EDMON, P.J.—
This appeal, which follows an order sustaining a demurrer without leave to amend, concerns the practice of on-call scheduling. As alleged, on-call scheduling works this way: Employees are assigned on-call shifts, but are not told until they call in two hours before their shifts start whether they should actually come in to work. If they are told to come in, they are paid for the shifts; if not, they do not receive any compensation for having been "on call."
Plaintiff Skylar Ward challenges the on-call scheduling practices of her former employer, Tilly's, Inc. (Tilly's), as violating Industrial Welfare Commission wage order No. 7-2001 (codified at Cal. Code Regs., tit. 8, § 11070; hereafter, Wage Order 7), which regulates the wages, hours, and working conditions in the mercantile industry. Among other things, Wage Order 7 requires employers to pay employees "reporting time pay" for each workday
We conclude that the on-call scheduling alleged in this case triggers Wage Order 7's reporting time pay requirements. As we explain, on-call shifts burden employees, who cannot take other jobs, go to school, or make social plans during on-call shifts—but who nonetheless receive no compensation from Tilly's unless they ultimately are called in to work. This is precisely the kind of abuse that reporting time pay was designed to discourage. We therefore reverse the judgment and remand this case to the trial court for further proceedings.
Tilly's is a California corporation based in Irvine, California. In 2012, plaintiff worked as a sales clerk in a Tilly's store in Torrance, California.
During her employment with Tilly's, plaintiff and other employees were scheduled for a combination of regular and "on-call" shifts (also referred to as "call-in" shifts), which had "a designated beginning time and quitting time." Employees were required to contact their stores two hours before the start of their on-call shifts to determine whether they were needed to work those shifts. Tilly's informed its employees to "consider an on-call shift a definite thing until they are actually told they do not need to come in."
Employees were disciplined if they failed to contact their stores before on-call shifts, or if they contacted the stores late, or if they refused to work on-call shifts. Discipline included formal written reprimands and, upon three violations, could include termination. However, Tilly's did not include on-call shifts as part of the employee's "scheduled day's work" when calculating pay unless the employee was required to work the on-call shift; and it did not consider an employee to have "reported for work" if he or she called the store prior to an on-call shift, but was told he or she was not needed.
On-call shifts "take a toll on all employees, especially those in low-wage sectors. Without the security of a definite work schedule, workers who must be `on call' are forced to make childcare arrangements, elder-care arrangements, encounter obstacles in pursuing their education, experience adverse financial effects, and deal with stress and strain on their family life. The `on-call' shifts also interfere with employees' ability to obtain supplemental employment in order to ensure financial security for their families."
Plaintiff filed a putative class action complaint on September 21, 2015, and filed the operative first amended complaint (complaint) on July 5, 2016. The complaint alleged that Wage Order 7 mandates that nonexempt retail employees be paid "reporting time pay" if either "an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee's usual or scheduled day's work" or "an employee is required to report for work a second time in any one workday and is furnished less than two (2) hours of work on the second reporting." (Cal. Code Regs., tit. 8, § 11070, subd. 5(A) & (B).) The complaint alleged that Tilly's employees were due reporting time pay for on-call shifts, and that Tilly's failure to properly compensate employees for those shifts resulted in violations of Wage Order 7, Labor Code sections 200-203, 226, and 226.3, and Business and Professions Code section 17200.
Tilly's demurred to the complaint, asserting that it failed to state a cause of action. It contended that the first cause of action for reporting time pay failed as a matter of law because requiring employees to "call[] in to ask whether to report for work" did not constitute "reporting for work" within the meaning of Wage Order 7. The second, third, and fourth causes of action were derivative of the first cause of action and, therefore, failed for the same reason.
The trial court sustained the demurrer without leave to amend. It explained: "[T]his court is persuaded that Defendant's interpretation of the phrase `report to work' to mean that an employee physically appears at the workplace is a correct analysis and interpretation. [¶] ... [¶] ... [T]he court finds that by merely calling in to learn whether an employee will work a call-in shift, Plaintiff and other employees do not report to work as contemplated by Wage Order 7. As such, Plaintiff is not entitled to reporting-time pay under the Wage Order, and the First Cause of Action for failure to pay reporting time pay fails. [¶] ... Plaintiff's three remaining claims are derivative of the first and fail for the same reasons."
Plaintiff timely appealed from the dismissal order.
"`"On appeal from an order of dismissal after an order sustaining a demurrer, our standard of review is de novo, i.e., we exercise our independent judgment about whether the complaint states a cause of action as a matter of law."' (Los Altos El Granada Investors v. City of Capitola (2006) 139 Cal.App.4th 629, 650 [43 Cal.Rptr.3d 434].) In reviewing the complaint, `we must assume the truth of all facts properly pleaded by the plaintiffs, as well as those that are judicially noticeable.' (Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814 [107 Cal.Rptr.2d 369, 23 P.3d 601].) We may affirm on any basis stated in the demurrer, regardless of the ground on which the trial court based its ruling. (Carman v. Alvord (1982) 31 Cal.3d 318, 324 [182 Cal.Rptr. 506, 644 P.2d 192].)" (Krolikowski v. San Diego City Employees' Retirement System (2018) 24 Cal.App.5th 537, 549 [234 Cal.Rptr.3d 499].)
