BILL ANALYSIS                                                                                                                                                                                                    ”




                                                                  AB 907
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          Date of Hearing:   January 8, 2014

                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
                               Roger HernŠndez, Chair
                    AB 907 (Conway) - As Amended:  March 21, 2013
           
          SUBJECT  :   Employment: flexible work schedules.

           SUMMARY  :   Authorizes individual employees to request flexible  
          work schedules, as specified.  Specifically,  this bill  :  

          1)Permits an employee to work up to ten hours per workday  
            without overtime if the employee requests such a schedule in  
            writing and the employer approves the request.

          2)Requires the employer, where such a schedule is adopted, to  
            pay overtime for all hours worked over 40 in a workweek or  
            over ten in a workday.

          3)Authorizes an employer to inform its employees that it is  
            willing to consider employee requests to work flexible work  
            schedules, but prohibits an employer from inducing a request  
            by promising an employment benefit or "threatening an  
            employment detriment."

          4)Authorizes an employee or employer to discontinue a flexible  
            work schedule at any time by giving written notice to the  
            other party.

          5)Specifies that these provisions do not apply to any employee  
            covered by a valid collective bargaining agreement or  
            specified public employees.

          6)Makes related conforming changes.

          7)Makes related legislative findings and declarations. 

           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  









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            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  :  This bill is the latest in a long series of attempts  
          to revise various provisions of California law related to  
          overtime and alternative workweek schedules.  Those provisions  
          of law were codified by AB 60 (Knox), the "Eight-Hour-Day  
          Restoration and Workplace Flexibility Act of 1999."  Debate in  
          recent years has centered around questions of whether the secret  
          ballot election process should be maintained, or whether  
          individual employees should be authorized to establish their own  
          individualized alternative workweek schedules.  The author has  
          titled this bill the "Workplace Flexibility Act of 2013."
            
           Brief Background on AB 60  

          Beginning in 1913, the Industrial Welfare Commission (IWC) had  









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          jurisdiction over working hours only of women and minors.   
          Exercising its authority, the IWC established daily overtime  
          after eight hours for those groups.  In 1974, the discriminatory  
          impact of this approach was struck down in federal court.  The  
          IWC's efforts to adopt new wage orders led to a protracted legal  
          battle.  In 1980, the California Supreme Court upheld the  
          adoption of final wage orders incorporating the eight-hour day  
          for male and female employees.  

          Those wage orders remained in effect until January 1, 1998, when  
          the IWC amended five of them to eliminate daily overtime and  
          provide that: "No overtime pay shall be required for hours  
          worked in excess of  any  daily number"  (Emphasis added).  The  
          five wage orders that were amended were Wage Order 1  
          (manufacturing industry), Wage Order 4 (professional, technical,  
          clerical, and mechanical occupations), Wage Order 5 (public  
          housekeeping industry), Wage Order 7 (mercantile industry), and  
          Wage Order 9 (transportation industry).

          That action resulted in an unsuccessful legal challenge,  
          legislation including SB 680 (1997) which was passed but vetoed  
          by Governor Wilson, and ultimately AB 60, which was successfully  
          passed and signed by Governor Davis effective January 1, 2000.   
          AB 60, among other things, codified daily overtime after eight  
          hours as the general rule in California.







           Scheduling Flexibility Under Current Law
           
          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  









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          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.













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           "Workplace Flexibility" Has Its Benefits

           There has been significant debate and discussion in recent years  
          (both at the state and national levels) about "workplace  
          flexibility" and the benefits it can provide to workers and  
          their families.  For example, a report<1> by the Institute for  
          Women's Policy Research noted the following:

               "The large majority of high-income countries have  
               introduced flexible working statutes aimed at making it  
               easier for employees to change how many hours, and when and  
               where they work within their current job.  Patchy progress  
               towards more diversified work arrangements is pushing  
               workers out of the labor market altogether, or into jobs  
               that are below their skill levels and potential.  Few  
               economies can afford such a waste of human resources in  
               view of changing demographics, reduced labor force growth,  
               and global competition for knowledge. 

               U.S. employers are faced with a dramatic increase in the  
               share of older workers and a significant slowdown in labor  
               force growth, even if demographic trends in the United  
               States are less dramatic than in most other high-income  
               countries.  The growth in mothers' labor force  
               participation, a major source of additional labor in recent  
               decades, has stalled and U.S. labor force participation for  
               women has fallen behind in cross-national comparison.   
               Demand for more diverse work arrangements is high, yet  
               workplace change is lagging behind changing workforce  
               demographics. 

