Episode 63: Avoid Liability: On-Call Rules to Know

Welcome to the Workplace, a podcast by Cal Chamber. I'm Erica Frank, Cal Chambers, General Counsel and Executive Vice President. And back on the podcast today is Jennifer Shah of the Shah Law Group. Welcome, Jen.

Thank you so much for having me. I always love participating in these podcasts.

It's something that's fun to do and it's great that we can do it remotely while we still are in shelter in place with the COVID virus. And of course, we are still COVID 19 focused. There's still emerging issues that are coming out of the works. And one of the things I wanted to talk about today is how employers are really doing their best to stay open to keep their employees employed.

Yes, of course, that is something that most employers are really working hard to do and it's not as easy as it sounds. Right. There are a lot of complicating issues that come into play, not the least of which is the paycheck protection program where employers are worried about whether they can get their loan forgiven. So there is certainly a lot of play in this area.

You know what, you're so right. And we could talk about the paycheck protection program in a second because it ties into what employers are doing right now with the shelter in place orders. A lot of employers have their employees working remotely, but with many positions, it's not a full time job to be working remotely. You know, some positions are a little bit of administrative and a little bit of hands on needing to be in the workplace. And one of the things that we're hearing on the helpline is employee having their remote workers be on call.

Yes. Which sounds of course like a very sort of innocuous thing. Hey, you're on call. We'll let you know if we need you. Pretty straightforward. We hope we can put you to work, but we don't know if we're going to have all the work for you. So this is the best way for us to do it. Yes, lots and lots of employers are taking this approach.

Now, Jennifer, there's probably a couple different ways that employers are applying this. Maybe one is the traditional if we need you, we're going to call you. In that circumstance, is there specific wage and hour issues that the employer needs to be aware of?

Well, there can be. And you know, our listeners might have heard of the difference before of restricted on call and unrestricted on call. And certainly when we have an employee on restricted on call, where we're saying, look, we're going to call you and let you know if we need you, but if we do Call you, for example, you have to respond within 30 minutes. We may need you to come to the office. You have to be sure you haven't had anything alcoholic to drink, you know, the day before we call you, etc. The more we are limiting the employee's ability to persist their personal pursuits, which is the phrase that's used under the law, the more likely the time will be considered restricted and therefore must be paid at the applicable minimum wage rate. On the other hand, if you have unrestricted on call, I just say, hey, Erica, we might call you on Thursday if you're free, answer the phone, we'll give you hours. If you're not, fine, then that's unrestricted. We don't owe you anything. So traditional on call, if you don't overly restrict the employee's time is not compensable until the person actually comes in.

Okay, so how does this come into play with the shelter in place rules where the employee is saying, I can't go anywhere. Does that factor into what method of pay or how to calculate the pay?

Well, it's interesting because the reason an employee is not supposed to go anywhere has nothing to do with the employer. Right? It's because we're all supposed to be sheltering in place to try to keep the spread of this virus down. So for an employee to say, well, I was on restricted on call because I couldn't go anywhere. Well, wait a minute, could you not go anywhere because of the shelter in place or the stay at home order, or were you not able to go anywhere because I told you you had to sit by your phone and respond within 15 minutes? So the shelter in place rule or stay at home rule doesn't really change things. From that perspective, here's where it gets funky. Employers have thought, wait a minute, here's what we could do. I'm going to schedule you for a shift and I'm going to tell you that it's an on call shift and I'm going to tell you to call in that morning to tell me if in fact, I'll tell you if in fact you're going to be working. So this is the employer talking to the employee, right? I scheduled you for an on call shift, but your shift starts at 11. You've got to call me at 8 so I can make sure that I know you're coming in. Well, that creates an entirely different issue because now you paid the employee essentially to wait. You have told them to call in at 8 o', clock, which is definitely restrictive because they may have to come to work. Their day has started. Now, if you tell them I don't need you, we've got a reporting time pay issue.

Yes, we do. Ward versus Tilly's. Let's talk a little bit about that, Jen.

Well, so here's the thing that's so interesting. I really see this from both sides, right? I see it from the employer's perspective where they're saying, look, we scheduled you for an on call shift. You already knew it was on call. All we're asking you to do is call in three hours or two hours or an hour before to tell us a whether or not you're still available and we'll tell you if we still need you. But from the employee's perspective, they're like, wait a minute, you gave me a sort of shift, right, that I might be working. I don't know for sure. I already had to hang around in case you are going to need me. And now you want me to call three hours or two hours or one hour in advance. You're really restricting my time. And that has very significant ways our consequences. Because of course, when you have a pattern like that, when you have a practice where you always do that, you are creating liability under the Private Attorney's General act here in California. And this is where we get all these class actions. And without going into too much detail, it's where we end up having some real potential liability for these employers.

It's never easy, is it?

