March 28, 2024

California Supreme Court Clarifies When Certain Pre- and Post-Shift Activities Qualify as “Hours Worked”

An issue that has long plagued employers in California is whether time an employee spends on the employer’s premises making their way to or from their worksite is compensable. We have seen a spike in lawsuits raising this issue ever since the California Supreme Court’s 2020 decision in Frlekin v. Apple Inc., 8 Cal. 5th 1038 (2020), which readers will remember held that time spent by Apple employees undergoing exit searches when leaving Apple stores was compensable.

The issue comes down to “control”: what level of employer control over the employee is sufficient to trigger an obligation to compensate employees for that time? 

On March 25, 2024, the California Supreme Court published its decision in Huerta v. CSI Electrical Contractors Inc., which provides useful (and, in key ways, employer-friendly) insight into how to answer that question. 

The Facts

George Huerta worked for CSI Electrical Contactors (“CSI”), a subcontractor that performed construction work at the California Flats Solar Project (the “Site”). The site only had one entrance, located at a guard shack on the Site’s perimeter. From there, a designated road provided access from this single entrance point to the employee parking lots. There was a Security Gate on that road several miles from the guard shack, where employees underwent security checks. From the Security Gate, it would take employees about 10 to 15 minutes to reach the parking lots.  

At the beginning and end of each day, long lines of vehicles would form at the Security Gate, where guards would scan each worker’s identification badge and sometimes look inside vehicles and truck beds. The delay caused by this exit procedure could take up to a minute or more per vehicle and cause delays of five to more than 30 minutes. 

In addition, due to the presence of endangered species at the Site, the Department of Fish and Wildlife (“DFW”) imposed a number of restrictions that CSI contractually agreed to abide by that were designed to ensure minimal disturbances to wildlife along the road. These restrictions included speed limits, restrictions on honking of horns and playing of loud music in employee vehicles, and restricting employee travel while on the site to solely driving along the designated access road. 

The Lawsuit

Huerta filed a wage-and-hour class action seeking unpaid wages for employees’ time spent waiting to pass through the Security Gate, and for time spent driving between the Security Gate and employee parking lots. He also alleged that CSI employees were owed meal period premiums because he and other workers were required to remain on the premises during their meal periods. 

After CSI won summary judgment on Huerta’s claims, Huerta appealed to the U.S. Court of Appeals for the Ninth Circuit. Finding that California law was unsettled, the Ninth Circuit certified three questions to the California Supreme Court.

The Decision

Question 1: “Is time spent on an employer’s premises in a personal vehicle and waiting to scan an identification badge, have security guards peer into the vehicle, and then exit a Security Gate compensable as ‘hours worked’ within the meaning of . . . Wage Order No. 16?”

The court held that an employee’s time spent on an employer’s premises awaiting and undergoing an employer-mandated exit procedure like the one implemented by CSI was compensable as “hours worked.” The court applied essentially the same analysis it relied on in Frlekin, which focused on the level of “control” asserted by the employer during the exit process. 

Here, the court found evidence of such control included (1) the mandatory nature of the exit procedure; (2) that employees were required to perform specific tasks as part of the procedure (e.g., roll their window down, present their security badge and submit their vehicle for visual and physical inspection); (3) that employees remained confined on the employer’s premises until they completed the exit procedure; and (4) the purpose of the exit procedure was primarily in service of CSI’s interests. 

Notwithstanding the court’s holding, employers need not conclude that any additional travel time employees experience as a result of employer post-shift exit procedures is now automatically compensable. The court noted specific aspects of CSI’s exit procedures that distinguished it from the sort of delay caused by more routine security procedures designed to merely facilitate ingress and egress to and from employer premises—which ostensibly would not be considered “hours worked.”

Question 2: “Is time spent on the employer’s premises in a personal vehicle, driving between the Security Gate and the employee parking lots, while subject to certain rules from the employer, compensable as ‘hours worked’ or as ‘employer-mandated travel’ within the meaning of . . . Wage Order No. 16?”

The court held that that the rules CSI imposed on employees while traveling on workplace premises after passing the Security Gate, but before clocking in, did not amount to a level of control sufficient to render the travel time compensable as “hours worked.” In many ways, this is the most important aspect of this case for most employers in California.

The court noted that although these rules curbed Huerta’s freedom of action while traveling through the Site to some degree, the nature of the restrictions imposed were the sort which would be expected to be imposed on employees traveling on employer premises in nearly all workplaces, which the court characterized as “regulated environments” by nature. The court rejected the notion that “an employee is entitled to compensation whenever he is not permitted to drive wherever he wants, to go however fast he wants, or to stop wherever he wants on the employer’s premises.”  o the contrary, the court reaffirmed that employer rules that “are designed to ensure safe, lawful, and orderly conduct while traveling on the employer’s premises” are “necessary and appropriate in virtually every workplace,” and do not render travel time on an employer’s work premises compensable.

Unlike the concept of “hours worked,” which applies broadly across the wage orders, the concept of “employer-mandated travel” is unique to Wage Order No. 16, the wage order applicable to the construction, drilling, logging, and mining industries. Here, the court declined to find whether the travel time between the Security Gate and parking lots was compensable as “employer-mandated travel” in this particular case, but provided useful guidance for how such a determination must be analyzed. Specifically, the court held that for such travel time to be compensable as “employer-mandated travel” under Wage Order No. 16, there must be evidence not only that the employer required the employee’s presence at an initial location before mandating travel to a subsequent location, but also that the employee’s presence was required for an employment-related reason other than the practical necessity of accessing the worksite. 

Question 3: “Is time spent on the employer’s premises, when workers are prohibited from leaving but not required to engage in employer-mandated activities, compensable as ‘hours worked’ within the meaning of . . . Wage Order No. 16, or under California Labor Code Section 1194, when that time was designated as an unpaid ‘meal period’ under a qualifying collective bargaining agreement?”

The court held that even when a qualifying collective bargaining agreement exempts employers from the meal period requirements of Wage Order No. 16 (remember that collective bargaining agreement waivers of meal periods are only permissible in a few industries), the employer must still pay a minimum wage for ostensibly off-duty meal periods when the “employer’s prohibition on leaving the premises or a particular area forecloses the employee from engaging in activities he or she could otherwise engage in if permitted to leave.” The court explained that “[a]lthough a meal period’s limited duration may impose some practical limitations on employees’ freedom of movement, employees must retain the freedom to use the time ‘for their own purposes’ if a meal period is to qualify as “off-duty.” 

Note that this is not saying that meal period premiums are paid at minimum wage—those are still paid at the “regular rate.” Rather, the minimum wage discussion, which is specific to the unique context of Wage Order No. 16, focuses on how the ostensibly “off-duty” time itself must be paid as “hours worked” under Wage Order No. 16 when the meal period is not truly “off-duty” as a result of the employer’s restrictions.     

Practical Implications

In light of Huerta, employers should take stock of certain procedures:

Employers who require employees to pass through a mandatory security checkpoint before entering or exiting work should review their procedures to determine whether the factors identified by the Supreme Court indicate a level of control that makes the time spent undergoing these procedures compensable.  

Employers may also want to evaluate whether any rules that restrict employee travel while on their premises go beyond those “designed to ensure safe, lawful, and orderly conduct,” which the high court reaffirmed can be properly maintained without making on-site travel time compensable. 

Finally, employers should revisit carefully meal period policies that prohibit employees from leaving the work site during those breaks. 

Disclaimer: Please contact your Payne & Fears attorney for current guidance on the subject matter of this article.