United States: No Lullaby For Employers: California Supreme Court Finds Sleep Periods Considered 'Hours Worked'

In Mendiola v. CPS Security Solutions, Inc., S212704 (Jan. 8 2015), California's Supreme Court reaffirmed the rule that "hours worked" under California law includes all hours an employee is under the employer's control, even when the employee is not actively engaged in carrying out his or her job duties.  Significantly, the court held that a sleep period during the time an employee is "on call" cannot be excluded from "hours worked" by agreement between the employer and employee.  The court disapproved Seymore v. Metson Marine, Inc. 194 Cal.App.4th 361 (2011), which held an employer and employee could agree to exclude such "on call" sleep periods from "hours worked."  It also limited to the facts of the case the holding in Monzon v. Schaefer Ambulance Service, Inc. 224 Cal.App.3d 16 (1990) that an eight hour sleep period could be excluded by agreement from hours worked in a 24 hour shift for ambulance drivers and attendants. 

The Mendiola court held California's wage and hour laws do not "implicitly incorporate[]" the federal Fair Labor Standards Act's (FLSA) regulations.  Rather, the court reaffirmed the rule previously stated in Morillion v. Royal Packing Co. 22 Cal.4th 575 (2000) that California's "courts should not incorporate a federal standard concerning what time is compensable '[a]bsent convincing evidence of the [Industrial Welfare Commission's ("IWC")] intent'" to do so.

The Facts of the Case

The defendant in Mendiola provided security guards to construction sites.  The guards worked 16 hour shifts during weekdays, eight hours on patrol and eight hours "on call;" and 24 hour shifts on weekends, 16 hours on patrol and eight hours "on call."  While guards could generally use their "on-call" time as they saw fit, they were not allowed to leave their worksite without the defendant's approval.  To obtain approval, the guard had to tell the defendant where he or she would be, how long they would be off site, request a relief guard to cover the time they were gone, and wait for the relief guard to arrive.  If no relief guard was available, the employee was not allowed to leave the site, even if the reason for their absence was for a personal emergency.  When a relief guard was available, the departing guard had to be accessible by pager or radio phone and had to stay close enough to the site to return within 30 minutes if called to do so.  While on site, guards were required to respond immediately to any alarm or other circumstance requiring an investigation whether it occurred during their patrol period or during the time they were "on call." 

The guards were paid for all patrol hours, but, under a written agreement between the guard and the defendant, "on call" time was not counted as hours worked unless: (1) an alarm or other circumstance required that the guard conduct an investigation; or (2) the guard requested to leave the site and waited for, or was denied, a relief guard. 

The Supreme Court's Decision

The court addressed two issues in reaching its decision: (1) whether the guards' "on call" time constituted "hours worked;" and (2) if it did, whether California law permitted the defendant and the guards to exclude a sleep period from the hours worked during the "on call" time by a written agreement.  Regarding the first issue, the court restated California's rule that, whether "on call" time is counted as hours worked is a fact specific inquiry determined by the level of control an employer exercises over the employee during the "on call" time.  Factors considered in making this determination include whether:

(1) there was an on-premise living requirement;

(2) there were excessive geographic restrictions on an employee's movements;

(3) the frequency of calls was unduly restrictive;

(4) a fixed time limit for an employee's response was unduly restrictive;

(5) the on-call employee could easily trade on-call responsibilities;

(6) the use of a pager could ease the restrictions; and

(7) the employee actually engaged in personal activities during "on call" time. 

Applying these factors, the court quickly determined the guards' "on call" time constituted hours worked under California law as they were required to stay on the worksite unless the defendant gave them permission to leave, which could be denied depending on the circumstances.  If the guards were allowed to leave the site, they had to tell the defendant where they were going, they could be no more than 30 minutes away from the site, and would remain subject to recall.  In addition, they were required to respond immediately to any alarms or issues that arose during their "on call" time while on site.  Even though the guards could engage in some personal activities such as sleeping, showering, eating, reading, watching television, and browsing the Internet, this did not eviscerate the employer's control sufficiently to avoid having to treat this time as hours worked. 

Regarding the second issue, the court held sleep periods during "on call" shifts could not be excluded from hours worked by agreement unless such an agreement is specifically allowed under California law.  In doing so, the court expressly disapproved Seymore and limited Monzon to its facts, two cases that held that such agreements could be proper despite the absence of any California law providing for them.  In its analysis, the court noted that IWC Wage Order 4, which covered the defendant's employees, does not contain any language allowing an employer to exclude sleep periods or other time that an employee is under the employer's control from hours worked, while other Wage Orders, such as Wage Order 5 and Wage Order 9, both do.  The court considered this significant as it showed the IWC intentionally omitted such a provision from Wage Order No. 4. 

Despite this, the defendant requested the court read into Wage Order No. 4, federal regulations 29 C.F.R. 785.23, which allows an employer who requires an employee reside on its property to exclude from hours worked time the employee is not carrying out his/her duties, and 29 C.F.R. 785.22, which allows an employer and employee agree that a sleep period of no more than eight hours may be excluded from hours worked when the employee is scheduled to work a 24 hour shift.  The court denied the defendant's invitation stating "courts should not incorporate a federal standard concerning what time is compensable '[a]bsent convincing evidence of the IWC's intent."  The IWC's intent to adopt a federal standard is shown for example, when California's law, be it a statute or a Wage Order, contain "an exemption similar to that found in federal law."  Because Wage Order No. 4 does not contain any exemption similar to those in 29 C.F.R. 785.22 or 29 C.F.R. 785.23, the court held the Wage Order did not "implicitly incorporate[]" these exemptions. 

Implications

Following Mendiola, California employers should no longer exclude sleep periods from hours worked pursuant to an agreement with their employees unless such agreements are specifically permitted under California law.  In addition, Mendiola potentially has a much broader impact on an employer's ability to rely on federal regulations and authorities to interpret and apply California's wage and hour laws.  California employers should not rely on a federal exemption for hours worked absent convincing evidence of the IWC's intent to adopt such an exemption.

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