How should we pay on-call, nonexempt employees for the time they are not actually working when on call?

Whether nonexempt employees must be paid for their on-call time depends on whether they are "waiting to be engaged" or are "engaged to wait" as defined by the Fair Labor Standards Act (FLSA).

Some employers require their employees to work on an on-call basis often as a response to the business needs of specific industries. According to the FLSA regulations at 29 C.F.R. §785.17, "An 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.'"

If an employee who is on call can use his or her time freely and is not performing a specific assigned task, that employee is waiting to be engaged. The employee can be available by telephone if needed; however, since he or she is waiting (off duty), the employee is not compensated for that time.

An example of off-duty status is found at 29 C.F.R. §785.16  in the FLSA regulations: "If the truck driver is sent from Washington, D.C., to New York City, leaving at 6:00 a.m. and arriving at 12 noon, and is completely and specifically relieved from all duty until 6 p.m. when he again goes on duty for the return trip the idle time is not working time. He is waiting to be engaged."

On the other hand, when an on-call employee is required to stay at the workplace or is so near the workplace that he or she cannot use his or her time freely, the employee is engaged to wait (on duty). In such cases, the employee must be compensated for this time.

The FLSA also offers examples of waiting or on-duty behaviors at 29 C.F.R. §785.15 : "A stenographer who reads a book while waiting for dictation, a messenger who works a crossword puzzle while awaiting assignments, a firefighter who plays checkers while waiting for alarms and a factory worker who talks to his fellow employees while waiting for machinery to be repaired are all working during their periods of inactivity."

If an on-call employee must carry a paging device such as a beeper or cellular phone, and the employee is relieved of his or her duties, the time is unpaid unless the employer has an on-call policy that specifically requires pay during such times. Federal court decisions have held that on-call employees are not overly constrained by a paging device. Therefore, the unpaid, waiting-to-be-engaged status could apply to those employees who are not required to wait near or at the worksite.

As with any nonexempt employee, federal law requires that on-call, nonexempt employees must still be compensated at or above the minimum wage and must be paid overtime for all hours worked in excess of 40 in any given workweek. Also, employers should make sure to check state laws on minimum wage and overtime.