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Should Retailers Pay for the Privilege of Scheduling Employees “On-Call”?

Ever since taking office, New York’s Attorney General (“NYAG”) Eric Schneiderman has zealously targeted various industries with regard to their wage-payment practices, investigating car washes, grocery stores, fast food restaurants and nail salons. Now he has turned his attention to retailers.

Recently, as reported by numerous media outlets, the NYAG sent letters to retailers in New York, including Target, Gap, Abercrombie & Fitch, Urban Outfitters Inc., and others, inquiring as to their practices with regard to scheduling employees “on-call.” This is a staffing practice where employers schedule employees to be “available” on certain days, meaning the employee calls in to see if he/she is needed on that particular day. It is often used in businesses where it is difficult to predict how much labor will be needed on a particular day due to unpredictable sales/customer volume.

Reportedly, the only law cited in the letters is Section 142.23 of the Minimum Wage Order for Miscellaneous Industries and Occupations. Under this regulation, if an employee reports to work by request or permission of his/her employer, he/she must be paid minimum wage either for four hours or for the number of hours in the regularly scheduled shift, whichever is less. There is a similar law in the Hospitality Wage Order that encompasses hotels and restaurants. Despite this rule, generally the New York Department of Labor (“NYDOL”) has stated that where an employer pays well above minimum wage and therefore the wages divided by all hours worked including any call-in pay owed for one week is above minimum wage rate and overtime, additional pay is not required. (This is not the case for the hospitality industry.)

This law was born out of Great Depression-era practices where employers required a large number of potential employees to report to work, chose a fraction of the employees to work that day, and sent everyone else home without work. The regulation is meant to compensate employees who arrive at their scheduled work time and are told they are not needed that day. In New York, the call-in pay requirement has been interpreted as only applying if the employee actually arrives at work. Normally, if the employer tells the employee at any time prior to the employee’s arrival that the employee need not report to work, typically the employee is not owed call-in pay.

Interestingly, it appears the NYAG may be seeking to expand the call-in pay regulation to include situations where an employee is scheduled to be “on-call” even where the employee does not physically report to work. Should the NYDOL expand the application of the call-in pay regulations in this way, this could significantly impact the business model of employers who rely on scheduling employees on a “call-in” basis. We will keep you updated on the NYAG’s investigation and any impact it has on the call-in pay regulation.

If you are located in a state other than New York, you should ensure you understand any call-in/reporting pay statutes or regulations that may be applicable. Many states have such laws including Connecticut, Rhode Island, New Jersey, California, New Hampshire, and Massachusetts.

Brody and Associates regularly advises management on complying with local, state, and federal employment laws including wage and hour laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.