Global Compliance Desk – California

California Supreme Court’s Clarity on Compensable Hours

Recently, the California Supreme Court delivered crucial insights into the definition of “hours worked” under California labor laws in the landmark case of Huerta v. CSI Electrical Contractors. The Court ruling addressed three primary types of working time (waiting time, travel time, and meal break duration) and how they apply to employee compensation concerning total hours worked.

Facts of the Case

George Huerta was a construction worker for CSI Electrical Contractors, Inc., helping to build a solar power facility on privately owned land. 

• • • Huerta and other employees had to navigate through a single entrance, passing a guard shack and security gate miles away, all under the watchful eye of DFW biologists.
    • Upon arrival at the security gate, employees underwent various checks and badge scans before proceeding to designated parking areas, adhering to DFW speed limits and regulations.
    • Throughout their shifts, employees were required to remain on-site, even during meal breaks, as per CSI’s policy.
    • Departing the premises involved another round of security checks, potentially leading to further waiting times.

CSI paid its employees from the time they boarded a shuttle in the parking lot headed to the worksite until the time the shuttle dropped employees off at the parking lot at the end of a shift. CSI did not pay its employees for the time spent traveling the access road, waiting for or passing through the security gate, or for their meal periods taken at the worksite.

Huerta filed a class action against CSI seeking payment of unpaid wages for the time spent passing through the security gate, traveling along the access road, and taking on-site meal periods.   

Initial Ruling by California District Court 

The district court granted summary judgment in favor of CSI, finding that: 

• • • employees were not entitled to wages for the periods at issue because CSI did not exercise sufficient control over its employees during the security check and travel times, and 
    • according to applicable collective bargaining agreements, the employees were not entitled to compensation for their meal periods.

After the summary judgment by the district court, Huerta appealed to the Ninth Circuit, which certified the following three issues to the California Supreme Court – 

• • • Is time spent waiting at the security gate compensable as ‘hours worked’ under Wage Order No. 16?
    • Is travel time between the security gate and parking lots considered “hours worked” or ’employer-mandated travel’?
    • Are on-premises meal breaks compensable under Wage Order No. 16 or California Labor Code Section 1194?

Under  Wage Order 16, Hours worked is defined as, “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.”

Final Judgment

The California Supreme Court clarifies the Scope of Compensable ‘Hours Worked’  in its opinion which is as follows: 

Compensable Exit Inspections

• • • The Supreme Court unanimously ruled that time spent on employer-controlled exit inspections is compensable as “hours worked.” The Court referred to Frlekin v. Apple Inc. (2020), which ruled that waiting for and undergoing exit searches of personal items was compensable under California law as controlled work time. 
    • The court further clarified that factors indicating employer control included the requirement for employees to wait for and undergo inspections before leaving the confinement of the employer premises until inspection completion and performing specific tasks as part of the procedure. Thus, inspection is considered work time because its main purpose is to benefit the employer.

Non-Compensable On-Premises Travel

• • • The Supreme Court held that, under Wage Order 16, time spent in a personal vehicle driving between the security gate and the employee parking lot was compensable only if the security gate was the first location where the employee’s presence was required for an employment-related reason other than the practical necessity of accessing the work site.

Unpaid Meal Periods under Collective Bargaining Agreements

• • • The court confirmed that collective bargaining agreements cannot waive employees’ right to compensation for working during meal periods. 
    • Referring to its decision in 2015 regarding on-premises meal breaks in Augustus v. ABM Security Services, Inc., the court confirmed that an employee’s practical inability to leave the worksite during a meal period is insufficient to render a meal period a working one. The court therefore stated that the distances separating the Installation Site, parking lot, and public road, as well as the speed limit on the access road, might have made travel impractical during Huerta’s 30-minute meal period, and the fact that the features of a worksite make travel impractical in the time allotted is not sufficient to establish employer control.              

Practical Implications – Although the court analyzed the certified questions in the context of the construction industry and Wage Order 16, the court’s analyses shall have implications for California employers across a wide spectrum of industries.

Takeaway – Employers should review their practices to ensure they have adequate control to consider travel time and meal periods as compensable work time, adjusting pay practices as needed. They might also consider reducing unnecessary controls to promote a safe and organized workplace. Additionally, they should assess security and safety procedures including vehicle inspections, based on this guidance, and review policies restricting employee movement or activities during off-duty hours.