The old adage that time is money hits particularly close to home for recipients of on call pay. Many jobs are tethered to contingencies: health care workers, public utility technicians, emergency management personnel and relief agency staff, to name a few. These people serve in times of natural disasters, social upheaval, epidemic diseases and even terrorism. Others work when businesses are under intense demand for output. Whatever the job or circumstance, compensating such a work force requires attention to detail.

On Call Employment Defined

The United States Department of Labor publishes a precise description of on call employment. If required to wait at the facility where work potentially awaits, an employee is officially “on call.” Alternatively, the worker is allowed to wait at home, in which case he or she is “waiting to be engaged.” More similar to the on call status is that employee who must wait near the place of employment. Although not right on the premises, the worker has more restrictions on free time because of the geographical limitations. These considerations go right to the question of how does on call pay work.

Another important distinction to make when determining the manner of on call pay is whether or not the employee is exempt or non-exempt, i.e. whether minimum wage and overtime regulations apply to the worker in question. In general, exempted people must earn at least $455 per week and serve in a management, professional or highly specialized work role. Exceptions to this rule are law enforcement and corrections officers; hazardous materials clean-up crews; and first responders like paramedics and fire fighters.

Does Waiting Count as Work?

The underlying question to “How does on call pay work?” is whether or not waiting counts as labor. From the government definition, on call certainly restricts leisure. Confining employees at or near the workplace prevents them from most other pursuits. Does this not count, then, as time invested in the employer? More to the point, should not the boss’ time be on the boss’ dime?

This question goes to the notion of restricted vs. non-restricted conditions. Obviously, if the employee must remain at the job site – e.g. hospital or air control tower – the restricted status applies. Yet other factors may foster restricted conditions, even if the employee is off-site. For example, the management may forbid the use of alcohol while on call. In another instance, the worker must be reachable by cell phone 24/7. Cases like these pose restrictions as defined by the Fair Labor Standards Act. Employers and employees alike seek courts and mediators to interpret its provisions.

How Do Financial Officers Calculate On Call Pay?

Assuming that the worker’s time is restricted and his or her category is non-exempt, how does on call pay work? Sorry, but another classification is in order: part-time and full-time. On call pay might simply count as regular wages if the number of hours falls below 40 in a week. If you work 20 regular hours and then wait on call for an additional eight, you are still part-time; your compensation is no different from the full-timer whose hours remain under 40. On the other hand, a full-time employee who exceeds this limit with on call hours then gets overtime. Per the Internal Revenue Service (IRS), this counts as supplemental pay.

Depending on the size, scope and nature of the business or agency, employers can combine the overtime hours with normal work week time or, alternatively, separate them for withholding purposes. If segregated from regular pay, supplemental wages are reduced for taxation by the employer at a flat rate of 22 percent. This can work for or against the employee at tax time. Of course, an employer can opt to pay a higher wage for on call service regardless of a worker’s regular schedule.

How Should Employers Approach On Call Pay

Knowing the parameters of compensation is one thing. At the same time, the law does not always discern the particulars of employer capacities and employee realities. Nevertheless, there are several rules of thumb that management should follow when working out how does on call pay work.

Equity

It is best to work from one set of rules when establishing a regime of on call rotation and remuneration. Especially if the size of the company is limited, differences in frequency of on call hours–and generosity of pay–are apt to take a toll on morale.

Exempt Workers

Do not make lower level labor bear the brunt of on call availability. The additional money, as good as it is, eventually fails to make up for a lack of private life. For this reason, it is wise to call on management as often as possible to fill in on call slots and assignments.

Part-Time Workers

Consider paying those who work under 35 hours a week an overtime wage when remaining on call for various tasks. These employees may have to re-arrange their schedules, procure child care or cancel other commitments to be available. Just because regulations do not require it, doing so encourages productivity and loyalty.

Lengthen Response Times

Again, time is as valuable as extra cash for workers. Insisting that they respond to a call request within an hour is not reasonable for busy people. Nor does bombarding them with emails, texts and phone calls engender company loyalty. Give as much space as is feasible for them to make the practical and emotional shift from personal time to company time.

Summing Up

Required on call hours should be settled at the job interview, and no later. It is unfair to ambush a new employee with what can be a very demanding condition of the position. That confirmed, the law makes certain rules defining on call work, and setting standards for employers to abide by. As they adhere to federal regulations, business owners do well to go the extra mile in treating on call workers with consideration.