Existing law, with certain exceptions, establishes 8 hours as a days work and a 40-hour workweek, and requires payment of prescribed overtime compensation for additional hours worked. Existing law authorizes the adoption by ²/₃ of employees in a work unit of alternative workweek schedules providing for workdays no longer than 10 hours within a 40-hour workweek.

This bill would establish an overtime exemption for an employee-selected holiday season flexible work schedule. The exemption would allow during the holiday season, as defined, at the request of an individual nonexempt employee working in the retail industry, and upon employer approval, an employee-selected flexible work schedule providing for workdays up to 10 hours per day within a 40-hour workweek. The employer would be obligated to pay overtime based on the employees regular rate of pay, as prescribed, for all hours worked over 40 hours in a workweek or over 10 hours in a workday, whichever is greater. The bill would establish requirements for the termination of an agreed-upon schedule. The bill would except from its provisions employees covered by collective bargaining and public employees, as specified. The bill would require the Division of Labor Standards Enforcement in the Department of Industrial Relations to enforce this provision and adopt or revise regulations as necessary.

Date of Hearing: January 11, 2018

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Tony Thurmond, Chair

ABPCA Bill Id:AB 1173 (

Author:Harper) – As Introduced Ver:February 17, 2017

SUBJECT: Employment: work hours: holiday season: overtime

SUMMARY: Establishes an overtime exemption for an employee-selected holiday season flexible work schedule. Specifically, this bill:

1. Allows during the holiday season, November through January, at the request of an individual nonexempt employee working in the retail industry, and upon employer approval, an employee-selected flexible work schedule providing for workdays up to ten hours per day within a 40-hour workweek.
2. Obligates an employer to pay overtime based on the employee’s regular rate of pay, as prescribed, for all hours worked over 40 hours in a workweek or over ten hours in a workday, whichever is greater.
3. Establishes requirements for the termination of an agreed-upon schedule.
4. Exempts from its provisions employees covered by collective bargaining and public employees, as specified.
5. Requires the Division of Labor Standards Enforcement in the Department of Industrial Relations to enforce and adopt or revise regulations as necessary.

EXISTING LAW:

1. Defines a day's work as eight hours of labor.
   
2. Requires that any work in excess of eight hours day, in excess of 40 hours a week, and the first eight hours on the seventh day of work are to be compensated at no less than one and one-half times the regular rate of pay, and provides corresponding exemptions for certain classifications of employees.
   
3. Requires that any work in excess of 12 hours a day and in excess of eight hours on the seventh day of work are to be compensated at no less than twice the regular rate of pay, and provides corresponding exemptions for certain classifications of employees.
   
4. Allows employees of an employer to adopt a regularly scheduled alternative workweek that authorizes work by the affected employees for no longer than ten hours per day within a 40- hour workweek without the payment of overtime. Such alternative workweek schedules are permissible only if they receive approval in a secret ballot election by two-thirds of the affected employees.
   
5. Permits an employee, upon written request, to make up lost work time during the same workweek without incurring daily overtime.
6. Provides an exemption to the overtime and alternative workweek provisions of the law to an employee covered by a valid collective bargaining agreement if the agreement expressly provides for wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regularly hourly rate of pay at least 30% above the state minimum wage.

FISCAL EFFECT: Unknown

COMMENTS: The author argues that this measure is needed to, “give working families, caregivers, students and others with scheduling conflicts the availability to choose an alternative work schedule.” The author further asserts that, “choosing a flexible work schedule of four, ten hour days can help families juggle the demands of a job and family during the holiday seasons.”

In support the Valley Industry Commerce Association (VICA) argues, “Giving employees the opportunity to work a flexible schedule during the holiday season will increase work life balance at one of the busiest times of the year. VICA continues, “Our current laws are outdated and ignore the clear need for a way for employers and individual employees to create a mutually beneficial schedule.

In opposition, the California Employment Lawyers Association writes, “Current law already ensures adequate flexibility for employers and employees while protecting the basic right to overtime for work over eight hours in a workday.” CELA asserts, “AB 1173 would provide no protection for workers who feel pressured to waive daily overtime, especially during the holiday season when workers are expected to work longer hours, because the workplace election would be replaced by a one-on-one discussion with the boss. The California Labor Federation writes, “This wholesale dismantling of overtime law for some of economy’s lowest-paid and most vulnerable workers is totally unnecessary and completely indefensible.”

History of Overtime Protections Under California Law

The California Industrial Welfare Commission (IWC) was established in 1913 by the California Legislature to regulate minimum wages, maximum hours of work, and standards for working conditions for women and minors. California was the ninth State to create a commission to protect the welfare of working women and minors. In 1916, the IWC issued its first wage order, setting the minimum wage rate at 16 cents an hour for the fruit and vegetable canning industry, with pay of one and a quarter of minimum after ten hours, a limit of 72 hours a week, and improved sanitary conditions. A few years later the IWC reduced the maximum hours to eight hours a day and 48 hours a week.

By the sixties, the IWC faced ongoing legal challenges to its Orders, especially over the issue of regulations only for women. In Rosenfield vs. Southern Company, the federal court ruled that Rosenfield had been denied a promotion due to the state’s laws limiting the hours of employment and the amount of weight a woman was allowed to lift. This ruling cited the Civil Rights Act of 1964. Similar findings led to the Legislature extending the IWC’s powers to include men in 1973.

Throughout the next decade orders received greater scrutiny and were often under contention, usually based on whether IWC procedures were properly followed. During the eighties and nineties the IWC faced conflicting issues over standard work weeks and daily overtime. In 1997 after the IWC changed from requiring overtime pay after eight hours in any day to overtime only after 40 hours in one week, the Legislature revoked funding for the IWC.

