This article was updated on Oct. 4, 2018.
Federal and state on-call labor laws can profoundly impact the way you manage your workforce. On-call employees must respond and be present if they are needed. When they are working, they are paid. However, it can be confusing for both HR and the employee to identify when that paid time begins and ends. HR needs to understand the rules to ensure compliance under the Fair Labor Standards Act (FLSA).
On Call While at Work
Under FLSA rules, employees must be paid for the time they are required to be at work. That is the case regardless of whether the employee is on-site or not; for example, a courier waiting for a parcel or perhaps a sales representative waiting for a client to arrive for a lunch meeting.
That rule seems pretty straightforward, but it can lead to circumstances that are less than clear. For example, a staff member who is required to cover reception while eating lunch is likely entitled to be paid for that time, regardless of whether they answer any calls. An employee who is required to carry a pager during their lunch break but doesn't receive any calls that require an urgent response may not need to be paid. For clarity, you should always check with your state labor department, as their rules may differ from federal legislation.
On-Call While Elsewhere
Employees who are on call while not at work is a murkier set of circumstances. Rules can be established around activities that may impair the employee's ability to complete their duties, such as alcohol use; however, the volume of stipulations put on personal time will be a factor when determining whether they should be paid. The more restrictions placed on workers — for example, where they can go or how quickly they need to respond to calls — the more likely they are legally entitled to remuneration.
Employees must be paid for any time spent actually working. Therefore, workers that assist clients via the phone should maintain phone logs and submit those to payroll. Another consideration is the number of work calls employees receive. If they are affected to the point where they cannot use the time for their own purpose, then they are probably considered working for the entire on-call period.
Another aspect to consider is the travel time for your employees while on call. If a worker is required to attend to a service call or visit a client while on-call, then the time spent traveling to and from is likely to be paid because it is considered work. In addition, if the on-call employee is required to come into the workplace to deal with an emergency situation that can't be rectified from their own location, then travel time is generally applicable.
Keep in mind that on-call rules do not apply to employees who are classified as exempt under the FLSA overtime rules.There is no legal obligation to compensate exempt employees for their on-call time; their salary generally covers additional hours as required.
In order to be considered exempt, employees must be paid a set salary at a certain level and must meet the duties test. The definition is open to interpretation, but generally speaking, if employees have two or more employees under their supervision and make decisions instead of just following a process, or exercise independent judgment and work in general business administration, or have an advanced degree, they are considered exempt.
As stated above, the salary basis and level tests must also be met. Under the current rules, employees are considered exempt if their salary comes out to at least $455 per week, as a proposal to amend the salary test to $913 was indefinitely put on hold by a federal court..
Even if your employees qualify as exempt, you may want to consider creating a policy that compensates on-call employees as an additional employee retention strategy.
It can be necessary to have some employees on standby for last-minute shifts, particularly in the restaurant industry, but it is essential to understand the potential for that process to fall under on-call labor laws. According to The New York Times, many larger employers, such as the Gap and Starbucks, have moved away from this practice because of pressure from regulators.
On the other hand, employee scheduling software could assist with workforce planning of this nature, taking into account customer patterns and enabling HR to predict labor requirements well ahead of time.
Managing employees who have the potential to be considered on-call can be complicated. Therefore, it is crucial for HR to review those arrangements on a regular basis, particularly in conjunction with understanding how local regulations and laws differ, in order to ensure compliance and maintain a productive and engaged workforce.