CORRIGAN, J. —
Here we hold that, under the California wage order covering security guards, these plaintiffs are entitled to compensation for all on-call hours spent at their assigned worksites under their employer's control.
The relevant facts are not in dispute.
More specifically, a guard's obligations differed depending on the day of the week. On weekdays, each guard was on patrol for eight hours, on call for eight hours, and off duty for eight hours. On weekends, each guard was on patrol for 16 hours and on call for eight hours.
By written agreement, an on-call guard was required to reside in a trailer provided by CPS. The trailers ranged from 150 to 200 square feet and had residential amenities including a bed, bathroom, kitchen, heating, and air-conditioning. Only the assigned guard and maintenance staff had keys to these onsite trailers. Guards could keep personal items in the trailers and generally use on-call time as they chose. However, children, pets, and alcohol were not allowed, and adult visitors were permitted only with the approval of the CPS client.
An on-call guard wanting to leave the worksite had to notify a dispatcher and indicate where he or she would be and for how long. If another employee was available for relief, the guard had to wait onsite until the reliever arrived.
Guards were compensated as follows. They were paid hourly for time spent patrolling the worksite. They received no compensation for on-call time unless (1) an alarm or other circumstances required that they conduct an investigation or (2) they waited for, or had been denied, a reliever. Guards were paid for the actual time spent investigating disturbances. If three or more hours of investigation were required during on-call time, the guard was paid for the full eight hours.
The trial court granted plaintiffs' motion, concluding that CPS's compensation policy violated Wage Order 4. Citing the extent of CPS's control during on-call hours and the fact that the guards' presence on worksites primarily benefitted CPS, the court concluded that the on-call hours constituted compensable "hours worked" within the meaning of the wage order. CPS sought review. The Court of Appeal affirmed in part and reversed in part. Both parties petitioned for review.
We conclude that plaintiffs' on-call hours constituted compensable hours worked and, further, that CPS could not exclude "sleep time" from plaintiffs' 24-hour shifts under Monzon v. Schaefer Ambulance Service, Inc. (1990) 224 Cal.App.3d 16 [273 Cal.Rptr. 615] (Monzon) and Seymore v. Metson Marine, Inc. (2011) 194 Cal.App.4th 361 [128 Cal.Rptr.3d 13] (Seymore).
We have explained that "wage and hour claims are today governed by two complementary and occasionally overlapping sources of authority: the provisions of the Labor Code, enacted by the Legislature, and a series of 18 wage orders, adopted by the IWC." (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026 [139 Cal.Rptr.3d 315, 273 P.3d 513] (Brinker).) The IWC, a state agency, was empowered to issue wage orders, which are legislative regulations specifying minimum requirements with respect to wages, hours, and working conditions.
Wage Order 4 defines hours worked 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."
The guards here were required to "reside" in their trailers as a condition of employment and spend on-call hours in their trailers or elsewhere at the worksite. They were obliged to respond, immediately and in uniform, if they were contacted by a dispatcher or became aware of suspicious activity. Guards could not easily trade on-call responsibilities. They could only request relief from a dispatcher and wait to see if a reliever was available. If no relief could be secured, as happened on occasion, guards could not leave the worksite. CPS exerted control in a variety of other ways. Even if relieved, guards had to report where they were going, were subject to recall, and could be no more than 30 minutes away from the site. Restrictions were placed on nonemployee visitors, pets, and alcohol use.
Additionally, the Court of Appeal correctly determined that the guards' on-call time was spent primarily for the benefit of CPS. The parties stipulated that "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 notes that on-call guards engaged in personal activities, including sleeping, showering, eating, reading, watching television, and browsing the Internet. Although relevant, this fact does not compel a different conclusion. Morillion held that time spent traveling to and from work on employer-provided buses constituted compensable hours worked. (Morillion, supra, 22 Cal.4th at p. 578.) It rejected the employer's claim "that plaintiffs were not under its control during the required bus ride because they could read on the bus, or perform other personal activities.... Allowing plaintiffs the circumscribed activities of reading or sleeping does not affect, much less eliminate, the control [the employer] exercises by requiring them to travel on its buses.... Similarly, as one amicus curiae suggests, listening to music and drinking coffee while working in an office setting can also be characterized as personal activities, which would not otherwise render the time working noncompensable." (Id. at p. 586; see Bono, supra, 32 Cal.App.4th at pp. 971-972 [time employee is required to remain at workplace during lunch constitutes hours worked even when relieved of all job duties]; Aguilar v. Association for Retarded Citizens (1991) 234 Cal.App.3d 21, 30 [285 Cal.Rptr. 515] (Aguilar) [time employee is required to remain at workplace is hours worked even if permitted to sleep].) So too here. The fact that guards could engage in limited personal activities does not lessen the extent of CPS's control. It is the extent of employer control here that renders on-call time compensable hours worked under Wage Order 4.
