California Supreme Court Asked To Weigh In On “Hours Worked” Questions

Seyfarth Synopsis: The Ninth Circuit Court of Appeals once again has asked the California Supreme Court for assistance in determining important questions of California law.  Last week, the Ninth Circuit certified three questions to the California Supreme Court asking it to determine whether a construction industry employer should have paid its employees in three different circumstances.

Background

The California Flats Solar Project (“the Project”) retained CSI Electrical Contractors (“CSI”) for procurement, installation, construction, and testing services for Phase 2 of the Project.  George Huerta, a construction worker who performed services for CSI through a subcontractor, Milco National Constructors, claimed that CSI should have paid him for the time he spent driving down a dirt road at low speeds, and waiting to be inspected by security before entering and leaving the construction site. Additionally, Huerta claimed that he and his co-workers should have been paid for their meal breaks because they were prohibited from leaving the job site during them.

The workers arrived at the construction site via personal vehicles, carpools, and buses. The Project had one entrance, requiring workers to first pass a guard shack at the entrance, then to stop at a Security Gate several miles down the road where a security guard scanned each worker’s badge and sometimes peered inside vehicles. CSI told workers that the Security Gate was the first place they “were required to be at the beginning of the day in order to work.” The same badging out process at the Security Gate was used to exit the site. Since many workers exited the Project around the same time each day, lines at the Security Gate often were five to twenty minutes long.

Additionally, under the Project’s Collective Bargaining Agreement (“CBA”), workers had to comply with the California Department of Fish and Wildlife Incidental Take Permit (“ITP”). The ITP imposed specific rules regarding the endangered species present at the construction site. Some of the rules included a restriction on speed limits, passing, or creating dust, as well as general precautions about endangered species such as requiring a biologist to monitor the site to minimize disturbances to the species’ habitats, and waiting for the biologist to clear the road each morning before anyone could enter.    

Huerta asked the Ninth Circuit to overturn an unfavorable trial court decision.  Specifically, Huerta asked the Ninth Circuit to reverse three of the District Court’s decisions.  First, a ruling  that the time workers spent commuting and waiting for and undergoing security checks did not count as “hours worked” under Wage Order No. 16, which generally covers workers engaged in certain on-site occupations in the construction, drilling, logging and mining industries.  Specifically, the District Court had ruled that CSI’s requirements that workers undergo the exit process and drive between the Security Gate and the parking lots before and after each shift did not rise to the level of control sufficient to require compensation. The District Court also determined that the Security Gate was not the “first required location” as defined by Wage Order No. 16, and that Huerta’s meal period claims were statutorily exempted because he worked under a qualifying CBA.

Certified Questions

The Ninth Circuit stayed the case in order to provide California’s highest court the opportunity to determine whether it will exercise its discretion to decide three certified questions. 

The Ninth Circuit panel asked the California Supreme Court to answer the following three questions:

1. Is time spent on an employer’s premises in a personal vehicle and waiting to scan an identification badge, have security guards peer into the vehicle, and then exit a Security Gate compensable as “hours worked” within the meaning of California Industrial Welfare Commission Wage Order No. 16?
2. Is time spent on the employer’s premises in a personal vehicle, driving between the Security Gate and the employee parking lots, while subject to certain rules from the employer, compensable as “hours worked” or as “employer-mandated travel” within the meaning of California Industrial Welfare Commission Wage Order No. 16?
3. Is time spent on the employer’s premises, when workers are prohibited from leaving but not required to engage in employer-mandated activities, compensable as “hours worked” within the meaning of California Industrial Welfare Commission Wage Order No. 16, or under California Labor Code Section 1194, when that time was designated as an unpaid “meal period” under a qualifying collective bargaining agreement?

What Else Employers Should Know

There is no reason to believe that the Supreme Court will decline the Ninth Circuit's invitation to decide these important issues.  Nor, based on the Court’s wage-hour decisions over the last decade, is there much reason to believe that the Supreme Court’s interpretation of California law will be employer friendly, although the Court may choose to limit its decision to the unique aspects of Wage Order No. 16, as opposed to writing a broad decision that extends beyond this Wage Order.

Regarding the exit process the Ninth Circuit stated that "[t]he consequence of any interpretation of the Wage Order could significantly impact employers and employees throughout California that require workers to badge into or out of worksites, buildings, parking garages, or other locations."

With few exceptions, California’s Wage Orders define “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all time the employee is suffered or permitted to work, whether or not required to do so.” So the key question often is not whether the employee is actually working during the time in question, but whether the employee merely is subject to the employer’s control.

The California Supreme Court has held the two prongs are “independent factors, each of which defines whether certain time spent is compensable as ‘hours worked.’” However, the Ninth Circuit stated that “California law provides no clear answer” on whether Wage Order 16 requires employers to compensate workers for time spent on company property in a personal vehicle waiting to scan an ID badge, permit security to inspect a vehicle, and then exit a security gate.

With respect to whether drive time between the security gate and the employers’ parking lot are considered hours worked, the Ninth Circuit found that “[n]o controlling California precedent has answered the certified question of whether Wage Order No. 16 requires compensating workers for time spent driving between the entrance/exit of the employer’s premises and the location where the shift begins/ends.” While California cases concerning off-premises transportation such as Morillion v. Royal Packing Co., 995 P.2d 139 (Cal. 2000), and Hernandez v. Pacific Bell Telephone Co., 239 Cal. Rptr. 3d 852 (Ct. App. 2018), are instructional, the California Supreme Court has not decided the specific issue of whether driving on an employer’s premises, in a personal vehicle, before or after a shift, while subjected to an employer’s rules, is compensable as “hours worked” under the control prong of Wage Order 16.

Moreover, Section 5(A) of Wage Order 16 states, “All employer mandated travel that occurs after the first location where the employee’s presence is required by the employer shall be compensated at the employee’s regular rate of pay or, if applicable, the premium rate . . . .” However, the California Supreme Court has never defined “first location” or “employer-mandated travel” in Wage Order No. 16 Section 5.” Thus, the Ninth Circuit has left it up to the California Supreme Court to answer this question.

Finally, Huerta alleges that he was required to remain onsite for unpaid meal time. This claim was rejected by the District Court because Huerta worked under a CBA. However, the Ninth Circuit would like the California high court to weigh in on whether union-represented employees covered by a valid CBA “…may bargain away their right to be paid minimum wage for 'on-duty' meal periods where they are prohibited from leaving the employer's premises.”

Workplace Solutions

As always, employers should review their relevant wage-hour policies and practices and make any changes they determine to be appropriate. As a result of Huerta, special attention needs to be paid to what takes place between the time an employee enters the premises and clocks-in for work, as well as to its meal period practices and policies.