Ninth Circuit Clarifies Employer Obligations to On-Call Employees Working and Living on Site at Employer’s Remote Facilities

The Ninth Circuit Court of Appeals recently clarified its views concerning the employer’s obligations under the Fair Labor Standards Act (“FLSA”) to compensate employees who reside on the employer’s remote premises. The case is Brigham v. Eugene Water & Electric Board (“EWEB”), which was decided on February 3, 2004.

In the EWEB case, the employees worked and lived on-site at a remote power generation facility. The employees worked four-day weeks, consisting of three 10-hour "maintenance" shifts, plus one 24-hour "duty" shift. During the duty shift, the employees would perform six hours of scheduled work. In addition to these scheduled hours, the employees had to remain available throughout the duty shift to respond to emergency calls from the employer’s central dispatcher. Each employee was provided with on site housing equipped with a system that would alert the employee to any automated monitoring alarms. While on a duty shift, the employee was required to respond to any such alarms “immediately.” For these on-call activities, the duty employee received 10 hours of pay, plus double-time for any call-out time lasting beyond the call’s first 15 minutes.

The employees sued under the FLSA to recover for overtime pay which they alleged was owed for the uncompensated portion of their duty shifts (fourteen hours). The court did not agree that such pay was owed. In rejecting the employees’ claim, the court applied the judicially developed “waiting time” analysis to determine whether, from all of the pertinent factors, the employees were “engaged to wait” – which would be compensable time – or were instead “waiting to be engaged” – which would not be compensable time. The two “predominant factors” under this analysis are 1) the degree to which the employee is free to engage in personal activities, and 2) the existence and nature of the compensation agreements between the parties.

As to the first of these factors, the court concluded that, during the duty shift, the personal activities of the employees were so restricted that their time was not really their own; however, as to the second factor, the court concluded that, by accepting the assignment with knowledge of how the employees would be paid for the duty shift, these employees had entered into an agreement with their employer under which they would be compensated for the on-call portion of the duty shift in an amount equivalent to four hours of actual work on a maintenance shift.

The court remanded the case to the district court to determine how much overtime pay, if any, was owed under the court’s waiting time analysis and the agreement that was found to exist.