What Is the On-Call Pay for Hourly Employees?

In some industries—like IT and repair services—it’s common for some employees to be on call. These employees are expected to drop what they’re doing to respond to an immediate need, like diagnosing a computer networking issue, managing the emergency response to a natural disaster, or helping drivers with roadside problems and accidents.

If your employees are on call, you might be required to pay them for some or all of their on-call hours. But when, exactly, do you need to provide on-call pay for hourly employees? And when don’t you?

Let’s look at the details—and laws—of how to pay employees when they’re on call to make sure you’re in compliance and paying your employees what they’re owed.

What is the On-Call Pay for Hourly Employees?

On-call pay for hourly employees is their regular rate of pay, which must be at least minimum wage, or overtime if they've worked more than 40 hours in a workweek.

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Here's why:

• Federal law requires that employees on call are paid at least the minimum wage of $7.25 an hour.
• State laws require that employees on call are paid at least the state’s minimum wage (if it’s higher than the federal standard).
• On-call team members who work overtime must be paid their overtime rate if they exceed 40 hours worked. That’s 1.5x their hourly wage.
• Employees with employee contracts or collective bargaining agreements must earn the rate of pay stipulated by the terms of the agreement.
• Company policy might require that employees are paid premium wages for any on-call hours worked while on call. Those must be honored.
• Exempt employees aren’t entitled to on-call pay. You only need to pay non-exempt employees for being on call (more on this next).

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Bonus tip: Calculating on-call pay can be complex, especially when you need to pay overtime too. Skip the hassle by using Hourly to handle and simplify your payroll, making sure your employees get paid accurately—and that you comply with the law!

When Do You Need to Provide On-Call Pay?

You only need to pay wages for being on call when the employee is performing actual work. These are called “compensable hours.” 

In other words, if the employee is available to get called into work—but otherwise able to spend their time how they see fit, like shopping or watching TV—those hours aren’t considered compensable under federal law because it is “unrestricted time.” 

But if the employee is required to be on the employer’s premises, to remain within a certain distance from a work site or otherwise restricted, they’re considered working and must be paid for any hours spent on call—which is called “restricted time.”

What about Travel Time?

Employees must also be paid for any time spent traveling while performing on-call work. In other words, if an employee is at home and receives a phone call before heading to the office or worksite, they must be paid for both the phone call and the time spent driving to the office (in addition to the amount of time they actually spend at the office).

Who is Eligible for On-Call Pay?

On-call pay only applies to non-exempt employees. Exempt employees aren’t legally entitled to on-call pay. These are the major tenants of the federal law on on-call pay.

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According to the U.S. Department of Labor (DOL) and the Fair Labor Standards Act, non-exempt employees (and therefore those qualified for on-call pay) must meet some of the following criteria:

• Earn less than $35,658 per year (or $684 per week)
• Are paid on an hourly basis (not salaried)
• Aren’t employed as an executive, manager, professional in a role that requires advanced knowledge, or outside salesperson

In other words, employees are only exempt from on-call pay rules if they exceed all of the above criteria: they earn more than $35,658 a year, are paid a salary, and fulfill a specific role at your company. 

If an employee doesn’t exceed all of the above standards, their FLSA status is non-exempt and they must be paid for actual work performed while on call.

Additionally, the FLSA requires that non-exempt employees get paid overtime if they work for more than 40 hours in a workweek—including restricted on-call time—at a rate of one-and-one-half times their regular pay.

A Note on State Laws

It’s always good to check your local laws since they may differ somewhat.

For example, in California, eligible employees are entitled to get paid for every hour spent under the control of their employer while on call. 

This means businesses need to pay employees on standby if they’re required to be within a certain distance from the job site or if the frequency of phone calls or emails disrupts the employee’s personal time. Or for any other work tasks they’re required to do during their time off.

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What's more, overtime in California is considered any hours worked over 8 in a day, so you'll need to keep that in mind too.

What Types of Businesses Have On-Call Workers?

Employees are often required to be on call when they work in:

• Healthcare and emergency services, like doctors, nurses, and police officers
• IT, like network administrators, system administrators, and cybersecurity specialists
• Repair services, like electricians, plumbers, and emergency roadside specialists

How Many Hours Is On-Call?

The length of an on-call shift can vary based on the job role and industry, though shifts are often limited to 12, 16, or 24 hours (though they can exceed these hours). 

This means that an employee who’s on call would have to be available to come into the office (or head to a work location) at any point within that timeframe.

How Does On-Call Pay for Hourly Employees Work?

As a small business owner, you are required to pay employees for being on call for every compensable work hour they work—and, in some cases, even if it’s just waiting time. But when and how do you determine if an employee qualifies for on-call pay?

1. Determine the employee’s FLSA status. If the worker is a non-exempt employee, they should be paid for compensable hours worked while on call. If the worker is exempt, they do not.
2. Determine what level of restrictions you place on the employee. If the employee must remain at or near a work location, is expected to drop what they’re doing to respond to a call, or is contacted frequently while on call (to the extent your calls would be disruptive to their personal time), they qualify for pay for any hours worked.
3. Consult your state’s employment laws. State laws might be more restrictive than federal law. Familiarize yourself with your local laws to make sure you’re up-to-date on compensable work hours, including for any employees on call.
4. Follow your company policies. Employment contracts and agreements might stipulate that employees are eligible for on-call pay even when you’re not exerting control over their location or activity. Make sure you and your human resources department follow your company policies—and that your staff is aware of their employee rights.
5. Pay the right rate. You also need to pay employees the correct rate. If the time spent on call falls within the employee’s regular 40-hour workweek, you need to pay at least minimum wage (or a premium rate if your policy or their contract demands it). Additionally, you must ensure that any compensable hours spent on-call contribute to the employee’s overtime—and that you pay them for any overtime worked.
   

Example: Paying On-Call Wages

Let’s say an employee is paid $20 an hour, has worked 36 hours so far for the week, and is currently on call at home. 

While doing yard work, his phone rings and you ask him to come into the office. His compensable work hours would include the time he spends on the phone call, traveling to the office, and actually working at the office. At the end of the day, his total working time equals 44 hours.

If he doesn’t work anymore during that week, he will accumulate a total of four hours of overtime, even though he was on call when he earned those. This means his paycheck (before taxes) would equal $920:

Total pay = (Regular pay rate x 40) + (Overtime pay rate x 4) 

$920 = (20 x 40) + (30 x 4) 

What Is an Example of an On-Call Policy?

Documenting your company’s on-call policy in your employee handbook and other materials can help your employees understand their rights, when and how they qualify for payment while on call, and their on-call responsibilities and job duties.

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Make It Easy to Put out Fires

On-call time is necessary in many industries, especially those that deal with emergencies and unexpected events. 

Having an employee available to respond on short notice can make it easy to put out fires—both literally and figuratively—often without keeping them on the clock for an entire shift (and driving up your labor costs!). 

But to do right by your employees—and the law—make sure you provide on-call pay for hourly employees whenever you restrict their free time.

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