California law requires that employers pay employees for all hours worked. The term “hours worked,” however, is not all that simple to define or apply. The analysis is compounded when the hours worked are, for instance, part of the employee’s commute, consist of travel to a remote conference, or spent moving from client to client throughout the day. Once you conclude the time is “worked,” you must include those numbers in overtime calculations, and decide whether you want to pay travel at a different rate than the employee’s regular rate of pay.
What Constitutes Hours Worked For Purposes Of Compensation?
California Wage Orders (issued by the California Industrial Welfare Commission [the “IWC”]), define “hours worked” as “time during which an employee is subject to control of the employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” IWC Wage Order 4, Section 2K. Although the term “suffered or permitted” is included within the Order’s overall discussion of employer control, California courts have held that the tests for whether an employee was “controlled” or “suffered or permitted” to work can also be independent of each other. In other words, an employer is required to compensate for travel if the time falls into either or both categories. Morillion v. Royal Packing Co., 22 Cal. 4th 575, 583(2000).
An employee is “controlled” by the employer whenever the employer “directs, commands or restrains” an employee. Bono Enterprises, Inc. v. Bradshaw (1995) 32 Cal. App. 4th 968, 975. “Suffered or permitted” to work refers to time worked where the employer knows the employee is working and does nothing to stop it, or when the employer possesses information from which such knowledge can be inferred, and that the employer “had reason to know” that the employee was performing work on its behalf.
Is Commute Time Ever Compensable?
Merriam-Webster defines the term “commute” as “to travel some distance between one’s home and place of work on a regular basis.” (http://www.merriam-webster.com/dictionary/commute). Whether commute time is compensable in part or whole depends on the mode and purpose of employer provided transportation, and whether use is mandated or voluntary. In other words, is the employer in control?
- Regular Commute: An employer is not required to compensate an employee for the time it takes him to go from his residence to his regular work site.
- Ridesharing: An employer is not required to compensate an employee for time spent in company provided transportation from a pick up point to the work site so long as participation is entirely voluntary. If, for instance, an employer provides a bus for workers that picks them up at a subway station and transports them to work but the employee could get there by using his own transportation; i.e., a car, bike, etc., the employer is not required to pay compensation.
- Employer Control of Travel: An employer is required to compensate an employee for time spent riding in or driving a company vehicle from his home or a central stop to the work site if the employer requires employees to reach their worksite on company provided transportation. For instance, Walt Disney’s employee lot was a hike (over a mile) from the employee entrance to the Magic Kingdom. Disney prohibited employees from parking close to the park and provided a mandatory shuttle service from the employee parking lot.
When is Business Travel Compensable?
- Off the Business Clock
Off-the-Clock work is work performed outside of regular business hours, or pre- or post-shift work may be compensable. For instance, in terms of travel time, certain tasks have been found to be compensable:
- Mandatory Remote Conferences and Meetings
- Taking the company controlled vehicle (bus, van, vehicle) where the employee cannot perform personal tasks (stopping to shop, dropping kids off at school, etc.)
- Waiting for the company vehicle where the use of the vehicle is mandatory.
- Commute time from residence to remote client or vendor locations that exceeds regular commute time (i.e., the delta between regular commute and additional time to reach remote site).
- Mapping routes to customer locations.
- Mandatory Remote Conferences and Meetings
If an employee is required to attend an offsite conference or meeting, the time spent traveling to and from the meeting is compensable. Additionally, time spent in reaching the point of departure (i.e., travel from home to the airport) which is over and above the time spent in the employee’s regular commute is compensable. Also note that the time spent in attending a mandatory conference or meeting is compensable at the employee’s regular rate of pay.
- Travel Between Clients in a Single Workday
Once an employee reports to work, any work related travel occurring during the day is compensable.
Can Travel Pay Rates Be Lower than Regular Rate of Pay?
Yes, so long as all time is compensated at a rate equal to or higher than the minimum wage rate for California. Also, the employee must be informed of the lower rate in advance of the assigned travel. Be sure and check your location for its own minimum wage rate.
What About Overtime?
The employer must use a “weighted average” to obtain a regular rate of pay for overtime purposes. The California employer must pay 1-1/2 or 2 times the regular rate of pay for all time worked over 8 hours in a day or 40 hours in a week. The regular rate is calculated as follows:
Regular Hours + Travel Hours in Workweek
Total Compensation for Workweek
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©Illustration Credit: Anna Dulin