In California, what rules apply when determining what constitutes hours worked?

California wage-and-hour law clearly states that any hour an employee spends performing work on behalf of the organization, or work that the organization knew or had reason to know was being performed by the employee, is considered hours worked and therefore deemed compensable time, regardless of where the work was performed (with some limitations).

The Labor Commissioner has adopted the federal regulations permitting the practice of computing working time by rounding to the nearest five minutes, or one-tenth or one-quarter of an hour. Such rounding is acceptable as long as it is applied both ways (for both employee and organization) so as not to result, over a period of time, in failure to compensate employees properly for all time they have actually worked.

Key considerations regarding compensable hours are outlined below.

Reporting-Time Pay

California Industrial Welfare Commission (IWC) Orders require that employers pay nonexempt employees for certain unworked but regularly scheduled time, in addition to the hours the employee actually works. See, IWC Orders 1-16, Section 5. Such payments are known as reporting-time pay. The following are specific requirements for reporting-time pay:

• Each workday an employee is required to report to work but is not put to work or is furnished with less than half of his or her usual or scheduled day’s work, the employee must be paid for half the usual or scheduled day’s work, but in no event for less than two hours or more than four hours, at the employee’s regular rate of pay.

• If an employee is required to report to work a second time in any one workday and is furnished less than two hours of work on the second reporting, he or she must be paid for two hours at the employee’s regular rate of pay.

Exceptions to the requirement for reporting-time pay, found in IWC Orders 1-16, apply to the following situations:

• When operations cannot begin or continue due to threats to employees or property, or when civil authorities recommend that work not begin or continue.

• When public utilities fail to supply electricity, water or gas, or there is a failure in the public utilities or sewer system.

• When the interruption of work is caused by an Act of God or other cause not within the employer’s control—for example, an earthquake.

The reporting-time pay provisions do not apply to employees on paid standby status or when an employee has a regularly scheduled shift of less than two hours, such as a relief cashier who works only during a one-hour period in the middle of the day.

Reporting-time pay for hours in excess of the actual hours worked is not counted as hours worked for purposes of determining overtime.

Call-back, On-call and Standby Time

An organization does not automatically have to pay a nonexempt employee for carrying a beeper, cell phone or other mobile device. Whether the on-call time is compensable will depend on the degree to which the employee is under the organization’s control. Factors to be considered include the degree of the restriction on the employee’s freedom, whether the employee is required to be on the organization’s property, and the impact the on-call policy has on the employee’s ability to perform personal business. On-call time may be paid at a different rate than the employee would receive for working.

Whether on-call or standby time off the work site is considered compensable must be determined by looking at the restrictions placed on the employee. A variety of factors are considered in determining whether the employer-imposed restrictions turn the on-call time into compensable hours worked. Some of the factors to consider include:

• Whether a fixed time limit for response is unduly restrictive.

• Whether the on-call employee can easily trade his or her on-call responsibilities with another employee.

• To what extent the employee engages in personal activities during on-call periods.

During times when the employees are subject to the employer’s control, on-call or standby time at the work site is considered hours worked, and employees must be compensated for this time even if they do nothing.

Travel Time

Whether an employer needs to pay a nonexempt employee for travel time depends on many factors. Commuting—traveling from home to the usual work site—is not considered paid travel time. If the organization provides the employee with a company vehicle, the travel time to the employee’s usual work site is not paid time, even if the employee is performing small tasks such as refueling the vehicle. An employer does need to have an agreement with the employee regarding the use of the vehicle.

Most other travel time is considered work time, including travel to a different work site on a temporary basis or travel when an organization does not allow an employee to use his or her own transportation. In California, travel time is considered compensable work hours when the employer requires its employees to meet at a designated place, use the employer’s transportation to and from the work site, and prohibits employees from using their own transportation.

Generally, travel time longer than the employee’s normal commute to and from his or her regular work site is considered compensable. Employees who are required to report to a temporary work site or who experience a change in work site location must be compensated for any travel time in excess of the time normally required to report to their regular work site.

Time spent driving or as a passenger on an airplane, train, bus, taxi cab or car, or other mode of transportation in traveling to and from an out-of-town business-related trip and time spent waiting to purchase a ticket, check baggage or get on board is considered time spent under the employer’s control and therefore is compensable as hours worked.

Nonexempt employees may be paid for their travel time at a pay rate lower than the usual rate of pay. This rate may be as low as the minimum wage. The rate at which the travel must be paid depends upon the nature of the compensation agreement. If the employer has agreed to pay a fixed hourly rate of pay for any work performed, then travel time must be paid at that regular hourly rate or, if applicable, the required overtime rate. An employer may establish a separate rate of pay for travel before the work is performed for hourly employees, provided the rate does not fall below the statutory minimum wage.

De Minimis Time

The California Supreme Court ruled in 2018 that employers must pay workers for routine off-the-clock activities, such as setting the alarm and closing the store at the end of the day—even if the amount of time is minimal. Employers in California may no longer rely upon the federal Fair Labor Standards Act (FLSA) de minimis rule which states that infrequent and insignificant periods of time beyond the scheduled working hours, which cannot as a practical matter be precisely recorded for payroll purposes, may be disregarded.