In 1999, the legislature passed and the Governor Davis signed AB 60 (Knox) Chapter 134, Statutes of 1999, which established a framework for the payment of daily overtime compensation. That framework included: time and one-half pay after eight hours of daily work; personal time off for a personal obligation of an employee which may be made up during a workweek without payment of overtime compensation within specified limits; and, the adoption through an employee election of an alternative work week schedule or menu of schedules offered by an employer. That year, the Governor also reinstated the IWC. The IWC remained in operation until July 2004, when its funding was again eliminated from the state budget. Though the IWC is currently not in operation, the Division of Labor Standards Enforcement continues to enforce the provisions of the wages orders issued by the IWC.

Scheduling Flexibility Under Current Law

As noted above, AB 60 contained several features related to flexibility in employee work schedules. First, it provided for the adoption of alternative workweek schedules pursuant to an employee election. The alternative workweek schedule may authorize the employees to work no more than ten hours per day within a 40-hour workweek without receiving overtime. Such an alternative schedule must be adopted in a secret ballot election by at least two-thirds of the affected employees.

Labor Code Section 511(a) also provides that, "The regularly scheduled alternative workweek proposed by an employer for adoption by employees may be a single work schedule that would become the standard schedule for workers in the work unit, or a menu of work schedule options, from which each employee in the unit would be entitled to choose."

Moreover, Section 3(C)(1) of the IWC Wage Orders states: "If the employer proposes a menu of work schedule options, the employee may, with the approval of the employer, move from one menu option to another."

Section 3(B)(1) of the IWC Wage Orders provides that, "Nothing in this section shall prohibit an employer, at the request of the employee, to substitute one day of work for another day of the same length in the shift provided by the alternative workweek agreement on an occasional basis to meet the personal needs of the employee without the payment of overtime."

Section 3(C)(2) of the IWC Wage Order also provides that the term "affected employees in the work unit" may include all employees in a readily identifiable work unit, such 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.

In addition, AB 60 allowed employees to take off time for a personal obligation and makeup that time during the same workweek without payment of daily overtime. Labor Code Section 513 provides that, if an employer approves a written request, an employee may makeup work time during the same workweek without incurring daily overtime, except for hours in excess of 11 in one workday.

Finally, AB 60 contained an overtime exemption for employees covered by a valid collective bargaining agreement if the agreement expressly provides for wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regularly hourly rate of pay at least 30% above the state minimum wage.

Related and Prior Legislation:

AB 67 (Gonzales Fletcher) of 2016 would have enacted the Double Pay on the Holiday Act of 2016 requiring a grocery or retail store establishment employer to pay two times the regular rate of pay to an employee for work on Thanksgiving Day. That bill failed passage on the Assembly Floor on Concurrence in Senate Amendments.

AB 1038 (Jones) of 2015 would have authorized individual employees to request flexible work schedules, as specified and failed passage in this Committee.

AB 2448 (Jones) of 2014 was nearly identical to AB 1038 and failed passage in this Committee.

AB 907 (Conway) of 2014 was nearly identical to AB 1038 and failed passage in this Committee in January 2014.

SB 607 (Berryhill) of 2013 was nearly identical to AB 1038 and failed passage in the Senate Committee on Labor and Industrial Relations.

AB 830 (Olsen) of 2011 was nearly identical to AB 1038 and failed passage in the Assembly Committee on Labor and Employment.

SB 367 (Dutton) of 2011 would have permitted an individual nonexempt employee employed by an employer with 25 or fewer employees to request an employee-selected flexible work schedule providing for workdays up to ten hours per day within a 40-hour workweek, and would have allowed the employer to implement this schedule without any obligation to pay overtime compensation. SB 367 failed passage in the Senate Labor and Industrial Relations Committee.

SB 378 (Dutton) of 2011 would have provided that an alternative workweek schedule adopted pursuant to existing law may include a regularly scheduled alternative workweek that authorizes work by the affected employees for more than ten hours a day, as long as the employees are paid at the appropriate overtime rate. The bill further would have exempted from current law employers with five or fewer employees, but would have permitted such employers and their employees to voluntarily enter into a revocable written agreement setting forth an alternative workweek schedule that allows an employee to work up to ten hours a day, 40 hours a week, without the payment of overtime wages. Testimony was taken on SB 378 in the Senate Labor and Industrial Relations Committee, but a vote was never taken.

AB 60 (Knox), Chapter 134, Statutes of 1999. Established a framework for the payment of daily overtime compensation: time and one-half pay after eight hours of daily work; personal time off for a personal obligation of an employee which may be made up during a workweek without payment of overtime compensation within specified limits; and, the adoption through an employee election of an alternative work week schedule or menu of schedules offered by an employer.

REGISTERED SUPPORT / OPPOSITION:

Support

American Petroleum and Convenience Store Association

Brea Chamber of Commerce

California Business Properties Association

California Chamber of Commerce

California Restaurant Association

California Retailers Association

Camarillo Chamber of Commerce

Family Business Association

North Orange County Chamber

Orange County Association of Realtors

Orange County Business Council

Rancho Cordova Chamber of Commerce

Southwest California Legislative Council

Torrance Area Chamber of Commerce

Valley Industry and Commerce Association

Opposition

CA Conference Board of the Amalgamated Transit Union

CA Conference of Machinists

California Employment Lawyers Association

California Federation of Teachers

California Labor Federation, AFL-CIO

California Teamsters Public Affairs Council

Consumer Attorneys of California

Engineers & Scientists of CA, Local 20

International Longshore and Warehouse Union

Professional & Technical Engineers, Local 21

UNITE HERE

Utility Workers Union of America

Analysis Prepared by: Jennifer Richard / L. & E. /