“Reporting time pay” and “split shift pay” are two commonly misunderstood rules.
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Avoiding Liability For “Reporting Time Pay” and “Split Shifts”Verizon Defeats Employee Class Action
By Christopher W. Olmsted
California employers are often befuddled by hypertechnical wage and hour rules. The Labor Code and related regulations offer little guidance while at the same time imposing much liability. “Reporting time pay” and “split shift pay” are two commonly misunderstood rules. A California appellate court has clarified the rules in a recent case titled Aleman v. Airtouch Cellular.
Attend a Meeting, File a Lawsuit
Mr. Krofta worked at AirTouch stores from October 2005 to October 2006. During his time at AirTouch, Krofta learned what his schedule would be for the following week from the store work schedule, which was posted by the store manager at least four days before the work week began, and which laid out the days and hours that each employee would work.
Like other employees, Krofta was required to attend occasional work-related meetings. Most of these were store meetings, which would be held once or twice a month on Saturday or Sunday morning, before the store opened, and which would last an hour to an hour and a half. The meetings were scheduled in advance and listed on employees’ work schedules, and they were recorded in AirTouch‘s electronic timekeeping system.
Krofta’s timesheets from AirTouch showed that there were five occasions on which he was scheduled to work, and did work, less than four hours (possibly to attend meetings).
Separately, the AirTouch timesheets showed there were five times when Krofta worked a split shift, described as a short shift (generally a meeting) in the morning followed by a longer shift later the same day.
Indignant that he was required to show up to work and get paid for it, Krofta filed a class action lawsuit. He contended that he was owed additional compensation as reporting time pay for the five instances he worked less than four hours, and split shift premiums for the five times he worked a split shift. He sought to form a class action consisting of other employees who were similarly situated.
AirTouch contended that, as a matter of law, Krofta was not owed additional compensation. It filed a summary judgment motion, which the trial court granted. The employee appealed.
What is “reporting time pay”?
Reporting time pay is a pay requirement found in California wage regulations, which are called Wage Orders. Section 5(A) of Wage Order 4 (the Order applicable in this case) states:
“Each workday an employee is required to report for 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 for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.”
According to the California labor enforcement agency, the DLSE, the primary purpose of the reporting time regulation is to “guarantee at least partial compensation for employees who report to work expecting to work a specified number of hours, and who are deprived of that amount because of inadequate scheduling or lack of proper notice by the employer.”
Scheduled Short Meetings Don’t Count
The appellate court determined that Mr. Krofta was not entitled to reporting time pay for the five occasions that he reported to work for scheduled short meetings.
The court specifically addressed the circumstance where the employee is scheduled to work a short shift. The court wrote: “Although somewhat lengthy and cumbersome, Wage Order 4‘s reporting time pay provision is not ambiguous. There is only one reasonable interpretation of subdivision 5(A) as it pertains to scheduled work—when an employee is scheduled to work, the minimum two-hour pay requirement applies only if the employee is furnished work for less than half the scheduled time.
In Mr. Krofta’s case, the company scheduled meetings four days in advance. When he attended the meetings, he was there for the full scheduled time. He did not work “less than half” of the scheduled day’s work.
Mr. Krofta argued that under the wage regulation, he should be paid at least two hours on any day he is called in to work. The court rejected that argument. “The right to at least two hours of wages is conditional,” wrote the court, “it is dependent on the antecedent that an employee is not put to work or is furnished less than half said employee’s usual or scheduled day’s work.” “Every time Krofta was scheduled to report to work (whether for a meeting or otherwise), he was furnished at least half the scheduled day’s work. He was therefore entitled to receive wages compensating him for the actual time worked, but was not owed reporting time pay.”
The court noted that if the employee was sent home after half an hour due to lack of work, the employee would be entitled to two hours of regular pay.
Scheduling is Key
The key to this favorable ruling was the fact that the company scheduled the meetings in advance. Had the company called in Mr. Krofta on his day off and was then sent home after working an relatively short period, the result could have been different. It would have been necessary to determine the “usual” length of Mr. Krofta’s shift, and then determine whether this particular shift lasted less then half of the usual.
Apparently, then, if this court ruling remains the law in California, it is of vital importance to schedule staff meetings in advance if the company wishes to avoid reporting time pay.
The question of how far in advance to schedule remains an open question and should perhaps be a subject to discuss with legal counsel. In this case, the company created schedules one week in advance, with at least four days notice.
What is Split Shift Pay?
A split shift a work schedule which is interrupted by non-paid non-working periods established by the employer, other than bona fide rest or meal periods. The regulations provide for split shift pay in such circumstances. However, such pay is not usually owed unless the employee is paid at or close to minimum wage rates.
Subdivision 4(C) of the Wage Order states: “When an employee works a split shift, one (1) hour’s pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment.”
The court determined that Mr. Krofta was not entitled to split shift pay. There were five occasions during Krofta’s time with AirTouch that he worked a short shift in the morning followed by a longer shift later the same day. Each of these occasions fell under Wage Order 4’s definition of split shift. But the issue was whether further compensation in addition to regular wages was owed pursuant to subdivision 4(C). Additional compensation was not owed because every time Krofta worked a split shift, he was paid a total amount greater than the minimum wage for all hours worked plus one additional hour. In other words, his regular pay was high enough to cover the extra hour at minimum wage.
The court cited a legal treatise, summarizing the rule as follows: An employee earning the minimum wage who works eight hours on a split shift is entitled to receive nine times the minimum hourly wage. This provision also applies to employees paid more than the minimum wage. However, such employees are only entitled to the difference between what they actually earned and what they would have earned had they been paid the minimum wage for their entire shift plus an extra hour.”
Mr. Krofta earned enough so that he was not entitled to extra split shift pay. For example, on one of the days in question, November 26, 2005, Mr. Krofta was paid as follows:
Hours worked: 8
Hourly Rate: $10.58
Total Pay: $84.64 (8 x $10.58).
Split shift calculation:
Minimum wage pay for this shift: $54 (8 x $6.75 (the rate in 2005))
Plus one additional hour’s pay at the minimum wage: $6.75
Total: $60.75 ($54 + $6.75)
Since Mr. Krofta earned $84.64 that day, which was more than $60.75, he is entitled to no extra pay.
If Krofta‘s salary had been $7 an hour in 2005, he would have benefited from the split shift rule. For working an eight-hour split shift, he would have been entitled to an extra $4.75 in pay ($60.75 - (8 x $7)).
Note that the split shift liability depends not only on the hourly rate, but also the number of hours worked during the shift.
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