When a company has a need for last minute help, they may look to on-call employees. What happens when the employer requires waiting employees to limit their freedom while on-call? Here’s how to make sure your on-call employees are adequately compensated.

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What is On-Call Compensation?

When an employee is “on-call,” they are not formally on duty but must be easily contactable and ready to return to work at a moment’s notice. On-call compensation can differ from the same person’s compensation when they are officially on duty. It’s not always legally required to pay an on-call employee. If they meet the requirements for on-call compensation, they may receive a different wage while on-call than what they receive while on duty.

Should Businesses Offer On-Call Compensation?

The simple answer is, it depends on your situation. If you have requirements for your employee while on-call, compensation may be necessary as they are technically working by fulfilling the company’s requirements. The Fair Labor Standards Act (FLSA) classifies whether or not on-call status is considered “hours worked” by splitting this waiting time into two categories. If the on-call employee is “waiting to be engaged,” it is not considered work time. However, if the employee is “engaged to wait,” it is considered work time. The former does not require compensation while the latter does by law.

Benefits of Offering On-Call Compensation

  • Reliability of the employee. By offering compensation, an on-call employee is contractually required to be engaged to wait. This means that they are legally required to respond to a request to return to their duties within a reasonable time frame. The alternative is not being legally protected from potentially unreliable workers.
  • Control over requirements. The company has full say on expectations for on-call employees while they engage to wait. The employer can define the “reasonable response time,” how far away the employee is allowed to travel while on-call or even require the waiting employee to remain on the company premise.

Drawbacks of Offering On-Call Compensation

  • Subject to minimum wage and overtime laws. Federal law considers being on-call to be governed by minimum wage and overtime laws. Therefore, if the employee is engaged to wait, they must be receiving at least minimum wage and time-and-a-half pay for time worked (or engaged to wait) which exceeds 40 hours a week.
  • Full-time rather than part-time. When on-call time is considered hours worked, this can make the difference between an employee being part-time and full-time. As such, they may be entitled to additional compensation such as bonuses and benefits.

Qualifying Factors for On-Call Compensation

Compensation eligibility is determined by whether or not hours on-call are considered hours worked. Some factors that require the on-call employee to be compensated while “engaged to wait” include:

Location Restrictions

Per the Department of Labor (29 C.F.R. §785.17), if an employee is contractually required to remain on the employer’s premises, it qualifies them to be considered “engaged to wait” and therefore entitled to compensation. The same is true if the employee is required to stay close enough that they are not able to use their time for their own purposes.

Constrained to a Paging Device

Requiring an employee to carry a paging device does not qualify the employee for compensation. without other requirements that make the employee “overly constrained” by the paging device. An example of this might be a maintenance worker who carries a pager and is required to respond to a call within a set time-frame. These types of requirements tend to overlap with location restrictions as well.

Impacts Rest and Meals

If an employee is on duty for 24 hours, regularly scheduled sleeping periods can be excluded from hours worked (given that sleeping facilities are provided and furnished by the employer and the employee is able to get adequate sleep). Reduction is not permitted unless at least 5 hours of sleep is taken.

Additionally, if the employee is not actively on duty, they are permitted to take meals and partake of leisure as long as their contractual requirements remain met. This does mean that their leisure time can be interrupted at a moment’s notice, so they are engaged to wait since their leisure and meal time is regularly cut short.

Whether or not there is an impact on rest and meals is largely based on agreement between employee and employer. If an argument can be made saying these times are impacted, then it’s likely true and the employee should be compensated accordingly.

What Does Not Qualify for On-Call Compensation?

If the conditions and requirements of the on-call employee point to not being “engaged to wait” but rather “waiting to be engaged,” that employee is not entitled to receive pay.

Able to Remain at Home

If the on-call employee is allowed to wait at home without distance limitations from the workplace, the employee is considered “waiting to be engaged” and is therefore not required to receive compensation.

Not Overly Constrained by Paging Device

If the employee doesn’t have time urgency requirements with their paging device, they are not eligible for compensation.

No Impact on Rest and Meals

As mentioned, if an employee is engaged to wait, they can make arrangements with their employer to not have a reasonable scheduled sleep time be counted as hours worked. The conditions being that the employer can provide proper sleeping quarters and furnishings and the time sleeping exceeds 5 but no more than 8 hours. If that scheduled time is cut short (less than 5 hours) by the employer calling the employee to duty, then the employee must still be compensated.

Examples of Jobs with On-Call Compensation

There are many jobs that have on-call positions. Those that typically meet the requirements to receive on-call compensation include:

Emergency Responders

A fire department worker or ambulance driver is typically entitled to on-call compensation. This is due to the nature of their job and the surrounding requirements they entail. Such positions require the employee to stay on the premises while on-call and a timely response to being called to duty.

Medical Staff

Some medical workers are required to work extensive hours on-call on the hospital campus. This is in case their expertise or assistance is needed in emergency medical situations.

Religious Workers

Certain clergy positions may be entitled to on-call pay if requirements are met. For example, a hospital chaplain might be required to remain within a certain distance from the hospital and report in a timely manner if their presence is requested by a patient.

Maintenance Workers

A city water worker will likely be on-call for emergency situations that require an immediate response, such as sewage backup or a water main break. Another example might be an apartment maintenance worker required to remain on the complex premises to respond promptly to urgent maintenance issues.

Questions You’ve Asked Us About On-Call Compensation

If the employee is eligible to receive compensation while on-call, then typically, yes. There are exceptions to this rule when it involves scheduled times of rest (see “impacts rest and meals” and “no impact to rest and meals” sections above.)
Whether or not compensation is legally required depends on the situation and is determined on a case-by-case basis (https://webapps.dol.gov/elaws/whd/flsa/hoursworked/screenEr80.asp). If the employer has contractual requirements that restrict the on-call employee’s time and location freedom, possibly. Hours that qualify (see the article above) are considered hours worked and require the employee to be adequately compensated. The Wage and Labor Division is responsible for enforcing these laws. Compliance is the only sure-fire way to avoid hefty fines.

Kayla is the Chief Innovation Officer at Hero Culture, where the passion is to create company cultures of retention using the power of personality.

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