Demystifying On-Call Pay
Under the Fair Labor Standards Act, whether employees should receive on-call pay depends on whether the time spent on call qualifies as "hours worked." If so, employees must receive at least the federal minimum wage for each hour spent on call, plus overtime for all work hours over 40 for the week.
Whether on-call time qualifies as hours worked should be determined on a case-by-case basis. That said, there are some general guidelines on the topic — and it boils down to whether the employee is "engaged to wait" or "waiting to be engaged."
Employees who are 'engaged to wait' must be paid for on-call time. The FLSA regulations at 29 C.F.R. §785.15 explains what it means to be "engaged to wait." Basically, if employees are required to remain at the work site while on call, or if they do not have the freedom to engage in personal activities while on call, then they are "engaged to wait" — meaning on duty — and must be paid for the time spent on call.
For example, an employee who is permitted to watch television, sleep or read a book while on call, but is not allowed to leave the work site, must receive on-call pay. Even if the employee is allowed to leave the work site but has to frequently take calls from the employer, on-call pay is likely due — since the calls do not allow the employee to effectively conduct personal activities.
Employees who are 'waiting to be engaged' do not have to be paid for on-call time. If the employee is "waiting to be engaged," then he/she is off duty and does not need to be paid for on-call time. FLSA regulations at 29 C.F.R. §785.16 offers the following example: "If the truck driver is sent from Washington, D.C., to New York City, leaving at 6:00 a.m. and arriving at 12 noon, and is completely and specifically relieved from all duty until 6 p.m. when he again goes on duty for the return trip the idle time is not working time. He is waiting to be engaged."
Here, the employee has the freedom to use the idle time effectively for personal activities, and therefore does not need to receive on-call pay.
Note that under the FLSA, on-call pay applies to employees who are paid according to hours worked. This means you do not need to provide on-call pay to exempt employees who are paid on a salary basis, as these employees must receive a set salary that is not based on hours worked.
The issue of on-call pay has many subtleties and gray areas and, depending on your location, may include state requirements. Seek legal advice to gain a full understanding of your on-call pay responsibilities.