Question 1

What is a zero-hour employment contract?

Accepted Answer

A zero-hour contract is an employment arrangement under which the employer is not required to offer the worker any minimum number of hours, and the worker is generally not required to accept the hours offered. The relationship is sometimes called 'on-call,' 'as-needed,' 'per diem,' or 'PRN' (pro re nata). Hours are scheduled only when work is available, and pay is provided only for hours actually worked. The employee remains a W-2 employee — subject to FLSA, payroll tax withholding, workers' compensation, and other employment-law obligations — but has no guaranteed schedule. Zero-hour arrangements are common in healthcare, hospitality, education, warehousing, and event staffing.

Question 2

Are zero-hour contracts legal in the United States?

Accepted Answer

Yes. There is no federal prohibition against zero-hour arrangements in the United States, and most states permit them. Employers may hire workers on an as-needed basis without guaranteeing any minimum hours, provided they comply with the Fair Labor Standards Act (minimum wage and overtime), state wage-and-hour rules, paid sick leave laws, and any local predictive-scheduling ordinances. Several large U.S. cities — including Seattle, San Francisco, New York, Chicago, Philadelphia, Los Angeles, and the entire state of Oregon — have enacted fair-workweek or predictive-scheduling laws that limit the use of zero-hour and on-call scheduling in retail, food service, and hospitality.

Question 3

What is the difference between a zero-hour employee and an independent contractor?

Accepted Answer

A zero-hour employee is a W-2 worker who has no guaranteed schedule but is otherwise subject to all employment laws — including minimum wage, overtime, payroll tax withholding, workers' compensation, and unemployment insurance. The employer controls how, when, and where the work is performed when the worker is on shift. An independent contractor, by contrast, is a self-employed business owner who controls the means and methods of work, supplies their own tools, may serve multiple clients, and is paid on a 1099 basis without payroll tax withholding. Misclassifying a worker as a contractor when they should be an employee — including misclassifying a zero-hour worker as a 1099 contractor — exposes the employer to significant back-tax, wage, and penalty liability.

Question 4

Do zero-hour workers get minimum wage and overtime?

Accepted Answer

Yes. The Fair Labor Standards Act applies to zero-hour employees in the same way it applies to any other non-exempt employee. They must be paid at least the federal minimum wage of $7.25 per hour (or higher under state or local law) for every hour worked, and they must receive overtime pay at one-and-a-half times their regular rate for any hours worked over 40 in a workweek. State daily-overtime rules (California, Alaska, Nevada) also apply. Time spent waiting on-call may also be compensable in some circumstances — see the next FAQ.

Question 5

Is on-call time compensable under the FLSA?

Accepted Answer

It depends. Under DOL regulations and Supreme Court precedent, on-call time is compensable if the restrictions on the employee are so severe that the employee cannot effectively use the time for personal purposes. Factors include: whether the employee must remain on the employer's premises, response-time requirements, geographic restrictions, frequency of calls, and the ability to engage in personal activities. An employee who must stay at the workplace waiting for calls is generally working and must be paid; an employee who can stay at home with a phone and respond within a reasonable time is generally not working. The contract should clearly distinguish between paid on-call time and unpaid availability.

Question 6

Can a zero-hour employee refuse offered shifts?

Accepted Answer

In most arrangements, yes. The defining feature of a true zero-hour contract is that the worker is not obligated to accept any particular shift. However, employers may include reasonable expectations in the contract — for example, a minimum number of shifts per month to remain on the active roster, or the right to remove the employee from the roster after repeated refusals. These expectations should be spelled out clearly so both parties understand the relationship. If the contract requires the employee to accept all offered shifts, it is no longer a true zero-hour contract and may be characterized as a regular variable-hour employment arrangement.

Question 7

Are zero-hour employees entitled to benefits?

Accepted Answer

Generally no, but it depends on hours worked. Federal law does not require employers to provide vacation, retirement, or health benefits to zero-hour workers. The Affordable Care Act employer mandate applies only to employees who average 30 or more hours per week, measured over a look-back period of 3 to 12 months. A zero-hour worker who consistently averages 30+ hours over the look-back period must be offered ACA-compliant health coverage by an applicable large employer. State and local paid sick leave laws may also apply on a prorated basis. To attract reliable per diem talent, many healthcare employers offer a higher hourly rate (often called a 'per diem differential') to compensate for the lack of benefits and schedule.

Question 8

What is a 'reporting time' or 'show-up' pay rule?

Accepted Answer

Several states require employers to pay a minimum number of hours when an employee reports to work as scheduled but is sent home early. California, for example, requires payment of half the scheduled shift (minimum 2 hours, maximum 4 hours) when an employee reports for work but is not put to work or is given less than half the usual day's work. New York, New Jersey, Massachusetts, Connecticut, Rhode Island, New Hampshire, Oregon, and Washington D.C. have similar reporting-time rules. These rules can apply to zero-hour workers when a shift is offered, accepted, and then cancelled at the last minute. Employers should know the rules in every state where they schedule on-call workers.

