California Court Of Appeal Makes Two Significant Rulings Regarding Overtime Issues

California law imposes special premium pay obligations on the seventh day of work when an employee works at least some time on all seven days within a “workweek.” The first eight hours worked on the seventh day must be paid at time-and-a-half, and time worked over eight hours must be paid at double-time.

California defines a “workweek” as “any seven consecutive days, starting with the same calendar day each week.” A “workweek” is a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods.

The California Division of Labor Standards Enforcement (“DLSE”) has stated that “an employer may designate the period of the . . . workweek” and that, “absent pre-designation by the employer, DLSE will treat . . . each workweek as starting at midnight on Sunday.” Most California employers follow DLSE’s method of designating the workweek, never suspecting that this reasonable course of action might be interpreted as a “subterfuge” to avoid California wage and hour law.

Then came the decision of the California Court of Appeal, on February 28, 2011, in Seymore v. Metson Marine, Inc. The court held that an employer cannot “artificially designate the workweek in such a way as to circumvent the statutory requirement to pay overtime rates for the seventh consecutive day worked in each workweek.”

The court also held that when an employer requires its employees to sleep at the place of employment during their “off-hours,” and be ready to return to work within 45 minutes, those off-hours and sleeping hours qualify as hours worked.

Case Background

The plaintiffs worked for Metson Marine, Inc. They were stationed on a Metson ship to clean up oil spills and other discharges. They worked 14-day “hitches,” beginning at noon on a Tuesday and ending at noon two weeks later, followed by two weeks off.

They engaged in work activities 12 hours per day. Eight hours per day were designated sleep time aboard the ship. The remaining four hours of each day were considered “off-duty” time, during which they could leave the ship and run personal errands, but were required to carry cell phones and to return to the ship within 45 minutes of being called. They were paid straight time for the first eight hours each day and four hours of overtime each day. Twelve hours were unpaid, and they received no additional premium pay.

Metson’s workweek began and ended on Sunday at midnight. Thus, the 14-day hitch began in the middle of one workweek, consumed the entire second workweek, and ended in the middle of the third workweek. Metson paid the special seventh day premium pay only during the middle workweek.

Compensation For Seven Consecutive Days Worked

The Court of Appeal rejected DLSE’s position on identifying the workweek and found that Metson was bound by the work schedule it set for the plaintiffs. The court held that Metson’s workweek thus began on Tuesday, and that plaintiffs worked two full workweeks in a row with the special seventh day premium pay owed twice within the period, not merely once. The court ruled that Metson’s practice of starting its workweek on Sunday at midnight was an improper attempt to circumvent the Labor Code’s overtime requirements.

Payment for On-Call Time

Plaintiffs also claimed pay, including overtime, for the entire 24-hour period during each day of the 14-day hitch. They contended, and the Court of Appeal agreed, that Metson exerted significant control over their entire day because they had to sleep at their place of employment for eight hours each day, and during four hours of “off-duty” time they were still subject to Metson’s control because they had to return to the ship within 45 minutes of being called. The court concluded that all of these hours constituted “hours worked” under the IWC’s wage orders, which provide: “‘Hours worked’ means the time during which the 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.” Of particular importance to the court was the fact that plaintiffs could not drink alcohol, had to sleep on the ship, and had to return to the ship on short notice.

Nonetheless, the court utilized a rule of California and federal law that applies when an employee is on-duty for twenty-four hours or more. It allows the employer and the employee to agree to exclude from compensable time up to eight hours for sleeping and up to three hours for meals. The court held that the plaintiffs and Metson had an unwritten agreement to exclude eight hours of sleep time from compensable time, so that they were owed only four additional hours of pay per day.

What Metson Marine Means for Employers

Employers should be aware that time during which employees are subject to control by the company may be “hours worked,” even though the employees are engaged in no productive work and possibly even if they are able to engage in some of their own pursuits. Requiring employees to sleep on the employer’s facility is a relatively unusual situation, however, that will not concern most employers. Where it does occur, employers should be aware that they may agree with their employees to exclude up to eight hours of sleep time and up to three hours for meals from compensable time.

The holding that employers must calculate the beginning of each workweek based upon the employee’s actual “fixed and regular schedule” may prove more troublesome. It could involve administrative headaches because it would require different workweeks for different employees depending on their work schedules. If the employee changed shifts from workweek to workweek, the holding might also require that the workweek be adjusted every time there was a change. Finally, the holding could be used to challenge the validity of alternative workweek schedules based on a 9/80 schedule.

Plaintiffs may also attempt to apply the court’s rationale to the “workday,” with implications for overnight shifts. Consider, for example, an employee who works regularly five hours before midnight and another five hours after midnight, on the same continuous shift. With respect to one particular shift, that employee would have no daily overtime under a midnight-to-midnight workday schedule but would have daily overtime if the employer must adjust the workday schedule to conform to the employee’s own regular work schedule.

For further information, please contact the Seyfarth attorney with whom you work or any Labor & Employment attorney on our website.