A Deep Dive Into On-Call Pay

5 min read

Being on-call can be a frustrating experience. It can also be a great opportunity for growth.

However, your team must be aware of their rights and compensation. A poorly designed compensation plan can cause unnecessary stress and frustration. Ensure that your on-call pay process is considered and formalized.

Restricted Activities

Many jobs requiring on-call status are considered emergency or critical services, such as first responders and health care professionals. These workers are typically required to be on-call because their work is highly unpredictable, and they must be ready to respond rapidly to a call or request for service. In such cases, on-call hours are compensable under federal labor laws.

How does on-call pay work? The employer’s definition of on-call may need to meet federal standards. For example, suppose an employee must stay within a limited geographic area while on-call. That restriction prevents them from engaging in activities such as exercising at the gym or taking their kids to school. In that case, that time may be compensable under federal on-call pay regulations.

Employers should also be mindful of state minimum wage and overtime laws, which may differ from the federal government’s. Consulting an employment attorney can help clarify on-call shifts and compensation requirements.

Employers should pay employees a flat rate per week or day they are on-call, regardless of whether they are called to perform work. This approach avoids a conflict between state and federal minimum wage and overtime laws and provides consistency to employees. It also ensures that employees are paid fairly for their on-call time.

Frequent Calls

The volume and frequency of calls an employee receives while on call can impact their entitlement to pay. Frequent calls can significantly disrupt employees’ personal lives, especially when they have other commitments such as child care or other work tasks. Employers should consider paying these employees for time spent on-call, particularly if they are required to respond to multiple calls quickly, within a short period, or in a limited geographic area.

Some businesses, such as hospitals and air control towers, require on-call workers to stay on-site or close by, limiting the employee’s movement and time while waiting for work. This type of restriction likely meets the definition of a restricted activity under the Fair Labor Standards Act.

However, other employers, such as IT or repair services, may only need their employees to be available if called upon. In these cases, the employer probably does not need to pay employees for on-call hours. Regardless of the industry, the company’s on-call policy should be clearly outlined in its employee handbook or elsewhere and explained to any hourly workers with on-call shifts. The company must also follow federal minimum wage and overtime laws and, if applicable, state regulations.

Immediate Action

Whether or not on-call pay is required depends on the circumstances. Some jobs are tethered to contingencies: healthcare workers, utility repair technicians, and relief agency employees often work during natural disasters, social unrest, and epidemic diseases. Other positions are tethered to business demands: accountants, salespeople, and IT professionals may need to be on call during busy periods.

It is important to know whether or not on-call hours count as overtime. The FLSA rules are quite complex and vary based on each scenario. However, it generally comes down to whether or not the employee’s freedom of movement is restricted and what they may do while on-call. If the employer’s rules prohibit a worker from leaving a designated geographic area while on-call, they should be compensated for that time.

Employers must also follow state and local minimum wage and overtime laws, which may differ from federal regulations. HR leaders should consult with an attorney to bring clarity to these issues. In addition, they should ensure that the company’s on-call policies are clear and in line with the legal requirements. It is also essential to understand that employers cannot require on-call shifts in retaliation for protected activities, such as reporting a safety issue or filing a harassment complaint. Employees may have a discrimination or unfair pay case if the company violates these provisions.

Hours Worked

When an employee is on call, they must be available to respond to any requests from management. Whether this time constitutes hours worked depends on whether restrictions are in place that restrict an employee’s freedom of movement. For example, suppose an employer requires an on-call employee to remain on the company’s premises or so close to the site that they cannot use the time effectively for personal purposes. In that case, this time is considered work and must be paid for. For example, a firefighter waiting in a station or a receptionist answering phone calls during lunch are examples of employees engaged in active on-call time.

The adage “time is money” hits especially hard for workers who receive on-call pay. Employees may have to rework their schedules, procure child care, or cancel other commitments to be available for their employer when called. While the additional compensation often helps mitigate these burdens, it can quickly take its toll on morale.

HR leaders must consider the nuances of on-call pay when establishing policies and compensating employees. Understanding how on-call responsibilities and time-off rules affect employees can help ensure their business complies with federal regulations. They can also ensure that they offer the most competitive compensation for on-call hours to avoid legal disputes over alleged violations of wage and hour laws.

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