A California court ruled favorably for employers in a case concerning two technical wage and hour rules that can cause confusion: reporting time pay and split shift pay.

In the case, the court ruled that employees who reported to work for regularly scheduled short meetings were not entitled to additional reporting time pay. The court also said that employees are not entitled to a split shift premium if their pay for the day already exceeds the minimum wage for all hours worked plus one additional hour. Aleman v. AirTouch Cellular, 2011 WL 6382127 (2011)

Scheduled Meetings

Once or twice per month, AirTouch required sales and customer service representatives to attend store meetings on a Saturday or Sunday morning before the store opened. The meetings usually lasted approximately an hour and a half. The meetings were scheduled about four days in advance, listed on the employee’s work schedule and recorded on AirTouch’s electronic timekeeping system.

These workers complained that AirTouch paid them only for the length of the meetings, but they should have received additional compensation as reporting time pay.

The Wage Order provides:

Each workday an employee is required to report to 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 less than two hours nor more than four hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.

The workers argued that they should have received a minimum of two hours and up to four hours of reporting time pay (1/2 the regular shift) on those days that they came in for scheduled short meetings.

The court of appeal disagreed. The court ruled that when an employee is scheduled to come in to work for only a two-hour meeting, the employee is entitled to reporting pay only if the meeting lasts less than half of the scheduled time (in this case, less than one hour). When the AirTouch employees attended the meetings, they were there for the scheduled time and paid for that time. They did not work “less than half” the scheduled day’s work and were not entitled to reporting time pay.

The court used these examples:

• The employee’s only scheduled work for the day is an hour and a half mandatory meeting. The meeting ends a half hour early, and the employee works only one hour. The employer is not required to pay reporting time pay because the employee was furnished work for more than half the scheduled time. The employee is entitled to receive one hour of wages for the actual time worked.
• The employee’s only scheduled work for the day is an hour and a half mandatory meeting. The meeting ends one hour early so the employee works only 30 minutes. The employer is required to pay two hours of reporting time pay, plus 30 minutes of wages for actual time worked, because the employee was not furnished work for more than half the scheduled time.

Unscheduled Meeting Warrants Different Result

Employers should note a critical component of this ruling: the employer scheduled the meetings in advance. If AirTouch called the employees in on their day off, then sent them home after working for a short period, the Aleman court probably would have ruled differently.

For example, the Aleman court noted the recent case of Price v. Starbucks, where an employee was called in for an unscheduled “talk” and then quickly fired. The Price court ruled that the employee was entitled to two hours of reporting time pay because the employee was called in for the “talk” on a day that his schedule showed as off, and there was no set length for the meeting/talk.

The Aleman court’s decision is significant because it differs from the enforcement position of the Division of Labor Standards Enforcement (DLSE) as discussed in the DLSE’s enforcement manual. The court specifically disagreed with the DLSE’s interpretation of the Wage Order and noted that DLSE’s determinations are not binding.

Split-Shift Issue

The AirTouch employees also argued that they were entitled to split shift pay on days when they attended meetings in the mornings and worked a shift later in the day.

A split shift is any two distinct work periods separated by more than a one-hour meal period. If more than one hour elapses between shifts, the employee must receive at least one hour’s pay at no less than the minimum wage rate for the time between shifts, in addition to the minimum wage for that workday.

The employees argued that they were entitled to their regular wage plus one hour at the minimum wage. The court rejected this argument: “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.”

The court found that AirTouch properly paid its employees because the total pay for the day exceeded the minimum wage for all hours worked, plus an additional hour at minimum wage.

The court used this example:

• An employee worked eight hours. The employee made $10.58 per hour and was paid a total of $84.64 ($8 x 10.58). Minimum wage at the time was $6.75 per hour, so a minimum wage employee working a split shift would make $54 (8 x $6.75), plus one hour of split shift pay at minimum wage, for a total of $60.75 ($54 + $6.75). Since the employee actually made $84.64 the day, which is more than the $60.75, the employee was not entitled to extra pay.

This decision is an appellate court decision. It is unclear whether it will be appealed to the California Supreme Court. If this case does not get reviewed by the state Supreme Court, the ruling provides greater scheduling flexibility to employers.

Best Practices

• Schedule any meetings for staff that may occur on off-days in advance.
• Make sure the employees work at least half of the scheduled meeting time.
• Review split shift pay practices to ensure that all employees receive total compensation of at least minimum wage for all hours worked, plus one additional hour of pay at minimum wage.
• Ensure that employees accurately record their time for all work, including meetings.