In 1913, the Legislature established the Industrial Welfare Commission (IWC) "and—spurred by concerns over inadequate wages and poor working conditions—delegated to the agency authority for setting minimum wages, maximum hours, and working conditions." (Augustus v. ABM Security Services, Inc. (2016) 2 Cal.5th 257, 263 [211 Cal.Rptr.3d 634, 385 P.3d 823] (Augustus).) The IWC began issuing industry- and occupation-specific wage orders in 1916, and it revised those wage orders from time to time. (Id. at p. 263.) Although the Legislature defended the IWC in 2004, its wage orders remain in effect. (Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833, 838, fn. 6 [182 Cal.Rptr.3d 124, 340 P.3d 355] (Mendiola).)
The specific wage order applicable in this case is Wage Order 7, which governs "all persons employed in the mercantile industry," other than persons employed "in administrative, executive, or professional capacities." (Cal. Code Regs., tit. 8, § 11070, subd. 1(A).) The "mercantile industry" is "any industry, business, or establishment operated for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities." (Ibid., subd. 2(H).)
We begin with the regulation's plain language. Wage Order 7 requires employers to pay employees reporting time pay, as follows:
Tilly's argues that "report[ing] for work" requires an employee's physical presence at the workplace at the start of a scheduled shift. Tilly's says: "[A]n employee only reports for work by being present (reporting) at the start of the shift (for work). That is the plain meaning of Wage Order 7." Thus, Tilly's urges, "the plain meaning of `report for work' requires an employee to present herself at the start of a shift—not merely to verify the schedule in advance." Amicus curiae Abercrombie & Fitch Stores, Inc., urges us to interpret "report for work" in similar fashion, suggesting that Wage Order 7 requires reporting time pay only "if the employee (1) shows up (`reports') (2) ready for work (`for work')." By thus interpreting "report[ing] for work" to mean physical presence at the worksite, amicus curiae asserts the IWC "drew and maintained" a "bright-line rule."
Plaintiff, in contrast, asserts that Wage Order 7 is triggered by any manner of reporting, whether in person, telephonic, or otherwise. She says: "There is no specific language in [the] phrase [report for work] that requires or necessitates that such reporting be physical in nature. In short, the face of the wage order does not include an element requiring that workers physically present themselves at a workplace." Thus, plaintiff urges: "In the modern era, where many workers complete their tasks remotely, use telephones to clock in and clock out for timekeeping purposes, and, check for shifts telephonically, a commonsense and ordinary reading of the order would include the reporting that Plaintiff engaged in in accordance with Tilly's policies."
In our view, the text of Wage Order 7, alone, is not determinative of the question before us. Some dictionary definitions of "report" do, as Tilly's says, have a spatial element—i.e., "to go to a place or a person and say that you are there" (Cambridge Dict. Online (2019) <https://dictionary.cambridge.org/us/dictionary/english/report> [as of Feb. 4, 2019], italics added), or to "[p]resent oneself formally as having arrived at a particular place or as ready to do something" (Oxford Dict. Online (2019) <https://en.oxford dictionaries.com/definition/report> [as of Feb. 4, 2019], italics added). Many other definitions, however, focus on the reporter's intent, rather than his or her location—for example, "to present oneself as ordered" (Random House Webster's College Dict. (1992), p. 1142, col. 2, italics added), or "to present (oneself) to a person in authority, as in accordance with requirements" (Dictionary.com Online (2019) <http://www.dictionary.com/browse/report> [as of Feb. 4, 2019], italics added). Accordingly, as a purely linguistic matter, it is not obvious whether "report[ing] for work" requires an employee's presence at a particular place
Tilly's and the dissent urge that our interpretation of "report for work" should be governed by the IWC's understanding of the phrase at the time of its adoption in the 1940's—an understanding that did not contemplate employees reporting for work by telephone. We disagree only in part. Telephonic reporting requirements appear to be of recent vintage, and, indeed, the cell phone technology that makes such telephonic reporting feasible did not exist until many decades after the reporting time pay requirement was enacted. We therefore agree with Tilly's and the dissent that "`at least in 1947, the phrase "report [for] work" meant physically showing up.'" (Conc. & dis. opn. of Egerton, J., post, at p. 1192, citing Casas v. Victoria's Secret Stores, LLC (C.D.Cal., Dec. 1, 2014, No. CV 14-6412-GW(VBKx)) 2014 WL 12644922, p. *4 (Casas).) Put simply, that is how an employee reported for work in the 1940's.
