minimum wage could be accumulated to satisfy the one-hour split-shift premium requirement. In effect, employees working split shifts must be paid at least the minimum wage ($8.00) for all hours worked, plus one hour at the minimum wage.

Advice for employers

The court’s ruling signals great news for employers who may now schedule short meetings or work projects without being required to add reporting time premiums as long as the meetings last at least half of the scheduled duration.

Our advice for employers is to:

  1. Schedule all meetings and other events of short duration as far in advance as possible to avoid running into problems regarding reporting time; and,
  2. Indicate the precise length of the meeting and make sure employees record their time at the meeting; and,
  3. Make sure the meetings last at least half as long as scheduled.

With regard to split shifts, employers should make sure they are taking advantage of the proper formula for determining split-shift premium compliance.

This was originally published on Fisher & Phillips’ Legal AlertsThis Legal Alert is intended to provide an overview of an important new law. It is not intended to be, nor should it be construed as, legal advice for any particular fact situation.

John Skousen is a partner in the Irvine, California office of the law firm Fisher & Phillips. His practice is concentrated on wage and hour law and employment litigation. Following his graduation from law school, John served as a law clerk/staff attorney for the United States Court of Appeals for the Fifth Circuit and then served as a law clerk for United States District Court Judge Walter J. Gex, III, of the Southern District of Mississippi. Contact him at jskousen@laborlawyers.com.j

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1 Comment on “Landmark California Decision Limits Employee “Reporting-Time” Pay

  1. John – Great analysis of this case. I think another interesting portion of Aleman v. AirTouch Cellular revolved around the one employee who signed a release agreement in exchange for enhanced severance compensation. The employee argued that “her right to split shift and reporting time pay was undisputed, and so, as a matter of law, any release of these rights was ineffective.” The court rejected this argument, finding that there was a bona fide dispute as to her entitlement to any additional wages, and where such a dispute exists, an otherwise enforceable settlement agreement remains valid.

    So, I would say this ruling also signals to employers that, when reaching agreements with employees that involve incentive award payments – payments which the employees would not have been owed – be sure to include extensive language releasing the employer from “any and all claims.”

    In case you’re interested, I wrote a blog post about this ruling as well: http://blog.datamaticsinc.com/2012/01/a-model-for-successfully-handling-reporting-time-and-split-shift-pay.html

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