The California Second District Court of Appeal reversed a trial court’s decision in favor of the employer which held that an employee must physically appear at the workplace to “report to work.” The Court instead defined “report to work” within California Wage Order 7 to mean “presenting oneself as ordered.” Ward, 31 Cal. App. 5th at 1185. The Court explained that, in addition to circumstances in which employers require employees to physically show up to the workplace, employers also trigger the reporting time pay requirement when the “employer directs employees to present themselves for work by logging on to a computer remotely, or by appearing at a client’s job site, or by setting out on a trucking route[.]” Id. Under this definition, the Court concluded that the employer’s practice of requiring the Plaintiff to “call in” two hours prior to their shift triggered the reporting time pay requirement of Wage Order 7. Id.
In 2012, Plaintiff Skylar Ward worked as a sales clerk in a Tilly’s store in Torrance, California. Id. at 1171. During her employment with Tilly’s, Plaintiff and other employees routinely worked a combination of regular and “call-in” shifts. Id. For the call-in shifts, the employer designated beginning and ending times. Id. Tilly’s required its employees to call its stores two hours before the start of their call-in shifts to determine whether the stores needed the employees to work those shifts. Id. Tilly’s instructed their employees to consider a call-in shift a definite shift, until Tilly’s informed the employees that they did not need to come to work. Id. Tilly’s disciplined employees who were late, and those who refused to, or failed to, contact their stores before call-in shifts. Id. at 1172. Discipline included formal written reprimands and could even result in termination. Id. Plaintiff filed a class action complaint on September 21, 2015, and filed the operative (amended) complaint on July 5, 2016, alleging that Tilly’s owed its employees “reporting time pay” available under Wage Order 7 of the Industrial Welfare Commission. Id. at 1173.
In 1913, the California State Legislature established the Industrial Welfare Commission (“IWC”) to combat the growing concern over inadequate wages and poor working conditions. Id. at 1174. The Legislature gave the IWC authority to set minimum wages, maximum hours and standards for working conditions. Id. Soon after its creation, the IWC began establishing industry- and occupation-specific “wage orders.” Id. For example, Wage Order 7 governs “all persons employed in the mercantile industry,” other than persons employed “in administrative, executive, or professional capacities.” Cal. Code Regs., tit. 8, § 11070, subd. (1)(A). The mercantile industry is “any industry, business, or establishment operated for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities.” Id. at subd. (2)(H). Wage Order 7 includes reporting time pay requirement. Id. at subd. (5).
The reporting time pay requirement within Wage Order 7 requires that for each workday in which an employer schedules a mercantile employee to report for work, and that employee does report for work, but is not put to work, or is given less than half their scheduled hours, the employer must pay that employee equivalent to half their scheduled day’s work. Id. at subd. (5)(A). This payout cannot be less than the equivalent of two hours of work and cannot be larger than the equivalent of four hours of work. Id. Additionally, this payout must be at the employee’s regular rate of pay, which cannot be lower than minimum wage. Id. In Ward, the Court set out to define the meaning of “report to work” within Wage Order 7 and decide whether Tilly’s two-hour call-in scheduling scheme triggers the reporting time pay requirement.
To define “report for work”, the Court first looked at the plain text of Wage Order 7. Ward, 31 Cal. App. 5th at 1177. The text of Wage Order 7 does not define the phrase “report for work.” Id. The Court next considered research yielding conflicting definitions for the word “report”, with some focusing on a spatial element and others focusing on the reporter’s intent. Id. The Court concluded that it could not make a determination of the meaning of the phrase based on the plain text of Wage Order 7 alone. Id.
The Court then considered the history of the IWC, Wage Order 7, and the reporting time pay requirement, but discovered no evidence that the IWC ever considered whether telephonic reporting should or could trigger the reporting time pay requirement. Id. at 1179-80. The Court noted that neither the practice of call-in scheduling, nor the cell phone technology needed to make such scheduling feasible, existed when the IWC implemented the reporting time pay requirement. Id. at 1180. The Court did, however, recognize that IWC’s purpose in creating reporting time pay requirements was to compensate employees and encourage proper notice and scheduling by employers. Id. at 1182.
With this in mind, the Court found that telephonic call-in requirements trigger the reporting time pay requirement. Id. The Court noted a commonality between the practices employed by Tilly’s and the specific abuse that the IWC targeted when creating the reporting time pay. Id. at 1182-83. The Court outlined how call-in shifts are enormously beneficial to employers and extremely costly to employees. Id. The Court illustrated how employers avoid negative financial consequences by using call-in shifts to create a pool of contingent workers that employers mobilize when required. Id. This scheduling scheme creates no incentive for employers to competently anticipate their labor needs and to schedule accordingly. Id. In contrast, call-in shifts impose a tremendous cost on employees because such shifts constrain what employees can commit to in the future. Id. The limbo the employees are in, whether they will work or not work at the scheduled time, restricts employees from earning additional income, pursing an education, caring for a dependent family member, and enjoying recreation time. Id. The Court further explained that Tilly’s call-in shifts not only constrain employee’s freedom during the period of their scheduled shift, but also during the two hours before the shifts. Id.
The Court concluded that an employee need not necessarily physically appear at the workplace to “report for work.” Id. at 1185. Instead, the Court held that it interpreted the meaning of this phrase within the Wage Order to mean “presenting oneself as ordered.” Id. Pursuant to the Court’s ruling, the employer has the power to determine how an employee is to present himself or herself for work. Id.
WHAT DOES THIS MEAN:
The Ward decision means that even employees who “report to work” in ways other than appearing at a physical workplace are eligible for reporting time pay available under the Wage Orders. The Court in Ward upheld the general rule that if an employer instructs employees to present themselves for work by physically appearing at the workplace at the shift’s start, then the employee’s appearance at the job site triggers the reporting time pay requirement. Id. If, however, the employer directs employees to present themselves for work by logging on to a computer remotely, or by appearing at a client’s job site, or by setting out on a trucking route or by calling in two hours before a scheduled shift, then the employees present themselves by doing those things. Id.