Per diem employment combined with on-call scheduling often confuses workers regarding rightful pay. The term “per diem” means “for the day,” suggesting a simple daily payment. However, the addition of an on-call requirement complicates whether standby time should be compensated. Whether this time constitutes compensable work depends not on the employee’s per diem status, but on the degree of restriction imposed by the employer’s availability requirements. Clarifying payment obligations requires understanding both the employment arrangement and the on-call demands.
Understanding Per Diem Employment
Per diem employment is a staffing arrangement where individuals are hired on an as-needed or day-to-day basis to manage fluctuating workloads without long-term commitments. This status is defined by a lack of guaranteed work hours; the employee is only paid for shifts actually worked. Compensation is often a fixed daily rate or a higher hourly wage to offset the absence of traditional employee benefits.
This model is utilized in industries with rapidly changing staffing needs, such as healthcare, education, and hospitality, to cover absences or peak demand. Per diem workers typically do not receive standard benefits like health insurance or paid time off. Although they are considered employees entitled to minimum wage and overtime protections, their work schedule is irregular and dependent on the employer’s operational requirements.
Understanding On-Call Requirements
On-call status refers to periods when an employer requires a worker to be available for work, usually outside of their scheduled shift. The nature of these requirements determines the need for compensation. Highly restrictive on-call time forces the employee to remain on the employer’s premises or so close to the worksite that personal activities are severely limited.
A less restrictive model requires the employee to carry a phone but allows them to engage in personal activities, such as running errands or relaxing at home. They must be reachable and able to report to work within a defined timeframe, but they can use the time effectively for their own purposes. The employer must define the on-call shift periods and the maximum response time allowed for reporting to active work.
Determining If On-Call Time Is Compensable Work
The Fair Labor Standards Act (FLSA) provides the legal standard for determining if on-call time must be paid, regardless of employee status. The test centers on whether the worker is “engaged to wait” or “waiting to be engaged.” Time spent “engaged to wait” is compensable working time because restrictions prevent the employee from using the time effectively for personal purposes.
Courts and regulatory bodies examine several factors to make this determination, including the required response time; a short response time, such as 15 or 30 minutes, often suggests the time is compensable. Other factors include geographic restriction, the frequency of calls during the on-call period, and the ability to trade or switch on-call shifts. If the employer’s requirements are so restrictive that the worker cannot pursue their personal life, that time is considered hours worked and must be paid.
Time is not compensable if the employee is “waiting to be engaged,” meaning they are free to use the time for their own benefit and are minimally restricted. For example, being on-call at home with no geographical limits may not be considered working time. However, if state laws or collective bargaining agreements impose greater protections, those rules take precedence over the federal standard.
Calculating Pay for Per Diem On-Call Work
If on-call time is compensable under the “engaged to wait” standard, the employer must ensure payment meets federal minimum wage requirements. Payment for this standby period is often structured differently than the regular per diem rate for active work. A common method is “standby pay,” which is a fixed, reduced hourly rate or a flat fee for the entire on-call shift.
Once the per diem employee is called in for active work, their pay shifts to their negotiated regular rate. Many employers also provide a minimum shift guarantee, such as two to four hours of pay, for any call-in. If the total hours worked, including both standby and active time, exceed 40 in a workweek, the employee’s regular rate must be used to calculate the overtime rate of time and a half.
Essential Steps for Per Diem Employees
Per diem employees should first review their employment contract and the company’s policy regarding on-call requirements and compensation. It is prudent to keep detailed logs of all on-call hours, even those not immediately compensated, to establish a pattern of restriction. This documentation should include the start and end times of the on-call period, the number of times they were called, and the time it took to respond and report for work.
The employee must track all restrictions placed on their movement, such as travel distance from the worksite or prohibitions on consuming alcohol. This record provides evidence of the limits imposed on personal time should a wage dispute arise. Understanding the company’s internal process for reporting wage discrepancies is the final step to ensure concerns about unpaid time are formally addressed.
Courts examine several factors to make this determination, including the required response time; a short response time, such as 15 or 30 minutes, often suggests the time is compensable. Other factors include geographic restriction, the frequency of calls, and the ability to trade or switch on-call shifts. If the employer’s requirements are so restrictive that the worker cannot pursue their personal life, that time is considered hours worked and must be paid.
Time is not compensable if the employee is “waiting to be engaged,” meaning they are free to use the time for their own benefit and are minimally restricted. Being on-call at home with no geographical limits may not be considered working time. However, if state laws or collective bargaining agreements impose greater protections, those rules take precedence over the federal standard.
Calculating Pay for Per Diem On-Call Work
If on-call time is compensable under the “engaged to wait” standard, the employer must ensure payment meets federal minimum wage requirements. Payment for this standby period is often structured differently than the regular per diem rate for active work. A common method is “standby pay,” which is a fixed, reduced hourly rate or a flat fee for the entire on-call shift.
Once the per diem employee is called in for active work, their pay shifts to their negotiated regular rate. Many employers also provide a minimum shift guarantee, such as two to four hours of pay, for any call-in. If the total hours worked, including both standby and active time, exceed 40 in a workweek, the employee’s regular rate must be used to calculate the overtime rate of time and a half.
Essential Steps for Per Diem Employees
Per diem employees should first review their employment contract and the company’s policy regarding on-call requirements and compensation. It is prudent to keep detailed logs of all on-call hours, even those not immediately compensated, to establish a pattern of restriction. This documentation should include the start and end times of the on-call period, the number of times they were called, and the time it took to respond and report for work.
The employee must track all restrictions placed on their movement, such as travel distance from the worksite or prohibitions on consuming alcohol. This record provides evidence of the limits imposed on personal time should a wage dispute arise. Understanding the company’s internal process for reporting wage discrepancies is the final step to ensure concerns about unpaid time are formally addressed.