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 © NLP IP Company, Monday, January 24, 2000
The 8-Hour Day Returns
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 O n July 20, Gov. Gray Davis signed Assembly Bill 60, the "Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999." Among other things, AB 60 restores the requirement that employees be paid overtime compensation for all hours worked over eight in a workday. However, the act provides an exception to the daily overtime pay requirement for certain alternative workweek schedules. California employers who already have implemented alternative workweek schedules, or are interested in doing so, must carefully abide by the provisions of AB 60 to avoid future liability for unpaid overtime compensation. This article is designed to help employers navigate the uncharted waters of the AB 60 alternative workweek provisions.
OVERTIME PAY REQUIREMENTS
Under §510(a) of AB 60, non-exempt employees must be paid 11/2 times their regular rate of pay for: any work in excess of eight hours in one workday; any work in excess of 40 hours in any one workweek; and the first eight hours worked on the seventh day of work in the workweek. Additionally, non-exempt employees must receive twice their regular rate of pay for: any work in excess of 12 hours in one workday; and any work in excess of eight hours on the seventh day of work in a workweek. A drafting ambiguity in §510(a) has prompted some employers to ask whether overtime must be paid to an employee who works on the seventh day of the workweek, even if the employee has not worked the balance of the week. The answer is no. In the past, the Division of Labor Standards Enforcement has required overtime pay on the seventh day of the workweek only where an employee has worked the other days of the same workweek, and the labor commissioner's office has indicated informally that the agency will continue this practice.
ALTERNATIVE WORKWEEK EXCEPTION
Employers must notify employees of their regularly scheduled alternative workweek, including the specific days of the week they will be required to work. Although AB 60's definition of "alternative workweek schedule" is broad, the types of alternative workweek schedules that qualify as an exception to the payment of daily overtime are much narrower. An alternative workweek schedule that was adopted pursuant to the requirements of an applicable pre-1998 wage order remains valid after Jan. 1, 2000, as long as the schedule does not exceed 10 hours in a workday and was adopted by a two-thirds vote in a secret ballot election pursuant to a wage order in effect prior to 1998. Additionally, an alternative workweek schedule that was adopted pursuant to a collective bargaining agreement remains valid if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage. All other alternative workweek schedules became null and void on Jan. 1, 2000, with two exceptions. The first exception is under §511(h), which provides that an employee who was voluntarily working an alternative workweek schedule as of July 1, 1999, may continue to work that schedule without the payment of daily overtime if: the schedule does not exceed 10 hours in a workday; and the employer approves the employee's written request to work that schedule. Employees hired after July 1, 1999, thus are not eligible to request authorization under this provision to work an alternative workweek schedule. The second exception applies to the health care industry. Under §511(g), alternative workweek schedules that provide for workdays exceeding 10 hours, but not exceeding 12 hours, that were adopted in a secret ballot election pursuant to Wage Orders 4 and 5 in effect prior to 1998, will remain in effect until July 1, 2000. By that time, the IWC is required to review wages, hours and working conditions in the health care industry and may adopt or modify regulations concerning these areas. There is no provision in AB 60 which allows health care industry employers to adopt a 12-hour-day schedule between Jan. 1 and July 1, 2000. Thus, it appears that the health care industry merely was given a limited "grace period" under AB 60 until the IWC issues its new regulations.
NEW SCHEDULES
Until then, the pre-1998 wage orders, as amended, are reinstated. Therefore, employers who seek to implement alternative workweek schedules prior to July 1, 2000, should follow the procedures set forth in the reinstated wage orders. AB 60 also provides that an alternative workweek schedule may be proposed to affected employees in a "work unit," but does not define that term. However, certain pre-1998 wage orders defined "work unit" as "a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision of any such work unit. A work unit may consist of an individual employee as long as the criteria for an identifiable work unit are met." The labor commissioner also adopted this definition for Wage Order 1-89, because it did not contain any definition of identifiable work unit. Employers should anticipate that the IWC will provide guidance regarding the definition of the employees who will be entitled to vote in secret ballot elections. All employees in a work unit that will be affected by a proposed alternative workweek schedule must be given the opportunity to vote in the election. And under certain of the pre-1998 wage orders, employers are required to make a pre-election disclosure in writing to the affected employees, including the effects of the proposed schedule on the employees' wages, hours and benefits and notification of meetings for the specific purpose of discussing the effects of alternative scheduling. Failure by employers to comply with these notice requirements will render the election null and void. Although Wage Order 7-80 has no disclosure requirement, and Wage Order 1-89 requires a disclosure regarding employees' hours and pay only (not benefits), it would be prudent for employers in these industries holding elections also to provide full disclosure. Under the pre-1998 wage orders, an election will not be valid unless the balloting is secret. Although specific election procedures were not provided, employers should consider taking the following steps: · Prepare written ballots that: specify the proposed alternative workweek schedule or the menu of options; and give employees the option of either accepting or rejecting the schedule. · Provide employees with a private place to vote that is jointly supervised by an employer representative and an employee representative. · Ballots should be collected by the representatives, and each voting employee should be required to sign a form acknowledging participation in the secret ballot election so that employers will have a record of the employees' participation in the event of a legal challenge. · Ballots should be jointly counted by the employer and employee representatives. If two-thirds of the affected employees approve of the proposed alternative workweek schedule, the employer may implement it. Section 511(e) expressly requires employers to report the results of any election to the Division of Labor Statistics and Research within 30 days after the results are final. Additionally, under Wage Orders 4-89, 5-89, 7-80 and 9-90, affected employees were required to execute a written agreement following approval of the alternative workweek schedule. The labor commissioner -- in the Labor Commissioner Interpretative Bulletin -- interpreted this requirement to mean that after the election "the employer and two-thirds of the employees execute a written agreement setting forth the schedule. In this regard, execute means that the employees sign the agreement -- for example, at the end of the agreement." Even though the prior wage orders contained this requirement, it is not entirely clear if the IWC will continue with this procedure or might, instead, require employers to propose a written agreement that must thereafter be adopted in a secret ballot election by at least two-thirds of the affected employees in a work unit.
REPEALING A SCHEDULE
But AB 60 does not contain a similar provision regarding an employer's right to repeal. It expressly directs the IWC to adopt by July 1, 2000, new wage orders, which are to include procedures for employers and employees to repeal alternative workweek schedules. Section 511(d) of AB 60 requires employers to "make a reasonable effort" to find a work schedule that does not exceed eight hours in a workday to accommodate an employee who is eligible to vote in an election, but is unable to work the adopted alternative schedule. The same rule applies, under §511(g), to employers who operate licensed hospitals. Employers also are permitted -- but not required -- to provide accommodation to employees hired after an election. AB 60 expressly defines an accommodation as a work schedule that does not exceed eight hours in a workday, whereas pre-1998 wage orders containing an accommodation obligation only required an "alternative work assignment." Even though AB 60 reinstates certain pre-1998 wage orders, employers should comply with the definition of accommodation in AB 60. Finally, §511(d) of AB 60 requires employers to "explore any available reasonable alternative means" to accommodate the religious beliefs or observances of employees -- such as observance of a Sabbath or other holy days, including reasonable travel time -- that conflict with an adopted alternative workweek schedule. This includes the possibility of excusing the person from those duties that conflict with his or her religious beliefs or observances or permitting those duties to be performed at another time or by another person.
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| Kirby C. Wilcox is a partner in the San Francisco office of Paul, Hastings, Janofsky & Walker. Leslie L. Abbott and Caroline A. Zuk are associates in the firm's Los Angeles headquarters. |