Court of Appeal on Reporting Time (Redux)

We first blogged about Aleman v. Airtouch Cellular here.  I was pretty excited because I'm a dork. Oh, and because the Court of Appeal addressed two issues that come up all the time for clients, but never in court:  "reporting time" and the "split shift" premium. You remember.  

Anyway, as I predicted, the Supreme Court granted review and held the case, which meant it had no precedential value and pretty much disappeared.  But it's back.  And if it stays on the books this time, it may result in a big change to advice that employment lawyers give their employer clients.

Here are the facts as explained by the Court:

Krofta was required to attend occasional work-related meetings. Most of these were ―store meetings, which would be held once or twice a month on Saturday or Sunday morning, before the store opened, and which would last an hour to an hour and a half. The meetings were scheduled in advance and listed on employees‘ work schedules, and they were recorded in AirTouch‘s electronic timekeeping system.

Krofta‘s timesheets from AirTouch showed that there were five occasions on which he was scheduled to work, and did work, less than four hours (possibly to attend meetings). Separately, the AirTouch timesheets showed there were five times when Krofta worked a split shift—described by the parties for purposes of this litigation as a short shift (generally a meeting) in the morning followed by a longer shift later the same day.

*** Krofta contended, however, that he was owed additional compensation as reporting time pay for the five instances he worked less than four hours, and split shift premiums for the five times he worked a split shift.

REPORTING TIME PAY

Here's how the court analyzed the reporting time pay provision contained in the Wage Orders.  This will result in a big change to advice employment lawyers give to employers:

To simplify, the issue may be framed by the following question: If an employee‘s only scheduled work for the day is a mandatory meeting of one and a half hours, and the employee works a total of one hour because the meeting ends a half hour early, is the employer required to pay reporting time pay pursuant to subdivision 5(A) of Wage Order 4 in addition to the one hour of wages? The answer to this question is no, because the employee was furnished work for more than half the scheduled time. The employee would be entitled to receive one hour of wages for the actual time worked, but would not be entitled to receive additional compensation as reporting time pay. . . . [W]hen an employee is scheduled to work, the minimum two-hour pay requirement applies only if the employee is furnished work for less than half the scheduled time

SPLIT SHIFTS

The court's treatment of split shift pay clarified ambiguity in the law regarding whether split shift premiums are due for workers who make a certain amount more than minimum wage:

Krofta contends that he was owed additional compensation for working split shifts under subdivision 4(C) of Wage Order 4. Subdivision 4(C) is located under the section \4. Minimum Wages. heading of the wage order. It states: \When an employee works a split shift, one (1) houres pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment.. (Cal. Code Regs., tit. 8, ˜ 11040, subd. 4(C).) * * *

*** While subdivision 4(C) applied to Krofta, the provision did not provide him with any tangible benefit, since the total amount of his regular pay was significantly higher than the minimum amount required by subdivision 4(C).

No published California case has previously addressed this direct issue. However, although obviously not binding, a well-respected treatise (Chin et al., Cal. Practice Guide: Employment Litigation (The Rutter Group 2011)) has embraced the same interpretation of subdivision 4(C). The Rutter guide explains the provision thusly: ―[A]n employee earning the minimum wage who works eight hours on a split shift is entitled to receive nine times the minimum hourly wage.‖ (Id. at ¶ 11:682, p. 11-68.) ―This provision also applies to employees paid more than the minimum wage. However, such employees are only entitled to the difference between what they actually earned and what they would have earned had they been paid the minimum wage for their entire shift plus an extra hour.‖ (Id. at ¶ 11:683, p. 11-69.) ***

So, this means that an employee is not required to earn a split shift premium of one hour at minimum wage, unless he or she earns < (minimum wage * hours worked + (minimum wage * 1 hour)).

OTHER ISSUES

If the above weren't enough, this case keeps on giving. The Court held that a release of claims will lawfully include disputed claims for unpaid wages, despite Labor Code Section 206.5, a California statute prohibiting releases of wage claims.