In arguing against this result, CPS urges that we should incorporate 29 Code of Federal Regulations part 785.23 (2014) (part 785.23)
CPS identifies no analog to part 785.23 in Wage Order 4. By contrast, Wage Order 5, which applies to public housekeeping workers, does contain analogous language. Its definition of hours worked provides that, "in the case of an employee who is required to reside on the employment premises, that time spent carrying out assigned duties shall be counted as hours worked." (Wage Order 5, subd. 2(K), italics added.) Wage Order 4, as noted, does not contain language limiting hours worked to "time spent carrying out assigned duties." (See Morillion, supra, 22 Cal.4th at p. 592.)
Furthermore, other language in Wage Order 4 demonstrates that the IWC knew how to explicitly incorporate federal law and regulations when it wished to do so. For example, the wage order provides that, within the health care industry, hours worked should be interpreted in accordance with the FLSA. (Wage Order 4, subd. 2(K).) But the order makes no reference to federal law applying in the case of guards. The language chosen by the IWC does not support CPS's argument that a broad importation was intended. Indeed, it supports the contrary conclusion: The IWC intended to import federal rules only in those circumstances to which the IWC made specific reference.
The Exclusion of Sleep Time from 24-hour Shifts
The remaining question is whether sleep time may be excluded from plaintiffs' 24-hour shifts. On this issue, the Court of Appeal relied on Monzon,
In Monzon, ambulance drivers and attendants sued to recover unpaid overtime compensation. (Monzon, supra, 224 Cal.App.3d at p. 22.) The workers fell not under Wage Order 4, but instead under IWC wage order No. 9-2001 (Cal. Code Regs., tit. 8, § 11090 (Wage Order 9)). (Monzon, at p. 22.) To resolve the case, the Monzon court considered whether the parties had lawfully agreed to exclude eight hours of sleep time from otherwise compensable hours worked in a 24-hour shift. (Ibid.) Both Wage Orders 4 and 9 impose daily and weekly overtime obligations. (Wage Order 9, subd. 3(A); see ante, at p. 839 & fn. 7.) Unlike Wage Order 4, however, Wage Order 9 also contains a narrow exception to its daily overtime provision. The exception states: "The daily overtime provision ... shall not apply to ambulance drivers and attendants scheduled for 24-hour shifts of duty who have agreed in writing to exclude from daily time worked not more than three (3) meal periods of not more than one (1) hour each and a regularly scheduled uninterrupted sleeping period of not more than eight (8) hours." (Wage Order 9, subd. 3(K); see Wage Order 5, subd. 3(J) [virtually identical provision].)
While Wage Order 9's "sleeping period" exception may be open to several interpretations, the Monzon court concluded it did not apply in that case because the parties had not entered into a written agreement, which the exception requires. (Monzon, supra, 224 Cal.App.3d at pp. 40-41.) The majority nonetheless determined that the parties had lawfully agreed "to exclude sleep time from compensable time."
Monzon is not a paragon of clarity. At times it appears that its reliance on part 785.22 is based on the similarity between the state and federal definitions of hours worked. (E.g., Monzon, supra, 224 Cal.App.3d at pp. 45-46.) We have subsequently rejected such reasoning. (Morillion, supra, 22 Cal.4th at p. 590.) Alternatively, Monzon could be read as basing its reliance on evidence that the IWC intended to adopt the federal standard with regard to ambulance drivers and attendants. (E.g., Monzon, at p. 45.) Whatever its rationale, Monzon dealt solely with ambulance drivers and attendants and made specific reference to the realities of that industry. The DLSE subsequently recognized the limited scope of Monzon's holding. (E.g., Dept. of Industrial Relations, DLSE Opn. Letter No. 1998.05.29 (May 29, 1998) p. 2.) At oral argument, plaintiffs' counsel invited us to disapprove Monzon. However, the narrow Monzon rule has stood to regulate the compensation of ambulance drivers and attendants for nearly 25 years. Moreover, its application is not at issue here. It is sufficient to note that Monzon's holding is limited to its facts.
