Emphasizing that California law provides greater protections than federal law to on-call employees, the California Supreme Court in Mendiola v. CPS Security Solutions, Inc. held that security guards were entitled to compensation for time spent on-call at the premises of their employer, and that sleeping time during 24-hour shifts could not be excluded from working time.

In Mendiola, CPS employed guards to provide security at construction worksites. On weekdays, the guards were on patrol for eight hours, on-call for eight hours and off duty for eight hours. On weekends, the guards were on patrol for sixteen hours and on-call for eight hours. During the on-call hours, guards were required to reside in a trailer provided by CPS, which included residential amenities. Guards could generally use the on-call time as they chose, but could not consume alcohol or have visitors (except with approval of the construction company). Guards were not permitted to leave the trailer unless a relief worker was available to replace the guard. Guards received no compensation for the on-call time unless they were required to respond to a call or they waited for and were denied a relief worker.

A group of guards filed class action lawsuits against CPS in 2008, alleging that CPS’s on-call policies violated California law. After the trial court determined that the on-call hours constituted “hours worked” under the applicable wage order and an appellate court affirmed and reversed the trial court’s ruling in part, both parties petitioned for relief to the California Supreme Court.

The California Supreme Court resolved two key issues in favor of the guards. First, the Court held that the guards’ on-call time was properly “hours worked” under the wage order, as CPS had sufficient “control” over the guards during the on-call time. The Court identified the following factors that bore on the control issue: (1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on employee movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during call-in time. Also relevant was whether the waiting time was spent “primarily for the benefit of the employer and its business.” The Court found that these factors weighed in favor of working time, as the guards were required to reside in their trailers, could not easily trade on-call duties, were significantly restricted in their ability to leave the worksite (they could be no more than thirty minutes away) and were restricted in what they could do (i.e., limited visitors, no pets or alcohol use). The Court also noted that the on-call, on premises arrangement was primarily to benefit CPS, as the mere presence of security at the worksite was a strong deterrent to theft and vandalism.

Notably, the Court dismissed CPS’s argument that federal regulations permitted free time on an employer’s premises to count as uncompensated time rather than hours worked. The Court found no similar provision in the wage order at issue (Wage Order 4, which applies to professional, technical, clerical, mechanical and similar occupations), and held that California is “free to offer greater protection” to employees than federal law.

Next, the Court held that sleep time could not be excluded from working time in a 24-hour shift. Again the Court dismissed a federal regulation that permitted employers and employees to agree to exclude a sleeping period of no more than eight hours from an on-duty shift of twenty-four hours or more, finding that such a provision was not included in the California wage order at issue (although a similar provision exists in a California wage order that applies to ambulance drivers and attendants). While the Court recognized the difficulties faced by CPS and other employers in attempting to comply with California law in light of uncertainty caused by inconsistent positions by the DLSE on this issue and defunding of the IWC, it said that “[s]uch issues, however, must be addressed by the Legislature.”

The Mendiola ruling provides important guidance to California employers with all manner of on-call employees, not merely guards. Employees should review their on-call policies and practices to ensure compliance.