The Court of Appeal reasoned similarly in WorldMark, supra, 187 Cal.App.4th 1017. There, the court considered whether a provision of the Corporations Code that permitted members of a nonprofit mutual benefit corporation to "`copy the record of all the members' names [and] addresses'" (WorldMark, at p. 1028, italics added) also entitled members to copy comembers' e-mail addresses. The court noted that the Legislature "could not have intended in 1978 that the term `addresses' specifically would include e-mail addresses, since the concept of widespread and instantaneous communications by electronic mail was the stuff of science fiction in 1978." (Id. at p. 1034.) However, the court reasoned, the statute's legislative purpose indicates the Legislature would have intended the inclusion of e-mail addresses in the original statute had it anticipated the existence of e-mail. It explained: "The comments based on the legislative committee summary indicate the purpose of the statute was to balance a member's legitimate right to contact the membership for election contests or purposes reasonably related to the member's interest, against the potential for abuse in allowing too free an access. [Citation.] [¶] The addition of e-mail addresses would do nothing to upset the balance that the Legislature sought to achieve. Such balancing was accomplished by the process of allowing the corporation to propose a reasonable alternative. The use of e-mail addresses to achieve this goal does not affect the balance." (Id. at p. 1035.)
As relevant to the present case, Wage Order 7 does not reference telephonic reporting, nor is there evidence that the IWC ever considered
In 1913, the California Legislature established the IWC to adopt minimum wages, maximum hours, and standard working conditions for the protection of women and minors.
Effective June 21, 1943, the IWC adopted revised Wage Order 7, which included a reporting time pay requirement as follows: "Each day an employee is required to report for work and does report for work, but is not put to work or works four (4) hours or less, the employer shall pay the employee for not less than four (4) hours at fifty cents (50¢) per hour ...." (IWC meeting mins. (Apr. 5, 1943) pp. 39, 45.)
The same year, IWC also revised the wage order governing the housekeeping industry (wage order No. 5) to include a reporting time pay requirement. In connection with the revision, the IWC considered an employer request that employees who resided at the workplace be paid only two hours of reporting time pay, rather than the proposed four hours, because such employees "do[] not lose the usual time going to and from the place of employment." (IWC meeting mins. (Feb. 5, 1943) p. 6.) The IWC rejected the proposal, adopting a four-hour reporting time pay requirement for both resident and nonresident employees. (Id. at p. 26.) Subsequently, the IWC issued a ruling addressing whether the reporting time pay provision applied to resident employees; the IWC unanimously ruled that the four-hour reporting time pay requirement applied to both resident and nonresident employees. (IWC meeting mins. (Sep. 11, 1943) p. 18.)
The IWC adopted the current reporting time pay provision of Wage Order 7 in 1979. In addition to the original language (which was designated § (5),
This history thus reveals, as our Supreme Court has said, that the IWC's purpose in adopting reporting time pay requirements was twofold: to "compensate employees" and "`encourag[e] proper notice and scheduling.'" (Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at p. 1111.)
We conclude that had the IWC confronted the issue, it would have determined, as we do, that the telephonic call-in requirements alleged in the operative complaint trigger reporting time pay. We note as an initial matter
Like other kinds of contingent shifts, unpaid on-call shifts impose tremendous costs on employees. Because Tilly's requires employees to be available to work on-call shifts, they cannot commit to other jobs or schedule classes during those shifts. If they have children or care for elders, they must make contingent childcare or elder care arrangements, which they may have to pay for even if they are not called to work. And they cannot commit to social plans with friends or family because they will not know until two hours before a shift's start whether they will be available to keep those plans. In short, on-call shifts significantly limit employees' ability to earn income, pursue an education, care for dependent family members, and enjoy recreation time.
Further, because employees must contact Tilly's two hours before the start of on-call shifts, their activities are constrained not only during the on-call shift, but two hours before it as well. That is, at the time employees are required to call in to find out whether they will be required to work on-call shifts, they cannot do things that are incompatible with making a phone call, such as sleeping, watching a movie, taking a class, or being in an area without cell phone service. For example, consider an employee who has been scheduled for an on-call shift from 10:00 a.m. to 12:00 p.m., followed by a scheduled shift from 12:00 p.m. to 4:00 p.m. If Tilly's tells the employee at 8:00 a.m. that she is not needed for the on-call shift, she will not be paid anything for that shift. Nevertheless, she will necessarily have forgone sleeping, working another job, taking a class, etc. both at 8:00 a.m. and between 10:00 a.m. and 12:00 p.m. In short, the employer will have imposed to some degree on four hours of the employee's time—an imposition for which it will not owe the employee any compensation.
For all of these reasons, we conclude that requiring reporting time pay for on-call shifts is consistent with the IWC's goals in adopting Wage Order 7. Reporting time pay requires employers to internalize some of the costs of overscheduling, thus encouraging employers to accurately project their labor
Tilly's urges that reporting time pay for on-call shifts is inconsistent with the IWC's intent, which it characterizes solely as "`compensat[ing] the employee for transportation costs and loss of time.'" Tilly's contends that "making a phone call to check one's schedule is not something that the IWC intended to compensate, since it does not involve transportation costs or loss of time in the same way that actually reporting for work does." There are several problems with Tilly's analysis, most significantly that it reads one of the IWC's primary purposes—"encourag[ing] proper notice and scheduling" —out of the legislative and regulatory history. As we have said, the IWC identified its intention to encourage proper notice and scheduling when it first adopted a reporting time pay requirement in 1943, and it reiterated those concerns subsequently.
