I know that this wage and hour stuff can be pretty dry. But the penalties for noncompliance can be astronomical. Also, this is one of the relatively rare occasions when I get to report on a development that’s favorable for employers. So bear with me.
A recently published appellate decision, Price v. Starbucks Corporation, changes the way California employers are required to handle reporting time pay. Section 5 of each of the Industrial Welfare Commission Wage Orders requires the following:
Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s 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 (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.
So if an employee who normally worked 8 hours was called in and given less than 4 hours of work, he’d still be entitled to pay for 4 hours. If an employee who normally works 3 hours is called in and only given 1 hour of work, he’d be entitled to pay for 2 hours (because of the mimimum).
According to the Division of Labor Standards Enforcement’s Enforcement Policies and Interpretations Manual (2002 Update – pdf), the issue frequently arises when employees are required to attend training or staff meetings. The DLSE said, if a 1- or 2-hour meeting is scheduled on a day the employee is not normally scheduled to work, the employee must be paid one half of his usual day’s work (subject to the 2-hour minimum and 4-hour maximum). (Sec. 45.1.4) So an 8-hour employee called in to attend a 2-hour training session on a day he doeesn’t normally work would be entitled to be paid for 4 hours.
But the court in Price disagrees. It held that, because the employee didn’t expect to work a full shift, the employer wasn’t required to pay him for “half the usual or scheduled day’s work.” Instead, the employer was only required to pay him for the 2-hour minimum. Will the DLSE change its interpretation? With a new Labor Commissioner, that’s anybody’s guess. But appellate decisions take precedence over DLSE interpretations. So employers who understand this issue and schedule meetings and trainings accordingly (i.e. on days that employees aren’t normally scheduled to work) can save themselves a lot of money.