On-call time is compensable under the FLSA when restrictions on the employee's freedom are so significant that the time cannot be used effectively for personal purposes.
Why on-call pay matters for employers
Whether on-call time must be compensated under the FLSA depends on whether the employee is engaged to wait (compensable) or waiting to be engaged (not compensable). The key question is the degree of freedom the employee has during the on-call period.
On-call time is generally compensable when the employee must remain on the employer's premises, must respond within a very short time frame (such as immediately or within 5 minutes), is called back to work frequently during on-call periods, or is subject to restrictions that effectively prevent them from using the time for personal activities.
On-call time is generally not compensable when the employee can be at home or elsewhere of their choosing, has sufficient advance notice of on-call duties, can arrange personal activities around on-call obligations, and is not called back frequently. Being required to carry a pager or cell phone alone does not make on-call time compensable.
Courts apply a totality-of-circumstances analysis considering: geographical restrictions on movement, required response time, frequency of calls, ability to engage in personal activities, and whether the employee can trade on-call shifts.
When on-call time is compensable, it counts toward the 40-hour overtime threshold. Employers often pay a separate on-call differential rate for standby time, which is still factored into the regular rate of pay for overtime calculation purposes.
How BEG handles on-call pay for clients
BEG Managed Payroll correctly classifies and tracks on-call hours, applies appropriate pay rates, and includes on-call differentials in regular rate calculations as part of fully managed payroll at $25-$45 per employee per month. Learn about BEG Managed Payroll.
Frequently asked questions
Does carrying a work phone make on-call time compensable?
Not automatically. Carrying a phone or pager is one factor but does not by itself make standby time compensable. The key is whether restrictions on the employee's activities are significant enough to prevent personal use of the time.
How does frequent callback affect on-call compensation?
High callback frequency is a strong indicator that on-call time is compensable. If an employee is called back so often during on-call periods that they effectively cannot use the time freely, courts are likely to find the entire period compensable.
Must on-call time be paid at the regular hourly rate?
If compensable, on-call time must be paid at least at the minimum wage rate. Employers often pay a lower on-call differential for standby time and the full rate only for actual callback hours, which is permissible as long as effective rates meet minimum wage.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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