Moreover, while time spent commuting to work undoubtedly was one of the things the IWC had in mind when it referred to "loss of time," it was not the only one. Indeed, had the IWC intended to compensate employees only for commuting time, it logically would have keyed reporting time pay to distance traveled, such that employees who lived greater distances from work would receive more reporting time pay than employees who lived closer to work. Instead, the IWC tied reporting time pay not to an employee's commuting time, but to the length of the shift the employee was expecting to work. Significantly, it also allowed reporting time pay of up to four hours—an amount far in excess of the time it takes most employees to commute to and from work. And, as we have said, it specifically declined to limit reporting time pay for employees who resided at the workplace, who thus "do[] not lose the usual time going to and from the place of employment." (IWC meeting mins. (Feb. 5, 1943) p. 6.) This suggests that the "loss of time" the IWC was concerned about was not solely commuting time, but also lost worktime and the accompanying loss of income.
Further, the contingent nature of an on-call shift means that some employees —namely, those who commute more than two hours to work—will incur transportation costs notwithstanding the two-hour window. Employees who must commute more than two hours, either because they cannot afford housing close to work or must rely on public transportation to get to work, will have to begin traveling to work before they know whether they will
Finally, Tilly's suggestion that reporting time pay was intended only to compensate employees for travel time and expense also cannot be squared with the exception in the reporting time pay provision for shifts cancelled for reasons beyond the employer's control. This exception makes sense only if reporting time pay was intended to impose a penalty for overscheduling—not if reporting time pay was intended only to compensate employees for travel time and expense. Put simply, employees' travel time and expenses are not reduced because the employer has a good reason for canceling a shift.
As thus interpreted, the reporting time pay requirement operates as follows. If an employer directs employees to present themselves for work by physically appearing at the workplace at the shift's start, then the reporting time requirement is triggered by the employee's appearance at the jobsite. But if the employer directs employees to present themselves for work by logging on to a computer remotely, or by appearing at a client's jobsite, or by setting out on a trucking route, then the employee "reports for work" by doing those things. And if, as plaintiff alleges in this case, the employer directs employees to present themselves for work by telephoning the store two hours prior to the start of a shift, then the reporting time requirement is triggered by the telephonic contact.
Our conclusion that employees may be owed reporting time pay for on-call shifts is consistent with our Supreme Court's recent decision in Augustus, supra, 2 Cal.5th 257. The plaintiffs in that case were security guards who were required to keep their pagers and phones on during 10-minute rest breaks and to respond to calls as needed. (Id. at p. 260.) The plaintiffs sued, asserting that by requiring them to remain on-call during breaks, the employer was not providing them with true "rest" breaks. The trial court granted the plaintiffs' motion for summary adjudication, concluding that "an on-duty or on-call break is no break at all." (Id. at p. 261.) The Court of Appeal disagreed and reversed, concluding that "`simply being on call'" is not inconsistent with a period of rest. (Id. at p. 262.)
The Supreme Court granted review and reinstated the grant of summary adjudication for the security guards. It observed that applicable law required hourly employees be provided "rest periods," but it did not define the term. Nonetheless, the court said, "one cannot square the practice of compelling employees to remain at the ready, tethered by time and policy to particular locations or communications devices, with the requirement to relieve employees of all work duties and employer control during 10-minute rest periods." (Augustus, supra, 2 Cal.5th at p. 269.) The court explained: "Although Wage Order 4[
"... Whatever else being on call entails in the context of a required rest break, that status compels employees to remain at the ready and capable of being summoned to action [citation]. Employees forced to remain on call during a 10-minute rest period must fulfill certain duties: carrying a device or otherwise making arrangements so the employer can reach the employee during a break, responding when the employer seeks contact with the employee, and performing other work if the employer so requests. These
"This very case provides an apt example. The trial court determined it was undisputed that [the employer's] policy required plaintiffs to keep radios and pagers on, remain vigilant, and respond if the need arose. Given these intersecting realities, on-call rest periods do not satisfy an employer's obligation to relieve employees of all work-related duties and employer control. In the context of a 10-minute break that employers must provide during the work period, a broad and intrusive degree of control exists when an employer requires employees to remain on call and respond during breaks. [Citation.] An employee on call cannot take a brief walk—five minutes out, five minutes back—if at the farthest extent of the walk he or she is not in a position to respond. Employees similarly cannot use their 10 minutes to take care of other personal matters that require truly uninterrupted time—like pumping breast milk (see [Labor Code,] § 1030 [regarding use of break time for expressing milk for an infant]) or completing a phone call to arrange child care. The conclusion that on-call rest periods are impermissible is not only the most logical in light of our construction of Wage Order 4, subdivision 12(A), but is the most consistent with the protective purpose of the Labor Code and wage orders." (Augustus, supra, 2 Cal.5th at pp. 269-271.)
