Reporting time pay in California is intended to ensure that employees are paid for a mandated minimum number of hours if they are not allowed to work their full shift.
Employers in California, and their payroll and HR staff, are required to monitor these situations and ensure that any affected workers are paid correctly and accordingly. Employers are required by the Industrial Welfare Commission Orders to pay nonexempt employees for regularly scheduled, but un-worked time because of the lack of proper notification or inadequate scheduling by the employer.
However, largely because of the wording in the labor law, there is often confusion around what constitutes a legally required "minimum" shift. In Section 5 of the Industrial Welfare Commission Orders:
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.
While this is often misconstrued as implying that the law requires employees be scheduled a minimum number of work hours per day, this is not the case.
What is Reporting Time Pay?
The California Code of Regulations defines "Reporting Time Pay" as the amount of time a worker must be paid for if the worker is not put to work or is furnished less than half the usual or scheduled shift. In that case, "the employee shall be paid for half the usual or scheduled day's work"
If an employee reports to work and is sent home by the employer before the end of at least half of their usual shift, they are entitled to be paid a minimum of half their shift. In addition, if the same employee is required to report to work a second time in the same workday and is yet again given less than two hours of work, the employee must be paid for two hours at their regular rate of pay.
However, reporting time pay is owed only if the employer sends a worker home before the shift is halfway completed. If the employee has worked more than half the scheduled shift, then the employer is only required to pay for the actual hours worked.
A simple example for reporting time pay might be as follows:
An employee is scheduled to report to work for an eight-hour shift, but only gets to work for one hour due to lack of work or some other circumstance. The employer is still obligated to pay that employee for four hours at their regular rate of pay. This is for the one hour actually worked and three hours of "reporting time pay."
The problem is that a manager or employer can easily overlook this labor law requirement and simply assume that their employee should only be paid for the actual time worked, regardless of the reason. Instances have occurred where managers have sent workers home early due to lack of business and subsequently only paid the workers for those hours.
These situations have often resulted in costly claims and employee lawsuits filed on behalf of the workers.
Exceptions to Reporting Time Pay
Another point of confusion is whether the "two hours" minimum mandates a minimum amount of hours an employer can require for a shift. This was addressed by the California Court of Appeals in Aleman v. AirTouch Cellular in December 2011.
While the case centered on employee meetings, the ruling made it clear that reporting time pay is based on the actual length of the shift; not strictly four or eight hour shifts. As a result, it was made clear California labor law does not require a minimum hour work day.
However, there are some other instances where the reporting pay time mandate is excepted:
- When operations cannot begin or continue due to threats to employees or property, or when civil authorities recommend that work not begin or continue; or
- When public utilities fail to supply electricity, water, or gas, or there is a failure in the public utilities, or sewer system; or
- When the interruption of work is caused by an Act of God or other cause not within the employer’s control, for example, an earthquake.
Also, California employers are not required to provide reporting time pay if an employee voluntarily leaves work early. This could be due to the employee becoming sick or needing to take care of personal needs outside of work. While these instances may be compensate with sick pay or other benefits, the employer is not obligated for reporting time pay.
Reporting Time Pay and Overtime
Keep in mind that reporting time pay is not counted as overtime pay since those wages are not paid for hours actually worked. This means that if an employee is paid for, say, 44 hours for a week, but the employee only actually worked for 39 hours in the week, and four of those hours are reporting time pay, then no weekly overtime pay is due.
Because of these types of instances it is important to note reporting time pay separately from hours worked on employee’s itemized wage statement. This will avoid any potential confusion later.
Payroll Compliance is Critical
Employers and managers must be diligent in maintaining compliance when scheduling shifts and when making shift changes. Understanding California labor laws and considering the impact when scheduling is critical to ensure that you are staying compliant and, therefore, minimizing the cost related to reporting time pay due.
It doesn’t matter what your business your company is in, payroll plays a major role in your operations. Partnering with Accuchex allows you to focus on your business yet still maintain peace of mind knowing your payroll is handled accurately.
The complete online payroll solutions provided by Accuchex covers everything you need to make sure your payroll is taken care of and that is why we are a trusted California payroll solutions provider. We offer our services in California Bay area – North bay, South Bay and East bay, including San Francisco. Call Accuchex Payroll Management Services at 877-422-2824.