On December 31, 2014, the California Supreme Court held in Mendiola v. CPS Security Solutions, Inc. (Case No. S212704) that security guards who work shifts of 24 or more hours under Wage Order 4 must be compensated for their sleep time.  The Court also held that, under the particular facts of the case, the security guards were required to be paid for their “on-call” time.

CPS Security Solutions provides security services to various clients.  Generally, its security guards worked 24-hour shifts where eight hours were designated as unpaid “on-call” time and an additional eight hours were designated as unpaid “sleep time.”  The guards were required to live on-site in a trailer provided by CPS.  The trailer had residential amenities paid for and maintained by CPS, including a bed, bathroom, kitchen, heating, and air conditioning.  Guards were permitted to keep personal belongings in the trailer, could generally use their on-call time however they wanted, and were free to have visitors with approval from the CPS client.  No children, pets, or alcohol were permitted.  While on-call, a security guard who wanted to leave the premises had to notify a dispatcher so that he/she could be relieved by another guard.  If no one was available to provide relief, the guard could not leave the premises.  Moreover, even if off-site, on-call guards were required to carry a pager or phone and be able to return to the site within 30 minutes.  Except in infrequent circumstances, CPS did not pay its guards for any on-call time.

In 2008, security guards employed by CPS filed two class action lawsuits against the company.  In each case, the employees alleged that CPS improperly failed to pay guards for on-call hours and for eight hours of sleep time.

Under California law, whether on-call time is compensable depends upon the level of control the employer exercises over the employee during the time in question.  The following factors are considered:  (1) whether the employer has an on-premises living requirement; (2) whether there are excessive geographical restrictions on the employee’s movements; (3) whether the frequency of work-related calls is unduly restrictive; (4) whether a fixed time limit for response is unduly restrictive; (5) whether the on-call employee can easily trade on-call responsibilities with another; (6) whether the use of a pager can ease restrictions; and (7) whether the employee has actually engaged in personal activities during the on-call time.

Applying these factors in the Mendiola case, the California Supreme Court found that CPS had sufficient control over its security guards such that the guard’s on-call time was compensable.

Regarding sleep time, the Court noted that federal law generally permits employers and employees working shifts of 24 or more hours to agree that employees will not be paid for up to eight hours of sleep time.  However, the Court found that California law is different.  Under Wage Order 4, which applies to many types of employees including CPS’ security guards, sleep time agreements are not permitted.  Thus, all time the employee was required to remain on the client’s premises or under the employer’s control, even time spent asleep, needed to be paid.  The Court noted, however, that the same result would not necessarily apply for employees covered by different Wage Orders.  Thus, careful analysis of the issue is a must.

As an employer, what can you learn from Mendiola?  If your employees work 24-hour shifts, you should closely review your company’s policies regarding compensation for “on-call” and “sleep time” situations.  Since different rules may apply to different types of employees, it is likely a good idea to work with an attorney who is knowledgeable on the topic.

Daniel McQueen is a Partner and Lindsay Holloman is an Associate in Sheppard Mullin’s Los Angeles office. If you would like further information, please contact your Sheppard Mullin attorney.  You may also contact Mr. McQueen at dmcqueen@sheppardmullin.com or Ms. Holloman at lholloman@sheppardmullin.com.