Notwithstanding the foregoing, Tilly's suggests that requiring reporting time pay for on-call shifts is unworkable and will have absurd unintended consequences. These claims are without merit.
First, Tilly's suggests that if calling in two hours before an on-call shift triggers reporting time pay, employers will have to pay employees who are told to come to work but then fail to show up. Tilly's urges: "Consider the case of an employee who calls at 8 a.m. and learns he is expected to work at 10 a.m., but who is sick that day or for some other reason does not actually go to the store for work. According to Appellant, that employee has nevertheless `reported for work,' simply because the employee made the phone call.... [¶] ... [¶] Appellant's interpretation of the Wage Order thus leads to absurd results: if calling in advance qualifies as reporting for work, then the employee is free to be absent from work at the start of his shift and still receive reporting-time pay."
Second, Tilly's suggests that if on-call shifts trigger reporting time pay, the employees will be entitled to compensation merely for ascertaining their schedules—something Tilly's says has never been compensable. Tilly's frames the issue this way: "Employees undoubtedly must ascertain when they are supposed to work.... Sometimes schedules will be posted weeks or days in advance. And sometimes, as here, employees will not know their schedules until they call in, either two hours beforehand or the day before. No matter how far in advance it takes place, however, the act of ascertaining one's working schedule does not constitute reporting for work."
Third, Tilly's contends that permitting employees to earn reporting time pay for calling in prior to the start of a shift is unworkable because "there is no limit to how far in advance of a shift an employee might `report for work' .... If [an employee] called in two days before, or three days before, or a week before, or two weeks before, in each case she would be performing exactly the same act: ascertaining by phone, in advance of a shift, whether to actually report for it." In so urging, Tilly's attacks a straw man because it is the employer, not the employee, who directs how employees report for work.
The judgment of dismissal and order sustaining the demurrer are reversed, and the case is remanded to the trial court for further proceedings consistent with this opinion. Plaintiff is awarded her appellate costs.
Dhanidina, J., concurred.
EGERTON, J., Concurring and Dissenting.—
I agree we must remand the case for plaintiff and appellant Skylar Ward to pursue a single theory against defendant and respondent Tilly's, Inc.: that she reported for work, in person,
Ward's first amended complaint alleges three kinds of what she terms "on-call shifts": (1) Tilly's schedules the employee for a regular shift followed by an on-call shift. The employee must physically come to work for her regular shift; Tilly's then tells her "during her regular shift whether she also will be required to work her on-call shift." (2) Tilly's schedules the employee for a regular shift preceded by an on-call shift. The employee must contact Tilly's two hours before the on-call shift would start (or by 9:00 p.m. the night before if the on-call shift is scheduled for 10:00 a.m.) to find out if she must work the on-call shift—in other words, if she must come to work two hours before her regular shift. (3) Tilly's schedules the employee for an on-call shift on a day she otherwise is not scheduled to work. The employee must contact Tilly's two hours before the on-call shift would start (or by 9:00 p.m. the night before if the on-call shift is scheduled for 10:00 a.m.) to find out if she must work the on-call shift.
A version of types two and three of the on-call shifts Ward alleges was at issue in Casas. There, the plaintiffs alleged their employer, a clothing retailer, scheduled them for "call-in shifts." The employer required employees to call in two hours before the shift to find out if they had to report. The retailer moved to dismiss the lawsuit and the court—United States District Judge George Wu—granted the motion. Judge Wu concluded, "[C]all-in shifts do not trigger reporting-time penalties, even if the scheduling practice is inconvenient and employee-unfriendly." (Casas, supra, 2014 WL 12644922 at pp. *1-2.)
Judge Wu noted the parties read the phrase "report for work" differently. The court stated, "[V]arious dictionaries agree that the verb `report' means, at
Judge Wu then turned to the legislative history of the wage order. The court noted an earlier version of the wage order, adopted in June 1947, used the phrase "report for work" this way: "`No woman employee shall be required to report for work or be dismissed from work between the hours of 10 p.m. and 6 a.m. unless suitable transportation is available.'" (Casas, supra, 2014 WL 12644922 at p. *4, italics added, citing Docket No. 27-1, Ex. D, IWC Wage Order No. 7 R (eff. June 1, 1947) [at 91 § 3(c)].) Judge Wu observed "[t]hat same 1947 Wage Order also included language almost identical to the current reporting-time provisions, stating: `Each day an employee is required to report for work and does report, but is not put to work or is furnished less than half the usual day's work, said employee shall be paid for half the usual day's work at the employee's regular rate of pay, which shall be not less than the minimum wage herein provided.'" (Casas, at p. *4.) The court continued, "A basic rule of statutory construction states that identical words or phrases used in the same statute bear the same meaning, particularly where they appear in close proximity." (Ibid.) Judge Wu also cited minutes of a 1942 IWC meeting, concluding, "The legislative history therefore strongly suggests that, at least in 1947, the phrase `report to work' meant physically showing up." (Ibid.)
