The minimum wages, maximum hours, and working conditions of virtually all employees are regulated by a series of Wage Orders adopted by the Industrial Welfare Commission. Although many of these Wage Orders have been in effect for decades, until now, employers lacked definitive rulings on how to apply the Wage Orders’ reporting time and split shift premium provisions. The California Court of Appeal in Aleman v. AirTouch Cellular has provided all employers with much needed clarity regarding when premiums are owed, and how they are calculated.
The putative class action plaintiffs in Aleman alleged that AirTouch Cellular failed to properly pay them reporting time pay for days when they reported to work only for scheduled meetings, and that they were owed a premium of an additional hour of compensation on days they worked a split shifts or attended a meeting and worked later in the day. The Court of Appeal rejected both claims.
Reporting Time Pay for “Scheduled” v. “Usual” Work
At issue in Aleman was whether an employee who reported to work just to attend a work-related meeting was entitled to pay for a minimum of two hours up to half of his or her usual workday, or only pay for attending the time spent attending the meeting. The relevant language from the Wage Orders provides that
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 of 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 . . .
The court found that the Wage Order draws a distinction between a “usual” day and a “scheduled” day, and that the “clear language of [the Wage Order] dictates that when work is scheduled, reporting time is owed only when an employee is not furnished with half of his or her scheduled day’s work.” The court rejected an interpretation of the Wage Order that would require payment a minimum of two hours for “scheduled work” such as a scheduled meeting. This stands in contrast to situations where an employee is sent home from their usual workday early due to a lack of work, or is called to work without notice on a day off and sent home after a short period of time.
Thus, where a meeting is scheduled apart from an employee’s usual workday, his or her entitlement to reporting time pay will depend upon whether he or she worked for more than half of the scheduled time. On other days, where the employee is reporting for their “usual” workday, the entitlement to reporting time pay will depend upon whether he or she worked more than half of their “usual” time.
All Wage Orders (except No. 16 governing construction, drilling, logging and mining) also include provisions that require that an employee be paid for a minimum of two hours at his or her regular rate when required to report work for a second time in any one workday. These provisions will apply where an employee reports for work twice in a single day, such as for a scheduled meeting in the morning and a regular shift in the afternoon, or any other split-shift schedule.
The Split Shift Premium is a Form of Minimum Wage
The court also addressed another question for which there had been no definitive answer: whether an employee who works a split shift is entitled to additional hour of compensation at his or her regular rate.
The Wage Orders define a “split shift” as “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 except for Wage Order 16, when an employee works a split shift the Wage Orders require that “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.”
Rather than automatically entitling an employee to an additional hour of compensation whenever a split shift is worked, the court concluded that the split shift provisions establish a form of minimum wage for the workday below which the employer may not fall. If the actual wage paid is greater than the minimum wage for all hours worked plus one additional hour, the minimum wage obligation for the split shift is satisfied and no additional compensation is owed.
For example, if an employee’s rate of pay is sufficiently high that after working for eight hours on a split shift, his or her compensation is greater than nine times the minimum wage (eight hours plus the premium), no additional compensation is necessary. However, if an employee earns more than the minimum wage, but the rate of pay is not greater than the minimum wage plus the extra hour, he or she is entitled to the difference between what they earned and what they would have earned had they been paid the minimum wage plus the extra hour.
Employer Policies and Practices Following Aleman
The reporting time and split shift premium provisions are intended to encourage employers to adequately schedule work, and guarantee at least partial compensation for employees who are deprived of expected work because of inadequate scheduling or lack of proper notice by the employer, or are required to report to work twice in a day. Employers must take steps to ensure that their policies and practices comply with the applicable Wage Order, and that their payroll systems can properly compensate employees when reporting time and split shift premiums are owed.
When employees are scheduled to report to work for a meeting outside of their usual schedule, the employees should be provided with notice in advance, and the meeting should last at least half of the scheduled time. If the meeting occurs on the same day of an employee’s usual workday, the employer should separately determine whether a split shift premium is owed due to a break in time between the meeting and the employee’s usual workday.
