Question:

As a business owner trying to comply with changing employment laws I have heard there have been recent revisions to California law regarding alternative workweek schedules. Can you tell me about this new legislation and how it impacts California employers such as myself?

Answer:

When the California Legislature reinstated daily overtime pay almost a decade ago, it also introduced alternative workweek schedules whereby employers may provide employees with an alternative to the conventional 5-day workweek by giving them the opportunity to work more than 8 hours a day at their regular rate of pay. In California, the general rule regarding overtime pay is that employers are required to pay one and one-half times an employee’s “regular rate” if that employee works more than 40 hours per week or if that employee works more than 8 hours per day. Additionally, employers must pay double the employee’s “regular rate” if that employee works more than 12 hours per day. However, Labor Code Section 511 provides for the implementation of alternative workweek schedules whereby certain overtime obligations can be avoided. One feature of the alternative workweek schedule is the option of providing employees with a menu of alternative schedules to choose from.  For example, employees might be permitted to select either four 10-hour shifts per week, or four 9-hour shifts and one 4-hour shift.  However, there have been significant restrictions on this menu option, including a prohibition of including 8-hour shifts within the menu of options, and the lack of any ability for employees to regularly adjust their option selections. As part of the recent legislation to emerge from Sacramento pursuant to the budget negotiations, the Legislature passed and the Governor signed into law a bill amending Labor Code Section 511’s provisions regarding alternative workweek schedules.

As amended, Labor Code Section 511 still allows an employer to propose an alternative workweek schedule or menu of alternative workweek schedule options to employees, but those options can now include a regular schedule of 8-hour days. The amended Labor Code also allows employees to adopt a menu of alternative workweek schedules allowing them, with employer consent, to move from one schedule to another on a weekly basis. The legislation thus provides greater flexibility to employers in the types of shifts that can be included and to employees in being allowed, with employer approval, to move between alternative workweek scheduling options.

Further, while Labor Code section 511 previously specified that employee approval required a secret ballot election of at least two-thirds of the affected employees in a work unit, it failed to define “work unit”, which led to uncertainty and employer exposure to liability for failing to properly identify the applicable work unit. The new law attempts to address this deficiency by defining a work unit to include “a division, a department, a job classification, a separate physical location or a recognizable subdivision.” It also specifies that it may include an individual employee if that employee otherwise satisfies the criteria of a reasonably identifiable work unit.

Please note that properly implementing an alternative workweek schedule program still requires strict adherence to the rules regarding these types of schedules, and an employer that does not follow the proper procedure risks incurring daily overtime liability if employees begin working an alternative workweek schedule that is later deemed to be invalid. An employer also faces this potential overtime liability if employees begin working an alternative workweek schedule that has not been formally approved by employee vote.

In general, the steps required to set up an alternative workweek schedule include the following:

  • Identifying the work unit that will be offered an alternative workweek schedule;
  • Providing a disclosure/proposal statement to the identified work unit;
  • Holding an informational meeting noticed to occur at least 14 days in advance of the employee vote that will be held;
  • Conducting a secret ballot election; and
  • Posting and notifying the Division of Labor Statistics of the results of the vote.

In sum, while employers must remain cautious in proposing and implementing alternative workweek schedules, the recent legislative changes have introduced some necessary flexibility for both employers and employees. More information on alternative workweek schedules can be obtained from the California Department of Industrial Relations at http://www.dir.ca.gov/DLSE/.
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