Judge Wu continued, "Nothing in the legislative history indicates that the IWC ever altered this meaning. Indeed, the phrase `[e]ach day an employee is required to report for work and does report' has remained unchanged throughout later versions of the Wage Order. This consistency strongly suggests that the IWC intended the phrase `report for work' to have the same meaning as in prior orders." (Casas, supra, 2014 WL 12644922 at p. *5.) Judge Wu stated, "This legislative history is entirely consistent with the Court's earlier plain-meaning interpretation and essentially ends the discussion. The ordinary meaning of the phrase `report for work' is to actually, physically show up." (Ibid.) The court noted, "The fundamental task in interpreting Wage Orders is ascertaining the drafters' intent, not drawing up interpretations that promote the Court's view of good policy." (Ibid.)
Judge Wu's opinion is thorough, well reasoned, and sensible. I would follow it.
In addition to the "suitable transportation" language Judge Wu discusses, other legislative history supports the conclusion that, by "report[ing] for work," the wage order's drafters meant showing up in person. In 1943, the IWC enacted a reporting time pay provision for employees who "report for work." The IWC explicitly found the reason for paying reporting time premiums is to "compensate the employee for transportation costs and loss of time." (IWC meeting mins. (Apr. 5, 1943) ¶ 16, p. 34.) Other IWC actions from the early 1960s to the late 1970s were consistent with this intent. (See, e.g., Dept. of Industrial Relations, Div. of Industrial Welfare, Enforcement Manual (Oct. 1965) ¶ 418 (referring to wage order No. 14) [by enacting reporting time pay provision, IWC was attempting to "guarantee the worker some earnings for making the trip to the place of employment"].)
There is more, much more. The legislative history consumes some 18,000 pages. But discussions of legislative history can waterlog the most buoyant reader. Suffice it to say here that no objective reader can study this complete legislative history and disagree with Judge Wu.
Ward relies on a different unpublished federal case decided not quite three years later, Bernal v. Zumiez, Inc. (E.D.Cal., Aug. 17, 2017, No. 2:16-cv-01802-SB) 2017 WL 3585230 (Zumiez).
The Zumiez court "conclude[d] that a `plain meaning' reading—one that applies a commonsense interpretation—supports the conclusion that telephonically calling in falls under the ambit of activity enforceable by the wage order." (Zumiez, supra, 2017 WL 3585230 at p. *3.) The court stated, "This legislative phrase [report for work] is facially unambiguous, and does not require a dictionary for interpretation." (Zumiez, at p. *4.) The court also found "no need for the Court to engage with the legislative history of the wage order." (Zumiez, supra, 2017 WL 3585230 at p. *3.) The Zumiez court said it "[took] notice of the order issued in [Casas]" (id. at p. *1), but the court did not discuss Judge Wu's reasoning or conclusions. Respectfully, the Zumiez opinion is an ipse dixit. It is unpersuasive.
In a third unpublished federal case, Segal v. Aquent LLC (S.D.Cal., Sept. 24, 2018, No. 18cv346-LAB (JLB)) 2018 WL 4599754 (Segal), a federal district court in San Diego agreed with Zumiez, but asked the parties to "keep the Court apprised of developments" in the Zumiez appeal before the Ninth Circuit. (Segal, supra, 2018 WL 4599754, at p. *5 & fn. 3.) Segal was a putative class action against a Massachusetts "staffing" company, commonly known as a temp agency. Segal alleged Aquent hired individuals and "assign[ed] them out to companies looking to hire short-term workers." (Id. at p. *1.) Segal alleged that Aquent's "recruiters misrepresented the number of hours [she] and her fellow employees would receive from their assigned companies" and that she "was required to `report to work' [sic] via daily teleconference, regardless of whether there was work or not." (Ibid.) Like the Zumiez decision, the Segal opinion contains no analysis.
As this court has noted, in cases construing wage orders, "[o]ur task is to determine the Industrial Welfare Commission's intent in promulgating the reporting time pay regulation. The rules of statutory construction apply to the interpretation of regulations." (Price v. Starbucks Corp. (2011) 192 Cal.App.4th 1136, 1145 [122 Cal.Rptr.3d 174] (Price).) In my view, Casas—not Zumiez— correctly determined what it means to "report for work." I respectfully disagree with the Zumiez court that the phrase "report for work" is "facially unambiguous." (Zumiez, supra, 2017 WL 3585230 at p. *3.) The Zumiez court saw "no need" to consider the legislative history of the wage order. (Ibid.) As Judge Wu noted in Casas, that legislative history supports Tilly's interpretation of the wage order's language.
