California Supreme Court Ruling Gives Guidance on Compensable Time Under California Law

The California Supreme Court issued its decision in Huerta v. CSI Electrical Contractors, providing further guidance to employers on when employee time spent in (1) security exit procedures, (2) traveling on employer property, and (3) in meal periods restricted to the employer's premises should be treated as compensable time worked.

The California Supreme Court on March 25 issued its decision in Huerta v. CSI Electrical Contractors. The case answered three questions of California law certified from the US Court of Appeals for the Ninth Circuit, as follows:

1. An employee’s time spent on an employer’s premises in a personal vehicle, awaiting and undergoing an employer-mandated exit security procedure that includes visual inspection of the vehicle, is compensable as “hours worked”
2. An employee’s time spent traveling between a security gate and a parking lot is not compensable hours worked merely because an employer imposes “ordinary workplace rules” during the drive to the worksite
3. When an employee is covered by a collective bargaining agreement that complies with Labor Code section 512(e) and Wage Order 16 § 10(E) such that the employer is exempt from California’s meal period requirements, the employee must still be paid at least minimum wage during any meal period, even if off-duty, if the employer prohibits the employee from leaving the employer’s premises or a designated area and thereby prevents the employee from engaging in personal activities he or she could otherwise engage in if permitted to leave

The court also answered a question unique to employers in the construction, drilling, logging, and mining industries, holding that if a security gate is the first location an employee is required to be for an employment reason other that accessing the worksite, the time to and from the parking lot is compensable as “employer-mandated travel” under Wage Order No. 16. [1]

Background

CSI hired Huerta to work at the California Flats Solar Project facility. The facility implemented certain security protocols to protect local endangered species, maintain safe operations, and prevent theft. To get to the worksite itself, employees had to travel past a manned security gate (the Security Gate) at the property’s perimeter several miles away from the worksite. Huerta claimed that lines would form at the Security Gate, where guards would scan each worker’s badge and sometimes “peer” inside vehicles.

At the end of the day, employees again needed to drive several miles to the property’s perimeter and wait in line to exit at the Security Gate, where guards would again scan badges and had the right to search vehicles. Huerta was not paid for the time waiting at the Security Gate or traveling to or from parking lots once inside the perimeter of the employer’s property.

Additionally, Huerta was subject to a collective bargaining agreement (CBA) that properly exempted CSI from the meal period requirements set out in Labor Code section 512. Huerta sought compensation for his meal break time, time spent waiting in line and undergoing security gate inspections, and time spent traveling on the road between the security gate and the work site.

Time Spent on Exit Screening

The Court held that “when an employee spends time on his employer’s premises awaiting and undergoing an exit security procedure that includes a vehicle inspection causing delay and that is mandated by the employer for its own benefit, the employee—even when in his personal vehicle—is subject to the employer’s control, and the time is compensable as ‘hours worked.’”

The Court relied on Frlekin v. Apple Inc., 8 Cal. 5th 1038 (2020), which found that time spent waiting for and undergoing required exit searches of bags and other personal items was compensable under California law as controlled “hours worked.” The Court agreed that “the CSI exit protocol is not as intrusive as the search in Frlekin,” but found it significant that the procedure “could take up to a minute or more per vehicle,” suggesting that the inspections went beyond the time needed to simply scan a badge.

The Court concluded that Huerta was subject to CSI’s control “while awaiting, and during,” the exit security procedures because, among other things, he was required to perform “specific and supervised tasks,” such as waiting in his car, presenting his security badge, and submitting to a visual inspection and possible search of his vehicle. In addition, the Court emphasized the fact that the search happened on the employer’s premises.

The Court noted that “[t]he fact that an employee awaits and undergoes the exit process while in his personal vehicle does not necessarily transform that time into [noncompensable] commuting time,” but made clear that such time is not compensable unless “sufficient indicia of control are present.” The Court distinguished procedures that only involve scanning a card, using a key, an automated gate, or flashing an identification card, suggesting that these types of exit procedures would not involve sufficient control to render time compensable. Instead, the Court indicated that the added circumstances of a guard inspecting back seats, back of trucks, and trunks involved more than facilitating egress.

