If you require an employee to be available on an on-call or standby status, that time may qualify as hours worked depending on how much you restrict the employee's ability to actually have free time. Under California law, if the employee is under your control, it's likely that you will have to pay the employee even if he/she is sitting around waiting for something to happen.

A recent California Supreme Court case discussed how to handle on-call time when security guards were required to stay overnight on the employer's premises. The case involved CPS Security Solutions, which provides security guards for building construction sites. Part of the guards' day was spent on regular security patrols. Nights were spent at the guards' assigned job site in CPS residential trailers. Guards were required to be on-call, investigate alarms and suspicious activity, respond to disturbances and prevent vandalism and theft.

The guards signed on-call agreements with CPS. If a guard wanted to leave the jobsite during on-call hours, the guard had to notify a dispatcher, provide information as to where the guard was going and for how long, and wait for a relief guard. The guard had to remain within a 30-minute radius, carry a pager and respond immediately if called. If no relief guard was available, CPS could order the guard to remain on the premises, even if the guard had an emergency.

The guards were allowed to keep personal items in the trailers and generally use on-call time as they wanted. However, adult visitors were permitted only with prior approval, and children, pets and alcohol were not permitted at any time on the premises.

During the nighttime shifts, CPS did not compensate the guards for the on-call time, except for time actually worked (responding to disturbances). If a guard spent three or more hours engaged in investigations during the on-call period, the guard would be paid for the entire eight hours.

On the weekends, the guards worked 24-hour shifts and were on patrol for 16 hours and on call for eight hours.

The guards sued, alleging that the on-call policy violated the Labor Code and Wage Order 4. The California Supreme Court ruled that:

• The guards were entitled to compensation for all on-call hours spent at their assigned worksites under their employer's control. The Supreme Court agreed with the court of appeal's analysis that compensation was warranted because CPS exercised significant control over the guard's activities during the on-call time. Additionally, the Supreme Court found that "the guards' on-call time was spent primarily for the benefit of CPS."
• CPS could not exclude eight hours of sleep time from the guard's 24-hour weekend shifts. Here, the Supreme Court reversed the court of appeal. The court of appeal, relying on other cases and federal regulations, ruled that CPS could exclude eight hours of sleep time from the guard's work time when working 24-hour shifts as long as the sleep time was uninterrupted; a comfortable place was provided; and the parties entered into an agreement specifically excluding the sleep period from compensation. The Supreme Court rejected this analysis and the applicability of the federal regulations to California's specific Wage Orders (here, Wage Order 4). The Supreme Court held that Wage Order 4 does not permit the exclusion of sleep time from compensable hours worked in 24-hour shifts.

This case is limited to Wage Order 4; different Wage Orders, such as those applying to ambulance drivers, etc., contain different language allowing for the exclusion of sleep time. This case is also an example of a situation where the employer exhibited significant control over on-call time, with a requirement that employees stay on-premises.