Mendiola v. CPS Security Solutions, Inc., No. B240519 (July 3, 2013): In a recent decision, the California Court of Appeal held that employees need to be compensated for “on-call” hours if the employer substantially restricted their ability to engage in non-work related activities. However, the court also held that employers may exclude eight hours of sleep time from 24-hour shifts, if there was an agreement between the employer and employee to make such a deduction.

CPS Security Solutions, Inc. provides security guards for construction sites throughout California. The company’s security guards work 16-hour shifts (eight hours "on duty" and eight hours "on call") on weekdays and 24-hour shifts (16 hours "on duty" and eight hours "on call") on weekends. Based on an “on call agreement” signed with each guard, CPS paid the guards for the time that they were “on duty” but did not compensate them for on-call time unless they engaged in an investigation. The guards were provided with a trailer where they could spend their time while they were on call but they were not allowed to have pets, children, or alcohol in their trailers. If a guard wanted to leave the site while on call, he or she had to wait for a reliever, stay within a 30-minute radius of the site, and carry a pager.

The guards brought a class action lawsuit claiming that CPS violated Industrial Welfare Commission Wage Order No. 4 and other statutes and regulations, by failing to pay the guards for their on-call hours. The trial judge issued a preliminary injunction against CPS requiring the company to pay the guards for the hours that they were on call during both the 16-hour shifts and the 24-hour shifts.

The Court of Appeal ruled that the guards are entitled to compensation for their "on-call" hours because the employer "substantially restricted" the guards' ability to engage in their personal activities. However, with regard to the 24-hour shifts, the Court of Appeal disagreed with the trial judge and held that the employer may deduct eight hours of “sleep time” from the 24-hour shifts, as long as the sleep time was uninterrupted, the guards had a comfortable place to sleep, and there was an agreement between the employer and employee that such time would be excluded.

According to Robert Roginson, a shareholder in Ogletree Deakins' Los Angeles office, “This is a very significant and helpful decision for those employers that require employees to remain on 24-hour shifts. The decision provides needed clarity on whether the time that an employee spends sleeping can be excluded and the steps an employer should take in order to properly exclude such time.”