On December 22, 2016, the California Supreme Court issued its decision in Augustus, et al. v. ABM Security Services, Inc., holding that California employees cannot be on-call or on-duty during rest periods.

The plaintiff, Jennifer Augustus, filed this class action in 2005 on behalf of all ABM security guards employed in California, alleging that the company's policy violated state law because it did not relieve the guards of all duties during rest periods. Defendant ABM had maintained a policy requiring its California security guards to keep their pagers and radio phones on during rest periods, and to remain vigilant and responsive to calls when needs arose.

The trial court had granted the plaintiff summary judgment and awarded US$90 million in statutory damages, interest and penalties. The Court of Appeal then reversed, holding that being “on-call” does not constitute performing “work” within the meaning of state law. The Supreme Court reversed, putting a spotlight on rest period requirements as it reinstated the US$90 million judgment.

Summary of the court’s conclusions

The question for the Supreme Court was whether California's rest period requirements for non-exempt employees were satisfied if the employee remained “on-call” during the break. To resolve the question, the court looked to the language of both California Labor Code Section 226.7(b), which prohibits employers from requiring an employee to “work” during a “rest” period mandated pursuant to an order of the Industrial Welfare Commission, and Industrial Welfare Commission Wage Order 4, subdivision 12(A), which requires employers such as ABM to authorize and permit all employees to take “rest periods.” In examining the plain text and history of Wage Order 4 and the Labor Code, the court determined that the reference to a “rest” period is premised on the ordinary meaning of rest: an interval of time free from labor, work or other employment-related duties.

As such, the court held that requiring employees to be on-call or on-duty runs afoul of the rest break requirement, as state law requires “employers [to] relinquish any control over how employees spend their break time, and relieve their employees of all duties—including the obligation that an employee remain on call.”

What this decision means for employers

Although not expressly stated, this decision likely applies retroactively as a statement of existing law. According to the Supreme Court, California law “requires” employers to relinquish any control over how employees spend their break time, and to relieve their employees of all duties, based on the current wage order and statutory language. This decision will therefore likely have implications for employers with on-call or on-duty requirements within their rest- or meal-period policies, such as requirements that employees remain ready and available to respond by pager, telephone or other means during a break.

The court advised that the mere possibility that an employee may be called back to work from a rest period, such as by a requirement to wear a pager, does not invalidate a rest-period policy. In the usual instance of an interrupted break, an employer need only pay the rest-period premium when the rest period is interrupted, or the employee may be provided with another uninterrupted rest period. But, the court expressed, interrupted breaks should be the exception, not the rule. In the case of ABM, it was the requirement for the employee to remain in contact, vigilant and ready to respond during the break that set the ABM policy apart and conflicted with rest break requirements.

The court also made a point of noting that employers may seek an exemption from the requirement that its employees be provided with duty-free rest periods by applying with the Division of Labor Standards Enforcement (DLSE). An employer must demonstrate that relieving employees of all duties during rest breaks would pose an undue hardship, and that the policy does not materially impact the welfare or comfort of employees. Any such exemption, however, would not be retroactive. Seeking an exemption may also invite a DLSE investigation into the employer's prior policies and/or practices.