In 2011, Seymore substantially expanded Monzon's 1990 holding. In Seymore, ship crewmembers, also governed by Wage Order 9, sued to recover unpaid overtime compensation. (Seymore, supra, 194 Cal.App.4th at pp. 365, 373.) The Court of Appeal considered whether the parties had lawfully agreed to exclude eight hours of sleep time from otherwise compensable hours worked in a 24-hour shift. (Id. at p. 365.) Relying on Monzon, the court
We disapprove Seymore v. Metson Marine, Inc., supra, 194 Cal.App.4th 361, as an improper extension of Monzon. As we stated in Morillion, courts should not incorporate a federal standard concerning what time is compensable "[a]bsent convincing evidence of the IWC's intent...." (Morillion, supra, 22 Cal.4th at p. 592, italics added.) Unlike Monzon, which at least could point to some evidence of the IWC's intent concerning ambulance drivers and attendants, Seymore identified no such indication, much less convincing evidence, that the IWC intended to permit the exclusion of sleep time from compensable hours worked for all employees working 24-hour shifts.
In concluding that CPS and plaintiffs could agree to exclude on-call hours from plaintiffs' 24-hour shifts, the Court of Appeal here cited Monzon and Seymore, extending Seymore's reasoning to its fullest conclusion. That is, the court below rejected the notion that the ability to exclude sleep time from 24-hour shifts is limited to ambulance drivers and attendants or employees covered by Wage Order 9. "We agree with the courts in Seymore and Monzon that because the state and federal definitions of hours worked are comparable and have a similar purpose, federal regulations and authorities may properly be consulted to determine whether sleep time may be excluded from 24-hour shifts. Further, we find this determination to be applicable to all wage orders that include essentially the same definition of `hours worked' found in Wage Order No. 9, including Wage Order No. 4." (Italics added.) This conclusion is both sweeping and incorrect.
With regard to the relevance of similarities between state and federal definitions of hours worked, Morillion is particularly instructive. In concluding that employees' travel time was compensable under state law, we stated that "we do not believe the similarity or differences between the [state and federal] definitions of `hours worked' is dispositive of whether plaintiffs' compulsory travel time is compensable under state law." (Morillion, supra, 22 Cal.4th at p. 590.) The relevant issue in deciding whether the federal standard had been implicitly incorporated was whether state law and the wage order contained an express exemption similar to that found in federal law. (Ibid.)
The absence of language addressing sleep time in Wage Order 4 seriously undermines the notion that the IWC intended to incorporate part 785.22 sotto voce.
In support of its conclusion, the Court of Appeal also opined that there were "sound reasons for permitting an employer who engages an employee to work a 24-hour shift ... to exclude ... eight hours for sleep time .... Most employees would be sleeping for a similar period every day, whether on duty or not, and the compensation provided for the other 16 hours ... ensures that the employees receive an adequate wage." We rejected a nearly identical argument in Morillion. (Morillion, supra, 22 Cal.4th at pp. 587-588 [rejecting the argument that employees would have had to commute anyway].) More importantly, we instructed courts not to "engage in needless policy determinations regarding wage orders the IWC promulgates." (Id. at p. 587.) Judicial review of "`wage orders is properly circumscribed.... "A reviewing
We recognize that the DLSE has, at various times, seemed to approve CPS's policy of excluding sleep time as complying with state law. In 1996, the DLSE began an investigation into CPS's compensation practices. In a 1997 letter to CPS, the acting labor commissioner concluded that the company could, pursuant to a written agreement, exclude sleep time. That position was subsequently and explicitly disavowed, however, in a 1999 letter to CPS from the newly appointed labor commissioner, and again in a 2002 letter to CPS from the DLSE chief counsel. The 1999 and 2002 letters rejected the position taken in the 1997 letter as incorrect and in conflict with established California law, and also dismissed CPS's reliance on federal regulations. CPS subsequently filed an action for declaratory relief against the labor commissioner, who filed a cross-complaint. Before trial, the parties settled and signed a memorandum of understanding (MOU). Pursuant to the MOU, which expired in 2007, CPS adopted its current compensation policy and the labor commissioner took the position that CPS's policy complied with all applicable wage orders.
Cantil-Sakauye, C. J., Werdergar, J., Chin, J., Liu, J., Baxter, J.,