Paying employees to be on call – 7 steps to getting it right

Karl Palachuk

Disclaimer: I'm not an employment attorney. I'm not any other kind of attorney. I only have enough common sense to know what we do in our business. You need to verify all employment policies with your attorney.

When you grow from one to many, one of the rewards is that you – the owner – no longer have to be the only person "on call" 24 hours a day. You get to go on vacation because someone else is handling the details. 

You also get to sleep without a cell phone next to your bed because someone else is going to get that call! 

There are three primary kinds of "on call" statuses, and there are different rules for each. 

1. An employee isn’t really off the clock if he can’t do his own thing 
For example, if someone has to stay in the office during their lunch hour to cover the phones or fill in for the front desk, you need to pay that person for the time. Basically, they are not free to do what they want. They have to stay there to do your bidding. Similarly, if you send a tech to a client's office, once they arrive, their "commute" is over and they need to be paid – even if the client is not there. Again, if the employee can't go do his own thing, then you need to pay him.

2. Employees are not at work, not scheduled to be called in, but are on the list of people who could be called in 
This is aside from the fact that, really, anyone in the company could be asked to come in. Sometimes you specifically say that Person A is scheduled to work and Person B is on call in case we get busy. If Person B cannot go out of town on a whim or go out for dinner or drinks because he might have to work, then you have limited his personal time.

3. Employees are scheduled to catch calls after hours
Just like working through lunch, these folks may never actually get a call. But they have to carry their cell phone, respond to alerts, and be ready to “remote” into client machines and fix things. If there is an after-hours emergency, these folks will do the after-hours work and client call-down as discussed in this previous blog.

We used to call this beeper pay. Now the term is sleeper pay. But unless you're paying someone to sleep at your office, you might not have to pay them at all. 

Note that #1 is pretty clear. These folks just can't go anywhere except where you need them to be. You need to pay them for that. Period. Examples #2 and #3 are a little less clear. There's really a scale from almost-zero chance of having to work to 50% or 60% chance of having to work. In most cases, after-hours on-call duty is pretty close to zero. But if they do get a call, they need to be able to respond, so they can't be otherwise engaged. Again, where on that sliding scale have you limited their freedom? 

Keeping it fair

Keeping it fairPart of this is just plain fairness. And part of it bumps into your local laws. Very often, there are no clear rules. But also very often, there are decisions by judges that become standards for other judges to use when they make decisions. 

 

Now, just to keep it complicated, simply requiring someone to be reachable by phone is NOT considered to be restricting enough to require pay. So if you don't say anything about limiting activities such as travel, then simply being available by phone is not required to be a paid event. 

If you don't have an RMM that can send out an alert, then you may have to require someone to check the service board once an hour. Now we're back into the scale discussion. How much does this limit their time, especially when no work comes in? 

As a general rule, the US Fair Labor Standards Act does not require that "exempt" or salaried employees be compensated for on-call duty. Thus the entire discussion applies to only hourly employees. 

For a good time, check out www.dol.gov/compliance/laws/comp-flsa.htm  [Insert your favorite lawyer joke or comment here]. 

Practical recommendations 

PolicyEnough speculation and legalese. Here's some practical advice to consider when you formulate your on-call policy. 

 

1. Let fairness be your guide
Be reasonable with your employees and they will be reasonable with you. This is particularly true if your company is very small. The last thing you need is some smouldering resentment because someone once had to work an hour in the middle of the night. 

2. If feasible, you should rotate on-call assignments among managers and other salaried employees 
Assuming that you really get very few after-hours calls or alerts, this is just a very minor limitation and very reasonable for their slightly higher compensation. Note that the rest of the suggestions here will help make this even less of an annoyance. 

3. For hourly employees, set a reasonable compensation
For example, pay them time-and-a-half for any hours outside their regular work hours. And pay a minimum of one hour or two hours for work that actually has to be done. 

4. Set a long response time in your service agreement
For example, if you have a three-hour response time, then your employee has lots of freedom. In three hours your employee can finish watching a kid's soccer game or drive back from the lake. 

And remember that "responding" to an alert might not really require any work. If the employee just has to acknowledge the ticket and assign it to the team at your outsourced back-office tech support, that's a three-minute task. It's only when they have to sit down at their computer and log into a client machine, or drive to the client office, that serious labor takes place. 

5. Consider a response time in Business Hours
If you say you'll respond within three business hours, then a call at 6:01PM does not need to be acknowledged until 11:01AM the next day. (Of course you'll respond at 8:05 AM.) This eliminates after-hours on-call work altogether.

You might not be comfortable with that, but you can get used to it. As I've said before, 99% of the after-hours work you do is because you've decided to do it, not because you really have to. 

We have used a business hours response time policy since about 2005. It has never been an issue. We've had a few incidents in which someone has sent nagging emails and voice mails until we called them back. Then we mention that our after-hours rate is $300/hr. Too bad we don't charge a "bugging me after hours" fee. 

6. If you have hourly employees on call, give them some minimal reward for being on call even if there are no calls
This could be a $25 gift card or something similar. You don't have to think of this as "pay" but more of a token of appreciation. This can go a long way to let employees know that you acknowledge their contribution even if they don't get an hour's pay. 

7. (I'm sorry about this). Write up your very reasonable, well-thought-out policy and have it reviewed by a lawyer 
Once she blesses it, you're good to go. 

I know a lot of this is a pain in the neck. But it is definitely worth the time and effort. After all, once you have a good workable policy, you'll be able to sleep at night without your phone on!

 

Three takeaways from this blog:

• Create a simple after-hours on-call monitoring policy that works within the culture of your company.

• Place a premium on fairness to your employees and they will perform excellently.

• Consider measuring your response time in “business hours” – except for true Priority 1 emergencies.

(Used with permission of Karl W. Palachuk, SmallBizThoughts.com)