CA Supreme Court: Security Guards Must Be Paid for Sleep Time

On January 8, 2014, the California Supreme Court issued a highly anticipated decision, ruling that employers must pay workers for all time spent on a job site, even if they are on-call or sleeping rather than on-patrol, clarifying the meaning of the state wage order defining “hours worked.” Mendiola et al. v. CPS Security Solutions, Inc., et al., No. S212704 (Jan. 8, 2015) (slip op. available here). It affirmed the Court of Appeal’s ruling that on-call time constituted “hours worked” under Industrial Welfare Commission (IWC) Wage Order 4 and must be paid for, even if the employees can read, eat, shower, or engage in other personal activities. Id. at 4. However, the Supreme Court reversed the Court of Appeal’s decision to exclude pay for sleep time during the employees’ 24-hour shifts, finding that the lower court had incorrectly concluded that all wage orders implicitly incorporated a federal regulation permitting the exclusion of eight hours of sleep time from 24-hour shifts. Id. at 12.

In 2008, on-call construction site guards filed two class action lawsuits against their employer CPS Security Solutions Inc., alleging minimum wage and overtime violations under the California Labor Code and IWC Wage Order 4. The Los Angeles Superior Court consolidated the cases and certified the class of employees; the trial court also granted the plaintiffs’ motion for summary adjudication of declaratory relief claims, finding that CPS’s on-call compensation policy violated Wage Order 4. On appeal, the injunction requiring CPS to compensate the guards for all on-call time spent in their residential trailers was affirmed in part and reversed in part. The Court of Appeal agreed that CPS needed to pay guards while they were on patrol for eight hours and on call for eight hours (but not while off duty for eight hours); however, the Court of Appeal also held that CPS did not have to pay for eight hours of sleep time on weekends when the guards were on duty for all 24 hours (i.e. on patrol for 16 hours and on call for eight hours). During on-call hours overnight, the company typically only compensated guards for time they spent actively investigating disturbances.

The California Supreme Court affirmed in part and reversed in part, finding that CPS must pay its security guards for all the time they spend overseeing construction sites, partly because CPS benefited from the security guards’ “mere presence,” which served to deter theft and vandalism on-site, even when they were not actively responding to disturbances. Slip op. at 9. Furthermore, the court stated that “[t]he fact that guards could engage in limited personal activities does not lessen the extent of CPS’s control.” Id. at 10. The Mendiola court found that because the employees were not free to leave the worksite, they needed to be compensated for all their time while on-site, even while they are asleep. The company’s contracts with its construction clients stated that a guard would be at the worksite during all hours. CPS was ultimately unable to convince the court that it should interpret the state wage order in light of a federal law that treats on-call time as uncompensated free time. Instead, California law sets a higher standard: “Federal regulations provide a level of employee protection that a state may not derogate. Nevertheless, California is free to offer greater protection.” Id. at 11.