The Court also clarified that on the reporting time claim, either party may seek attorney's fees under Section 218.5, which means that the employer won its fees against the plaintiffs.

So, happy Friday!  Monday won't be so bad either.

The case is Aleman v. Airtouch Cellular and the opinion is here.

Court of Appeal Makes Christmas Come Early for Employers re Reporting Time and Split Shifts

The Court of Appeal issued a ruling that may change the way us employment lawyers advise clients. But WARNING, this decision is not yet final and cannot be relied upon just yet.
Anyway the first issue deals with "reporting time" pay.  California's IWC Wage Orders require "reporting time pay," viz:

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.‖ (Cal. Code Regs., tit. 8, § 11040, subd. 5(A).)

It has been long understood (not just by me) that if an employee has to come in for a scheduled meeting on a day off, the employer must pay at least 1/2 the employee's regular scheduled shift (up to 4 hours).Don't take my word for it, here's what the Division of Labor Standards Enforcement has written about it:

Required "Training" Or "Staff" Meeting Attendance. DLSE has been asked on a number of occasions how the Reporting Time provisions of the Orders affect a situation where the employer requires employees to attend a short training meeting, staff meeting or similar gathering under a variety of circumstances. Most common are:

Required meeting is scheduled for a day when the worker is not usually scheduled to work. The employer tells all of the workers that attendance at the meeting is mandatory and a one- or two-hour shift is "scheduled" for this meeting. For those workers not "regularly scheduled" to work, the employee must be paid at least one-half of that employee’s usual or scheduled day’s work. * * *

Well, the Court of Appeal disagreed with the DLSE's analysis.  AirTouch Cellular scheduled meetings lasting two hours or less. Some employees came in specially for the meeting and claimed they were owed up to 4 hours' pay (1/2 the regular shift). The court said:

To simplify, the issue may be framed by the following question: If an employee‘s only scheduled work for the day is a mandatory meeting of one and a half hours, and the employee works a total of one hour because the meeting ends a half hour early, is the employer required to pay reporting time pay pursuant to subdivision 5(A) of Wage Order 4 in addition to the one hour of wages?

The answer to this question is no, because the employee was furnished work for more than half the scheduled time. The employee would be entitled to receive one hour of wages for the actual time worked, but would not be entitled to receive additional compensation as reporting time pay.

If that wasn't enough, the Court then resolved another mystery that has vexed employers and their lawyers for years:  When, if ever, is a "split shift" premium due to an employee who earns more than minimum wage for the day?   See, the wage order requires split shift premiums, but the provision is expressed in terms of "minimum" wage.  The court of appeal agreed with a district court when it held that "The plain language of the split shift regulation reflects an intent to ensure that an employee who works a split shift must be compensated highly enough so that he or she receives more than the minimum wage for the time actually worked plus one hour."

Therefore, an employee who earns more than $72 for an 8 hour day (assuming an $8 minimum wage) does not receive a  split shift premium, even if he works a split shift.  The court unfortunately did not say what happens when the day is shorter than 8 hours. ... must the employee still earn $72 for the day even if he only works 6 hours? 

Anyway, this wage and hour obscurity is probably dry as dirt for some of you. For others, though, this case could result in significant payroll savings. 

And DLSE, remember when I asked you the split shift question in a request for opinion letter like 3 years ago?  Remember?   Never mind. 

The opinion is Aleman v. Airtouch Cellular and the opinion is here.


DGV

Court of Appeal: That's Not a Split Shift

Under California's Wage Orders - 

“Split shift” means a work schedule, which is interrupted by non-paid non-working periods established by the employer, other than bona fide rest or meal periods. 
And "when an employee works a split shift, one (1) hour’s pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment."

The question is: If you work an over night shift, such that you start at 10:p.m., end your shift at 7:00 a.m., and then return to work later the same day, is that a split shift?  No, said the Court of Appeal in Securitas Security Services, Inc. v. Superior Court (opinion here).

So, DLSE? You don't have to issue that opinion letter I asked you to issue years ago. (!)

DGV