Question 9

What are predictive scheduling or fair workweek laws?

Accepted Answer

Predictive scheduling laws — also called fair workweek laws — require employers in covered industries to provide advance notice of work schedules, typically 7 to 14 days, and to pay penalties for last-minute changes. Oregon was the first state to enact a statewide law (2017), and major cities including Seattle, San Francisco, Berkeley, Emeryville, New York City, Philadelphia, Chicago, and Los Angeles have followed. Most laws cover retail, food service, and hospitality employers above a certain size threshold. Penalties include 'predictability pay' for changes made within the notice window, and 'right-to-rest' compensation when an employee is scheduled for back-to-back shifts with insufficient rest. These laws significantly restrict the use of true zero-hour scheduling in covered industries and jurisdictions.

Question 10

Should a zero-hour contract include an at-will clause?

Accepted Answer

Yes. Even though there is no guaranteed schedule, the employment relationship itself should be at will, meaning either party may end it at any time for any lawful reason. The at-will clause makes clear that being placed on the inactive roster is not a termination requiring notice, severance, or cause, and that the employee may stop accepting shifts and walk away at any time. The clause should be conspicuous, clearly worded, and acknowledged by the employee at signature.

Question 11

Can zero-hour workers receive unemployment if shifts dry up?

Accepted Answer

Possibly. Eligibility for unemployment insurance depends on whether the worker's earnings during the base period meet the state's threshold and whether the worker is 'unemployed' under state law. A zero-hour worker whose hours have dropped to zero or near zero — and who is willing and able to work — may qualify for partial or full unemployment in many states. Eligibility rules vary, so workers should apply through their state unemployment agency. Employers pay state unemployment insurance tax on zero-hour wages just like any other W-2 wages.

Question 12

How is a zero-hour contract different from a part-time contract?

Accepted Answer

A part-time contract typically guarantees a regular schedule of fewer than full-time hours — for example, 20 hours per week, every Tuesday, Wednesday, and Thursday. The employer is committed to providing those hours, and the employee is committed to working them. A zero-hour contract guarantees nothing: hours are offered as needed, and the worker accepts or declines on a shift-by-shift basis. A part-time worker has a predictable income; a zero-hour worker does not. Both types are W-2 employees subject to FLSA and other employment laws, but the scheduling and commitment levels differ significantly.

Question 13

What records should an employer keep for zero-hour workers?

Accepted Answer

All records required for any non-exempt FLSA employee, including: the employee's full name, Social Security number, address, occupation, hours worked each day and week, regular hourly rate, total daily or weekly straight-time earnings, total overtime pay, deductions, total wages paid each pay period, and the date of payment. Records must be kept for at least three years for payroll records and two years for time records. State recordkeeping rules may impose additional requirements. Accurate timekeeping is especially important for zero-hour workers because shift offers, acceptances, and cancellations can be evidence in wage-and-hour or reporting-time disputes.

Factor	Zero-Hour	Part-Time	1099 Contractor
Guaranteed Hours	None	Yes	Per project
Tax Form	W-2	W-2	1099-NEC
Withholding	Yes	Yes	No
FLSA Min Wage / OT	Yes	Yes	No
Workers' Comp	Yes	Yes	No
Schedule Control	Employer offers; worker accepts	Employer sets	Contractor sets

Free Zero-Hour Employment Contract Forms

What Is a Zero-Hour Employment Contract?

No Guaranteed Hours

W-2 Status

Pay When Worked

Zero-Hour Contract Form Preview

Zero-Hour Employment Agreement

Section 1: Parties & Position

Section 2: Compensation

Section 3: No Guaranteed Hours

Common Uses

Healthcare PRN Staff

On-Call Substitutes

Event & Hospitality

Warehouse Surge Labor

Trade Helpers

Pop-Up & Seasonal

Zero-Hour vs Other Work Models

How to Create a Zero-Hour Employment Contract

Identify the parties

Define the position and nature of work

Acknowledge no guaranteed hours

Set the hourly wage

Address on-call vs paid time

Reference predictive scheduling

Include at-will and confidentiality terms

Governing law and signatures

Key Components

Parties

Position

No Minimum Hours Clause

Hourly Wage

Shift Differentials

Overtime

On-Call Pay Rules

Reporting-Time Pay

Predictive Scheduling

At-Will Clause

Roster Removal

Governing Law

Zero-Hour Work in the U.S. Context

Predictive Scheduling Laws

Oregon (statewide)

Seattle, San Francisco, Berkeley, Emeryville

New York City

Chicago, Philadelphia, Los Angeles

Risks and Best Practices

Sample Zero-Hour Employment Agreement

Frequently Asked Questions

Official Resources

Create your Zero Hour Employment Contract in under 10 minutes.