The Division of Labor Standards Enforcement (DLSE), a division of the Department of Industrial Relations, is responsible for enforcing wage orders promulgated by the IWC. (Aguilar v. Association for Retarded Citizens (1991)
Ward argues in her brief that the preposition "for" "is intended to convey purpose," in contrast with the preposition "to" which—Ward says—"is characterized by physical movement." Ward's counsel conceded at oral argument that, if the wage order used the phrase "report to work," that would "suggest" a "physical presence" requirement. But, counsel said (notwithstanding the concession in his brief), Ward had not "analyzed that specific term." At least one federal court has interpreted the phrase "report to work" to mean physically reporting. Culley v. Lincare Inc. (E.D.Cal. 2017) 236 F.Supp.3d 1184 (Culley) was a putative class action. Plaintiff Christina Culley was a "healthcare specialist." (Id. at p. 1187, capitalization omitted.) She worked eight-hour shifts and was "also expected to be on-call certain evenings and weekends to handle customer issues that cropped up outside regular business hours." (Ibid.) Lincare paid Culley for the time she actually worked on these after-hours customer issues, but Culley contended she was entitled to a full two hours' reporting time pay. Lincare contended Culley was entitled to this reporting time pay only "when she was required to leave her house to perform after-hours work," not when she was able to "resolve the customer's issue over [the] telephone." (Id. at p. 1189.)
The court concluded that, even though "the relevant regulations are to be construed liberally in favor of the employee," Lincare "ha[d] the better of the argument." (Culley, supra, 236 F.Supp.3d at p. 1190.) The court said, "While [Culley] continually emphasizes the regulation's applicability to when an employee is required to `work,' she wholly ignores the requirement that the employee
Tens of millions of dollars in potential employer liability should not turn on the difference between the prepositions "to" and "for." Indeed, leading treatises treat the two words as interchangeable. (See, e.g., Simmons, Wage
Ward argues that even if, by "report for work," the IWC meant "physical attendance in the 1940s," we should redefine and expand that term because of "technological innovation." That "technological innovation," Ward says, is the cellular telephone. But there has been no technological change pertinent to proper statutory interpretation in this case. Nothing turns on whether a cord or a cell tower connects the phone. The notion that phones were unfamiliar in the 1940s is ahistorical: spend some enjoyable time listening to Glenn Miller's 1940 hit "PEnnsylvania 6-5000." (The Andrews Sisters' rendition is delightful.)
It is undoubtedly true—as Judge Wu noted—that the uncertainty of not knowing whether an employee will have to work an on-call shift can constitute a significant hardship to that employee. I also assume employers like Tilly's have legitimate business reasons for needing the flexibility to schedule employees based on unexpected surges or lulls in customers, absences of other employees due to illness or family emergencies, and the like. It would be surprising if retailers maintain on-call policies just to torture employees. Balancing these competing needs and interests of employers and employees is a task for the Legislature, not this court. The Legislature can
Indeed, our Legislature considered predictive scheduling legislation as recently as 2016. In 2015 and 2016, the California Assembly took up the proposed "Fair Scheduling Act of 2015," Assembly Bill No. 357 (2015-2016 Reg. Sess.) (Assembly Bill 357). Assembly Bill 357 would have provided for certain calculations of pay depending on how much notice the employer gave the employee. (Assem. Bill 357 (2015-2016 Reg. Sess.) § 3, subd. (c)(1)-(3).) The California Senate considered a similar bill, Senate Bill No. 878 (2015-2016 Reg. Sess.) (Senate Bill 878), the proposed "Reliable Scheduling Act of 2016." Like Assembly Bill 357, Senate Bill 878 would have calculated the amount of pay required based on the amount of notice the employer gave the employee. (Sen. Bill 878 (2015-2016 Reg. Sess.) § 1, subd. (e)(1)-(2).)
In 2014, the San Francisco Board of Supervisors enacted an ordinance entitled, "Predictable Scheduling and Fair Treatment for Formula Retail Employees Ordinance." (S.F. Ordinance No. 241-14.) The ordinance applies to businesses that employ 20 or more individuals in the city of San Francisco and "have at least 20 retail sales establishments located worldwide." (Id., § 3300G.3.) The ordinance requires employers to post work schedules at least two weeks in advance. (Id., § 3300G.4, subd. (b).) An employer must pay an employee one hour of pay if it changes the schedule 24 hours or more but fewer than seven days in advance. (Id., § 3300G.4, subd. (c)(2)(A).) The ordinance also provides for payments of two or four hours for changes or cancellations to scheduled or on-call shifts depending on the amount of notice and the shift's length. (Id., § 3300G.4, subd. (c)(2)(B), (C).) The ordinance contains a number of exceptions, including the unexpected unavailability of another employee when the employer did not receive at least seven days' notice, the failure of another scheduled employee to show up, employees' trading of shifts, and mandatory overtime. (Id., § 3300G.4, subd. (e).)
