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On-Call Pay in Michigan

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I work for a small courier service company in Michigan. There is one dispatcher on per day. At 5:00 pm when he goes home, he is required to take a company cell phone & pager. He must be available to receive pages from customers & dispatch a driver all through the night, until the business opens the next day. My question: Is the way this dispatcher being paid legal? Currently, if he receives a page from a customer, then he is paid $2.50 for 1 hour. If he receives another page an hour later, he is paid an additional $2.50, for that hour. If he receives more calls during the same hour, he is still paid just the $2.50 for one hour. If a driver calls the dispatcher for questions, the dispatcher is not paid for that call. If the dispatcher is sleeping and does not hear the page he is written up for no response.

Is this legal compensation for the dispatcher?

This is a complex question and you’ll need to contact both the Michigan and federal Department of Labor to get a determination on this particular case. But, here are some issues to consider.

Both federal and state law distinguish between an employee who is “waiting to be engaged” and one who is “engaged to wait.” An employee who can go about his or her own business and pursue other activities is “waiting to be engaged.” The employee need not be paid for this time. A plumber who is having a backyard barbeque but is on-call is “waiting to be engaged.”

However, an employee who is “engaged to wait” must be paid for the entire period. This employee is usually on the employer’s premesis, and not free to engage in personal activities, although he or she may not have any work to do at the moment. Firefighters who are cooking a meal at the firehouse while waiting for a call are “engaged to wait.”

It sounds as if in this case, the on-call dispatcher is “waiting to be engaged.” Therefore, he or she doesn’t need to be paid for the entire on-call period. This part of the situation sounds like it’s being handled properly.

However, there may be a minimum wage violation in the amount the on-call dispatcher is being paid when he or she does receive a call.

The Michigan minimum wage is $7.15 per hour. The federal minimum wage is $5.85 per hour.

Under both Michigan and federal law, the employer must pay the worker for the time actually spent working. Suppose Mike is a dispatcher who receives a call that lasts 15 minutes. The employer must pay Mike for 15 minutes at the Michigan minimum wage, which would be $1.79. If Mike receives a second call, even if it is in the same hour, the employer would need to pay him for that call as well. If the second call was another 15 minutes, that would be an additional $1.79. If Mike is on overtime, he should be paid a minimum of $2.68 per 15 minutes.

If Mike is currently being paid more than the minimum wage, then he should be paid for the time he spends working at his usual hourly rate, or at 1.5 times that rate for overtime.

However, if the phone call is only 6 minutes, then the employer would likely only owe Mike 72 cents for regular time or $1.08 for overtime.

Many employers have a policy to pay workers a minimum number of hours when they are called out. There is no federal law that requires this and apparently no Michigan law. Normally an employer will pay the worker a minimum of 1, 2 or 4 hours when an on-call worker is called to work.

If this employer paid workers $7.15 for a minimum of one hour, the employer would not be required to pay additional wages when the dispatcher was called again, within the same hour. However, because the employer is paying only $2.50, that’s not the case here.

It appears that the employer is paying the worker for about 21 minutes, each time the worker receives a customer call. It would be interesting to know the rationale behind the employer’s method of paying. It’s important to note that if the calls usually last less than 21 minutes, the employer may not owe the worker anything for most calls. In fact, the dispatcher may have been overpayed for calls that lasted less than 21 minutes.

Also, under both federal and Michigan law, an employee must be paid for all the time they work. This means that the dispatcher should be paid for time spent on the phone with messengers or other employees, just as they would be paid for time spent on the phone with customers. If the worker spends more than 21 minutes total on the phone with customers and co-workers, for any call, then the employee is entitled to additional compensation.

If the dispatcher normally works 40 hours per week and the on-call time is in addition to that, then the dispatcher is entitled to overtime pay. Under Michigan law, that’s $10.73 per hour.

The federal minimum wage law and overtime law applies to companies that engage in interstate business, or have revenue exceeding $500,000 per year. The Michigan minimum wage law applies to most employers in the state, and will increase on July 1, 2008 to $7.40 per hour.

The only way to get a definitive answer on this particular situation is to contact both the Michigan Department of Labor and Economic Growth (DLEG), and the U.S. Department of Labor. The Wage and Hour Division of DLEG is at 517-335-0400. The phone number for the Wage and Hour Division of the U.S. Department of Labor is 800-487-9243.

It is acceptable for the employer to write up an on-call employee who misses a call.