California law is very clear in requiring that "all hours worked" must be compensated at statutory minimum wage or overtime rates. Less clear, however, is what time must be counted as "work." In Mendiola v. CPS Security, Inc., the California Supreme Court clarified that a liberal two-pronged standard applies to this determination.
CPS Security provided on-site guards at construction sites. As part of their duties the guards were required to be on-call to respond to any emergencies and to sleep in trailers placed at the sites. The Supreme Court found that the guards' on-call and sleep time both met the definition of "hours worked" under California law and therefore had to be paid.
The Mendiola Court first clarified that California has two separate and independent tests under which time may be defined as "hours worked."
In Morillion [v. Royal Packing Co.], we explained that “the two phrases—‘time during which an employee is subject to the control of an employer’ and ‘time the employee is suffered or permitted to work, whether or not required to do so’ “ can be viewed “as independent factors, each of which defines whether certain time spent is compensable as ‘hours worked.’ Thus, an employee who is subject to an employer's control does not have to be working during that time to be compensated....
As to the "control" test, the Court found that an employee will normally satisfy the test whenever he is required to remain on the employer's premises.
When an employer directs, commands or restrains an employee from leaving the work place ... and thus prevents the employee from using the time effectively for his or her own purposes, that employee remains subject to the employer's control. According to [the definition of hours worked], that employee must be paid.
Applying this standard, the Court found that the guards were entitled to pay because they were required to stay at the job site during their on-call hours.
As to the "permitted to work" test, the Court found that the threshold question is whether the time is primarily for the benefit of the employer and its business." The guards were therefore entitled to compensation under this test as well because their on-call time was directly connected to their employer's "business model" and the service being offered to its clients.
CPS's business model is based on the idea that construction sites should have an active security presence during the morning and evening hours when construction workers arrive and depart the site, but that theft and vandalism during the night and weekend hours can be deterred effectively by the mere presence of a security guard in a residential trailer. Thus, even when not actively responding to disturbances, guards' “mere presence” was integral to CPS's business.
These clarified standards for paid "hours worked" will have far reaching effects. Indeed, under Mendiola any activities which require attendance at a job site, effectively preclude personal activities, or directly relate to the employer's "business model," will likely require compensation.