Well, it's not easy. And like I said, I see both sides. And I think what's going on in the crisis, the COVID 19 crisis, is we've never been in this situation before. I mean, I think this is so historic. Ella. My daughter asked me the other day, mama, has this ever happened before? And I said, you know what, Ella? I think it happened in World War II in a similar way where your grandma, you know, she couldn't have lights on during certain times of the day. They had to stay home if they were smoking cigarettes, they had to do it in the shower with, you know, shower curtain clothes, so no light would go out of the window. There were all kinds of crazy things going on, right? But honestly, since then, nothing like this has happened. So we are locked down. I mean, I drove to work today in about a minute and 30 seconds. And it usually takes me about 15 minutes. And I wasn't even speeding. I was just humming along, right? So the world has been top, you know, turned topsy turvy. And I think employers and employees for the most part are really just Trying to do their best. I don't think a lot of employers are out there trying to take advantage of employees, and I don't think a lot of employees are out there trying to take advantage of employers. Yes, there are exceptions, but for the most part, I think we're all trying to find our way. And, and you can see where a cfo, for example, the money person in the organization, would say, hey, wait a minute, this on call thing is genius. We tell them we might need them. We're not telling them for sure we need them. We're going to know what our workload is on that day, at that particular moment, and then that way everybody's happy. But that's just not how California law works.

I think one of the things, particularly with this on call theory for dealing with COVID 19 and folks being remote is thinking outside of the box or trying to be creative to meet the best of both worlds, where the employer is still able to have workers when they need them and the employee still being able to retain their job when so many people are getting laid off. So it definitely, right now everybody's happy. The concern that we all have and why we do these podcasts on such unique situations is when the dust has settled and everybody is back to whatever that normal might be.

That all of a sudden we have individuals who are looking to make a little bit of money. We've talked about this before, that there are fabulous attorneys in California and then there are some that are really looking to make a buck or two and might say, guess what, you're employer wasn't paying you properly. And that's the concern that we have later on down the road.

That's exactly right. That is exactly right.

So, Jennifer, when we first kicked off this podcast, you mentioned the Paycheck Protection act. And I think it's relevant to talk about here in this discussion of on call as well, because part of that paycheck protection plan is that the employer maintains payroll.

Correct. So what's interesting is one of the things we've all been madly researching is, well, wait a minute, can you pay someone to do nothing? Can you say, all right, yeah, I maintain payroll. I had them on the payroll. They weren't doing any work. But what do I care, right? I maintain my payroll. The government paid for it, and now I'm going to get my loan forgiveness. So that's one way of doing it. Another way to do it is to say, all right, I'm going to maintain my payroll by putting people on call. I'm going to consider that to be maintaining my payroll. But in fact, what the paycheck protection program looks at is are you actually paying the payroll? So that's where the on call issue can get people in trouble. And I've read a lot of blogs about this where folks are suggesting, oh, yeah, just put your employees on call. And then that way you can tell the federal government that you intended to work them. Well, that is really not the test. The test is, did you maintain your payroll appropriately during the relevant period? So I think the on call idea is really misplaced in this way.

That's a really good tip for folks to really be aware of is you know what that means to maintain payroll. It's not to have people on payroll, as it would be the case with the on call. It's to maintain the payroll at the.

Is it correct at the level that it was or when you applied for the loan?

Well, it's very interesting. There are actually two periods of time. One is a period of time early on in the crisis. The other is when the loan was paid out, not when you applied, and eight weeks later. So you do have a couple of different ways to establish. And there's a lot of weird permutations here, like what if somebody quits? What if you have to fire someone for performance issues that doesn't have anything to do with COVID 19. You know, that all gets a little bit tricky. And some of those things, unfortunately, it drives me crazy to say this. We don't have answers to them. Right. Because we're in a situation where a lot of this is just law that's being written on the fly, to be honest.

Yes. It's still so fluid. It really truly is. And here it's mid April and we're still learning as we go through each day. And I think that that's going to be the case for a while. But as we move through it, we are all doing our best to stay up on things. And it's such a pleasure, Jen, to have you here on the podcast all the time because you are doing such a fantastic job staying up on all these nuances. And it's such a huge value to our listeners to be able to have, like, you on the podcast. So thank you.

Oh, you are so sweet, Erica. Thank you so much. You know, it is really fun for me to be able to talk about these issues because I sort of look at it as like, kind of like a public service announcement. Right? Like, these are the things you need to be doing. And I know what's hard for some people right now is, you know, thinking about calling a lawyer and paying money for something when you're already pressed for cash is a really difficult thing to do. So I love the idea that there's this much free information that employers can take advantage of and you know, that's.

A good place to end. Just on the side of caution for folks that yes, there is a lot of free information, but with that can be a lot of misinterpretation of the information as well because it's so fluid. And I think to Jennifer's point, there's still a lot of we don't know yet type of answer. So employers, please be careful with the information that you are listening to and following. And I do have to say, the State of California, Governor Newsom's administration has done a very good job keeping their Covid Resources site up. Cal Chamber also has a Coronavirus COVID 19 resource on calchamber.com and there are links to the Federal Department of Labor, OSHA and other related sites as well. So there is a lot of information out there. It's just sorting through and determining what's there. The credible information over though, that's not so. Well Jen, thanks again for coming, for not coming, for calling in again today. It's always our pleasure to have you.

Well, thank you. I had a great time as always.

And thank you all for listening again to the workplace. Hopefully we are not getting too stir crazy yet with the stay at home orders and shelter in place orders, but we will continue to keep you entertained. So please subscribe, subscribe, share and comment about Cal Chambers podcast by visiting calchamber.com.