Time Spent Entering and Driving on Employer’s Property

The Court addressed both general compensatory time issues as to an employee’s drive time on company property and an issue of “employer-mandated travel” unique to Wage Order 16. On the general topic, the Court made clear that simply driving to work on an employer’s premises in a personal vehicle “before or after a shift, while subjected to an employer’s rules,” does not make time compensable as “hours worked” under California’s control test. Huerta was subject to employer rules during the drive, including anti-discrimination policies, environmental rules, alcohol and drug policies, rules prohibiting smoking, practical jokes, horseplay, and “rules of the road,” such as speed limits, passing other drivers, stopping on the road, smoking, or using ear pods. The Court declared: “Although these rules curbed Huerta’s freedom of action while traveling between the Security Gate and the parking lots, we hold that they do not amount to a level of control sufficient to render the travel time compensable as ‘hours worked.’”

The Court noted that such rules “are necessary and appropriate in virtually every workplace,” and if they constituted employer control sufficient to qualify as hours worked, that would invite claims of unpaid wages from “any employee who uses a timeclock” or is traveling on an employer’s premises, including before or after a shift. Similarly, if the general site policies were sufficient to establish control, “then the control test would boil down to a categorical rule of compensability for any time an employee spends on the employer’s premises, including the time it may take to find a parking space at the start of the work day, to walk between a parking lot and worksite at the beginning or end of the day, or to wait for an elevator in a tall building.” Soundly rejecting these results, the Court concluded: “Rules designed to ensure safe, lawful, and orderly conduct while traveling on an employer’s premises . . . do not impose a level of control that renders the time compensable.”

The Court also examined whether the travel time could be compensable as “employer-mandated travel” under Wage Order 16’s unique provision stating that “[a]ll employer-mandated travel that occurs after the first location where the employee’s presence is required by the employer shall be compensated at the employee’s regular rate of pay.” No other Wage Order contains this specific requirement to compensate “employer-mandated travel.” Thus, the Court’s holding on “employer-mandated” travel should apply only to employers falling within Wage Order 16 (construction, drilling, logging, and mining). More generally, the Court’s thoughts on what constitutes “employer-mandated travel” make clear that “the practical necessity of reaching the worksite” does not make time compensable.

With respect to employer-mandated travel under Wage Order 16, the Court held that the “first location where the employee’s presence is required” does not refer to the entrance or single access point of a workplace, such as a parking entrance gate. Instead, the Court found “first location” refers to instances where an employee’s presence at a location “is required for an employment-related reason other than the practical necessity of reaching the worksite,” such as “to pick up work supplies, receive work orders or other directives, or perform work before traveling to a second jobsite.” The Court refrained from expressing any view on whether the security gate was the “first location” where Huerta’s presence was required, but noted that Huerta would need to show that his presence at the Security Gate was required for an employment-related reason other than accessing the worksite.

Restrictions on Employee Movement During Meal Breaks

Finally, the Court addressed the situation where an employer is exempt from California’s meal period requirements due to a qualifying occupation and collective bargaining agreement (CBA) under Labor Code section 512(f). Huerta argued, and the Court agreed, that even though California’s meal break rules did not apply to him, he was entitled to at least minimum wage during any on-duty meal periods. Huerta claimed that because he could not leave the worksite during meal breaks, his meal break time should have been compensated as hours worked.

The Court held that “even when a qualifying CBA exempts employers from the [meal period] requirements, an employee must be paid a minimum wage for meal periods when an employer’s prohibition on leaving the premises or a particular error forecloses the employee from engaging in activities he or she could otherwise engage in if permitted to leave.” In this regard, “[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.” This includes “feasible personal activities,” such as “being allowed to return to one’s vehicle or take a walk” unless distances from the worksite would make “travel impracticable during [a] 30-minute meal period.”

The Court agreed that “the fact that the features of a worksite make travel impractical in the time allotted is not sufficient to establish employer control.” This holding confirms that physical and geographic realities of a worksite do not, in and of themselves, render break time compensable. The Court, however, expressed no view on whether CSI’s particular restrictions met this standard.

Key Takeaways

This ruling provides important guidance with respect to several categories of activities on what does and does not constitute employer control sufficient to make the time compensable work time. Given the additional guidance, employers may want to review their security and safety processes and procedures, including as to any inspection of vehicles. Employers should also consider reviewing their policies as to any limitations on employee movement or activities during off-duty time.