Employer Wins Reporting Time and Termination Case

March 17, 2011  |  From HRCalifornia Extra

Section 5 of California’s Wage Orders requires that employers pay employees who report to work and who are not provided with work for one-half of their "usual or scheduled day's work," (no less than two hours, and not more than four hours), at their regular rate of pay.

A recent case involved how much reporting time pay is owed when an employee is not scheduled to work but reports for a termination meeting.

Drake Price worked at Starbucks Corporation as an entry-level employee for approximately 13 scheduled shifts; then was fired. He sued Starbucks on behalf of himself and a class of employees for unpaid wages, penalties and damages. The lawsuit claimed several violations of the Labor Code, including Starbuck’s failure to timely pay wages upon termination, failure to pay an additional hour of reporting time pay on the day he was fired and failure to issue a wage statement that complied with the Labor Code.

The court denied this claim because Price did not show specific harm that resulted to him, personally, and the larger class of employees as a result of the way Starbucks listed the net wages and hours worked. Price v. Starbucks, 192 Cal. App. 4th 1136 (2011)

Price called in to report he was unable to work his scheduled shift. Later in the day he called in and was told he was not on the work schedule for the rest of the week, and that he should call his branch manager about his work schedule. The branch manager left Price a voice mail message stating that Price should come to the store later in the week to "have a talk."

When Price arrived at the store, he was terminated and given a check for all the work performed through his last day at work and a separate check for the two hours of reporting time pay on the day of the scheduled meeting.

Section 5 of California’s Wage Orders requires that employers pay employees who report to work and who are not provided with work for one-half of their "usual or scheduled day's work," (no less than two hours, and not more than four hours), at their regular rate of pay. When an employee is not scheduled to work but reports for a termination meeting, how much reporting time pay is owed?

Price sued, claiming he was entitled to pay for half of his shift based on the average number of hours worked during his employment, pay for the hours he would have worked when he was taken off the schedule, waiting time penalties and damages for the company’s failure to provide a legally compliant pay statement as required by Labor Code section 226. Starbucks filed for dismissal of the claims and the lower court granted all the motions. Price appealed that court’s ruling.

The court of appeal reviewed the claim for damages related to the wage statement and Starbuck’s failure to list total hours worked, net wages earned and all applicable hours of work. Price claimed that the use of "amount paid" rather than "net wages" violated the Labor Code. The court denied this claim because Price did not show specific harm that resulted to him, personally, and the larger class of employees as a result of the way Starbucks listed the net wages and hours worked. Having to do math to determine if the pay was accurate did not create an "injury," or do harm to the plaintiff, as defined by the statute.

Price claimed that he was entitled to wages from the day he was taken off the schedule. The court disagreed, noting that he was not told he was fired and, therefore, Starbucks did not owe Price for the time between his removal from the schedule and the actual termination date.

The court of appeal determined that Price was not entitled to more than two hours of reporting time pay. He was not scheduled to work the day he was terminated, but was asked to report to the office for a meeting. There was no expectation that Price would work that day, and nothing in the statute requires that the employer average the hours worked in order to determine reporting time pay for attending a meeting on a non-workday.

Best Practices

  • Ensure that a final check will be available on the employee’s last day of work. The final check must include pay for all hours worked through the last day, as well as any accrued and unused vacation.
  • If an employee reports to work and is terminated, pay the employee for half of the regularly scheduled hours. Reporting time pay is a minimum of two hours and maximum of four hours — if an employee normally will work four hours or less, you would owe the employee two hours of reporting time pay.
  • Review the HR Library’s Counting and Recording Hours of Work section
  • If the employee is usually scheduled to work less than eight hours but more than four, you would owe the employee for half the scheduled hours.
  • If the employee is regularly scheduled to work eight hours or more, you would owe the employee four hours of reporting time pay.
  • Consult with legal counsel if in doubt about reporting time pay requirements.
  • Review these Pay and Scheduling Questions & Answers for more information on compensation issues
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