How are we—an appellate court limited to the narrow record before us—to determine how much notice is enough to avoid a violation of the wage order? What if employees are required to call in eight hours in advance instead of two? How about 12 hours? Twenty-four? Three days? A week? At oral argument, Ward's counsel seemed to offer a concession that a requirement employees call in 24 hours in advance would be legal. But a concession by one attorney in one case cannot bind all of the plaintiffs' lawyers across the state who might choose to file similar lawsuits.
And what about a situation in which an on-call employee is needed to come in to the store because another employee called in sick, or has a family
The conclusion that the legislative intent of those who wrote IWC wage order No. 7-2001 was not to require payment to employees who are required merely to call their employer to learn whether they must "report for work" should—to quote Judge Wu—end the discussion. As a court, our fundamental task in interpreting this wage order "is ascertaining the drafters' intent, not drawing up interpretations that promote the Court's view of good policy." (Casas, supra, 2014 WL 12644922 at p. *5.) Any needed fix is the responsibility of our Legislature.
Type one of the on-call shifts alleged in this case requires a different analysis. As noted, in that version of Tilly's practice, "[e]mployees are scheduled for a regular shift as well as an on-call shift later that same day. In such instances the employee is required to physically show up for work at the time of her regular shift and is told during her regular shift whether she will also be required to work her on-call shift." Ward seeks to sue on behalf of a subclass of employees "who: (a) were scheduled for a regular shift immediately followed by an on-call shift that same day; (b) physically reported to work by working their regular shift; and (c) were not paid the greater of two hours at their regular rate of pay and one-half of their scheduled day's work at their regular rate of pay."
So according to the allegations of Ward's first amended complaint, she did physically report to work but was sent home after her regular shift, and not permitted to work her two-hour add-on shift, without any compensation. The trial court's order sustaining Tilly's demurrer did not discuss this version of the on-call policy. Tilly's counsel—who drafted the proposed order for the court's review—included several paragraphs regarding the on-call-shift-following-scheduled-shift type of arrangement, but the trial court marked them out. The trial court's conclusion—"by merely calling in to learn whether an employee will work a call-in shift, Plaintiff and other employees
On appeal, Tilly's never explains why this practice is not unlawful under the wage order as a situation in which the employee "is required to report for work and does report, but is not put to work ...." Under most or all of the IWC's wage orders, "if an employee is required to report for work a second time on any one workday and is furnished less than two hours of work on the second reporting, the employee shall be paid for two hours at the employee's regular rate of pay." (Wilcox, supra, Determining Compensable Hours, § 3.01[5][b], pp. 3-20 to 3-21.) Ward alleges she did show up, in person, prepared to work an add-on shift at the conclusion of her scheduled shift, but was sent home and not permitted to work the add-on shift.
All that Tilly's has to say on this subject appears at page 45 of its brief: "Under existing California law, employers are and always have been free to extend employees' shifts before they end." Tilly's cites no authority for this assertion. When asked about this at oral argument, Tilly's counsel said only that employers have "every right without any notice" to require employees to stay for additional hours after the end of their shifts, and that there is no statute or regulation prohibiting them from doing so. But there is a difference between an employer occasionally extending an employee's workday so that she must continue to work past the time her shift is scheduled to end, and a routine practice of requiring employees to work 50 percent more time—two hours added on to a four-hour shift—with at most a few hours' notice.
Finally, in any event, our interpretation of the wage order's "report for work" language should be prospective only. Both Ward and Tilly's insist the language of the wage order is absolutely clear. But their readings of this "absolutely clear" language are 180 degrees apart. Two federal judges have read the same three words to mean opposite things. Wage order No. 7-2001 has been on the books for more than 70 years. Neither the DLSE nor the Division of Industrial Welfare Enforcement ever has filed any charge or initiated any action against an employer for an "on-call" policy. The DLSE "is the state agency authorized to interpret and enforce California's labor laws." (Price, supra, 192 Cal.App.4th at p. 1146, fn. 10.) As noted, the DLSE's interpretation of the wage order has been in accord with Tilly's reading of the language: that "report for work" means actually showing up. "Although not binding on a court, the DLSE's construction is entitled to consideration and respect." (Ibid.; see also Morillion, supra, 22 Cal.4th at p. 584.) None of the three leading treatises cited—all updated as of 2018— even mentions the issue. Until August of 2017, when a federal district court
Proper public policy about on-call shifts is complex. Retailers face inevitable uncertainty: weather, traffic, inventory gluts and shortages, and marketing responses all affect the number of customers who may appear on a given day. Some efficient businesses would like to staff with flexibility. This is less an issue of management competence than it is of grappling with market unpredictability.
The question is legislative. California is blessed with an active, informed, engaged, attentive Legislature that is in session year round. Our Legislature can hold hearings to investigate the dimensions of this statewide situation. All interested parties can receive notice and an opportunity to be heard. Legislative compromises can be proposed, debated, adjusted, and revisited. This court can do none of that.
I would affirm the trial court's order sustaining Tilly's demurrer to Ward's first amended complaint except for the legal theory set forth in paragraph 25(a) of that complaint. I would have the parties bear their own respective costs on appeal.
