It’s not unusual for employers to ask employees to be on-call. Many businesses need to have someone available to answer calls and address emergencies during non-business hours. It can promote good customer service.  

When these situations arise, the question becomes: at what point is the individual paid for their time being on-call? For some, the time spent on-call will be treated as unpaid unless the employee actually performs work during that period. Others might offer a small stipend, like $20.00, for on-call availability, regardless of how much or little someone ends up working during that time. Many employers don’t provide pay at all since employees “volunteered” to do it. 

What employers might not realize, however, is that failing to pay for on-call time could violate wage and hour laws. Ignoring this can result in liability, particularly in the form of wage claims for unpaid time that should have been compensated.

What makes this issue more complicated is that not all on-call hours are the same—some must be paid, while others don’t. Understanding the differences and managing on-call situations properly is crucial to ensure compliance.

The Fair Labor Standards Act (FLSA) governs wage and hour rules and determines when an employee must be compensated for their time. Regarding on-call hours, two key concepts are used to determine whether time should be paid: “waiting to be engaged” and “engaged to wait.” In simple terms, if the time benefits the employer, it is generally considered compensable.

“Waiting to be engaged” means the employee is free to spend their time as they choose, just like during normal off-hours. Because this time primarily benefits the employee, it usually isn’t compensable until work duties must be performed like answering calls.

“Engaged to wait” occurs when the employer places restrictions on the employee’s activities during on-call hours. The more restrictions there are, the more likely it is that the time will be considered compensable because it primarily benefits the employer.

Here are some factors to consider when determining whether on-call time must be paid:

• Freedom to engage in personal activities: If the employee can go about their usual personal tasks while on-call, it’s more likely the time won’t require compensation.
• Geographical restrictions: The fewer geographical limitations placed on the employee, the less likely the on-call time is compensable.
• Number and frequency of calls: How often the employee must perform work while on-call may impact whether the time is paid. The higher the call volume the less likely it is that their time is for their own benefit. 
• Response time limits: The more flexible the response time, the less likely the on-call time will need to be compensated.
• Other Employer Restrictions: Special, additional requirements may result in the need to compensate an employee while on-call. For example, a requirement to report to the business within 20 minutes, if needed, at all times while on call. 

These guidelines apply only to time between calls or other work duties that are part of the employee’s on-call responsibilities. Any actual work performed during their on-call shift must always be paid. Additionally, if the total hours worked in a week exceed the overtime threshold, overtime pay is required. 

Volunteering is not legal in private-sector, for-profit businesses. 

The rate of pay for work performed during on-call hours can differ from the employee’s regular rate. This time may be categorized into different types of work—such as office time, on-call time, call-back time, or travel time. Each type can have a separate pay rate, referred to as a “different capacity work rate.” These rates must meet or exceed minimum wage requirements, and the employee must be notified in writing of these rates before their on-call duties begin. 

In an effort to simplify pay, there may be a desire to provide a flat rate for the duration of an employee’s on-call shift. This can work as long as that flat rate covers all hours worked (i.e., time spent engaged to wait and/or managing calls and emergencies and other tasks). If the rate for the weekend is, for example, $50.00, but the employee worked enough to earn $100.00 in wages, then the employer must make up the difference. 

To properly calculate pay, employees must track their time performing work while on-call. This should be submitted by the employee and paid through normal payroll. 

If you’re implementing an on-call system for employees, it’s important to clearly outline your expectations and clarify any restrictions you may have. Compare your on-call policies with the criteria mentioned above to determine which portions of the on-call time should be paid. When in doubt, the safest course of action is to compensate for the time.