Sleep time compensable for wage claim class action

In Mendiola v. CPS Securities Solutions, Inc. (60 Cal. 4th 833), Plaintiff security guards brought two class action lawsuits against the security company for failure to pay wages.  The plaintiffs alleged minimum wage and overtime violations for their on-call 24-hour work schedule. The facts of the case were undisputed.  During the week days, CPS guards worked 8 hour shifts, were on call for the following 8 hours, and then would have 8 hours off.  On the weekends, guards worked 16 hour shifts, with 8 hours on-call directly after.  CPS provided a trailer for on-duty guards, which they were required to stay in pursuant to their employment agreement. Guards would have to notify a supervisor if leaving the site and could not leave until a relief arrived.  The guards were paid for their hourly time spent patrolling the sites, but only received compensation while on call if responding to an alarm or waiting for and being denied a reliever.

After the trial court consolidated the two suits, both sides sought declaratory relief as to the lawfulness of CPS’s compensation policy.  The trial court concluded that CPS violated IWC Wage order 4.  Since the guards were subject to CPS’s control during on-call time and their presence was for the benefit of CPS, all on-call hours constituted compensable time.  CPS appealed, the Court of Appeals affirmed in part and reversed in part, and both sides petitioned the California Supreme Court for review.

The Court explained Wage Order 4.  Citing Morillion v. Royal Packing Co. (22 Cal.4th 575), the two factors considered under Wage Order 4 are: (1) the time during which an employee is subject to the [employers] control, and (2) the time the employee is suffered or permitted to work, whether or not required to.   The Supreme Court agreed with the appellate court in that the hours worked were compensable.  CPS argued for adoption of 29 CFR 785.23 to treat time for meals, rest, and other private pursuits as non-compensable.  However, unlike other Wage Orders, which explicitly created an exemption incorporating federal law, Wage Order 4 did not.  Applying the standard here would eliminate significant employee protections, a direct contradiction to state employment laws.

The Court affirmed the Court of Appeals decision holding the hours compensable and reversed the decision incorporating the federal regulation.