California High Court Finds Construction Site Security Guards' On-Call Time Compensable

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By Elliott T. Dube

Jan. 9 — The time security guards spend “on call” in residential-type trailers at construction sites amounts to compensable “hours worked” under state law, the California Supreme Court ruled Jan. 8.

The state high court affirmed a California Court of Appeal ruling that CPS Security Solutions Inc.'s policy of generally compensating guards' on-call time only when it is spent investigating work-site disturbances violates the state's Industrial Welfare Commission Wage Order 4.

That order defines “hours worked” as the “time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” The high court agreed with the lower court's findings that CPS controls guards' activities to a substantial enough extent and that guards' on-call time primarily benefits the company.

But the supreme court reversed the appeals court's ruling that CPS could allocate eight hours as unpaid sleep time on weekend days when the guards were on duty for 24 hours. The lower court erred in finding that Wage Order 4 implicitly incorporates a federal regulation that allows for the exclusion of eight hours of sleep time from employees' 24-hour shifts, Justice Carol A. Corrigan wrote for the supreme court.

Certified Class of Guards Sought Declaratory Relief

CPS guards filed two proposed class actions in 2008 that were consolidated. A trial court granted summary adjudication to the guards on their claims for declaratory relief, and the appeals court affirmed in part and reversed in part.

Like the appeals court, the supreme court found that CPS exerted control over the guards in multiple ways.

“The guards here were required to ‘reside' in their trailers as a condition of employment and spend on-call hours in their trailers or elsewhere at the worksite,” the supreme court said. “They were obliged to respond, immediately and in uniform, if they were contacted by a dispatcher or became aware of suspicious activity.”

Guards couldn't easily trade on-call responsibilities, could only request relief from a dispatcher and couldn't leave the work site if no relief could be secured, the court found. It added that relieved guards had to report their whereabouts, were subject to recall and weren't allowed to be more than 30 minutes away from the site.

Assessing the extent to which guards' on-call time benefited CPS, the court considered the parties' stipulation that the company's business model was partly based on the idea that “theft and vandalism during the night and weekend hours can be deterred effectively by the mere presence of a security guard in a residential trailer.”

“Thus, even when not actively responding to disturbances, guards' ‘mere presence' was integral to CPS's business,” the court said.

It also rejected CPS's argument that the guards' ability to engage in limited personal activities such as reading and watching television lessened the extent of the company's control.

The California Supreme Court agreed with the lower court's ruling that CPS Security Solutions Inc. controlled security guards' activities to a substantial enough extent and that their on-call time primarily benefited the company.

In addition, the court declined to apply a federal regulation, 29 C.F.R. § 785.23, which states that an “employee who resides on his employer's premises on a permanent basis or for extended periods of time is not considered as working all the time he is on the premises.” CPS failed to provide convincing evidence that the IWC intended to import the regulation, which gives workers less protection than state standards, the court found.

Lower Court Improperly Applied Sleep Exception

The supreme court faulted the appeals court for applying another federal regulation, 29 C.F.R. § 785.22, which states “[w]here an employee is required to be on duty for 24 hours or more, the employer and the employee may agree to exclude … a bona fide regularly scheduled sleeping period of not more than 8 hours from hours worked.”

The appeals court found that all industry-specific IWC wage orders incorporate Section 785.22, partially reasoning that “state and federal definitions of hours worked are comparable and have a similar purpose.”

But this conclusion was “both sweeping and incorrect,” the supreme court said. It found no evidence that the IWC intended to incorporate Section 785.22 into Wage Order 4. That wage order includes no language addressing sleep time, while two other industry-specific wage orders include sleeping-period exceptions, the supreme court said.

Law Offices of Cathe L. Caraway-Howard and Natividad Law Firm represented the guards. Blank Rome LLP represented CPS.

To contact the reporter on this story: Elliott T. Dube in Washington at edube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://op.bna.com/dlrcases.nsf/r?Open=edue-9slnyq.