               Flexible working statutes strengthen the ability of  
               individual employees to find solutions that allow work-life  
               reconciliation, but in a manner that takes account of  
               -------------------------
          <1> Hegewisch, Ariane and Janet C. Gornick.  "Statutory Routes  
          to Workplace Flexibility in Cross-National Perspective."   
          Institute for Women's Policy Resrach, Center for WorkLife Law,  
          University of California, Hastings College of the Law (2008).








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               employers' business and operational requirements.  Of 20  
               high-income countries examined in comparison with the  
               United States, 17 have statutes to help parents adjust  
               working hours, six help with family care giving  
               responsibilities for adults; 12 allow change in hours to  
               facilitate lifelong learning; 11 support gradual  
               retirement; and five countries have statutory arrangements  
               open to all employees, irrespective of the reason for  
               seeking different work arrangements.  Evaluation of  
               statutes supporting flexible working hours shows that the  
               laws have caused few problems for employers, and that  
               gender equality improves most where laws are interpreted  
               broadly, not narrowly focused on part-time work."
           
          But Does "Workplace Flexibility" Benefit All Workers Equally?  

          As stated above, there has been much discussion in recent years  
          about the benefits to employers and employees of "workplace  
          flexibility" and "flexible work schedules."  However, a recent  
          report<2> raised some interesting points for consideration  
          regarding whether "workplace flexibility" in fact benefits all  
          workers equally.  For example, the report stated the following:

               "'Workplace flexibility' is the buzz phrase in debates  
               about how to help busy parents better juggle the competing  
               demands of work and family.  But the public conversation  
               has been shaped largely by the experiences of professional  
               and managerial workers - the target of their demands has  
               been the archetypal fixed schedule of a full-time, salaried  
               office worker who often puts in far more than the requisite  
               40 hours a week. As such, the workplace flexibility  
               discussion remains somewhat tone deaf when it comes to the  
               needs of low-wage workers. 

               Low-wage workers face a completely different set of  
               challenges - they are much more likely to be paid hourly,  
               work less than full time, and have erratic schedules with  
               little advance notice of when they are expected to work.   
               Their hours - and therefore pay - often vary from week to  
               week and even month to month.  So while full-time  
               professional and managerial workers have sought flexibility  
               to diverge from rigid schedules, low-wage workers typically  

               -------------------------
          <2> Cauthen, Nancy K.  "Scheduling Hourly Workers: How Last  
          Minute, 'Just-In-Time' Scheduling Practices Are Bad for Workers,  
          Families and Business."  Dmos (2011). 








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               need more predictability and stability within fluid  
               schedules. 

               To meet the needs of all workers, we must first change the  
               terms of the workplace flexibility debate.  Solutions such  
               as four-day work weeks, varying the start and end time of  
               the work day, or telecommuting can provide critical  
               flexibility for professional and managerial workers.  But  
               the term "flexibility" muddies the water when it comes to  
               low-wage hourly workers: over the last couple of decades,  
               such workers have been increasingly subject to greater  
               demands for flexibility for the benefit of their employers.  
                As a result, hourly workers have had to endure more  
               uncertainty in their schedules, greater fluctuations in  
               their hours, and less predictability in the size of their  
               paychecks. 

               The recent trend toward "just-in-time" scheduling  
               epitomizes the unstable unemployment environment faced by  
               low-wage workers.  Just-in-time (JIT) scheduling, also  
               called "scheduling to demand," is a practice that closely  
               links labor supply to consumer demand.  Used widely in the  
               service sector, employers rely on scheduling software and  
               measures of demand (such as floor traffic, sales volume,  
               hotel registrations, or dinner reservations) to match  
               workers' hours to labor needs.  In doing so, they often  
               change posted schedules at the last minute even if it means  
               sending workers home after they arrive for work or asking  
               them to stay beyond the end of their shift.

               Such practices can wreak havoc in the lives of workers and  
               their families, complicating child care arrangements,  
               transportation, and eligibility for both employer-sponsored  
               and government benefits.  These conditions are challenging  
               not only for parents but can create tremendous chaos and  
               stress for children as well." (Original emphasis included).

           How Many California Employers Have Established an Alternative  
          Workweek Schedule?
           
          The Division of Labor Statistics and Research, under the  
          Department of Industrial Relations, provides on their website a  
          database listing all California employers that have filed  
          alternative workweek election results with the division pursuant  
          to Labor Code section 511(e).  According to the database, there  









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          are currently 25,266 employers that have successfully  
          established an alternative workweek for their employees.  This  
          is an increase from last year, when the database reported that  
          there were 23,929 employers that had successfully established an  
          alternative workweek schedule (and 20,389 the year before that).





           Recent San Francisco "Family Friendly Workplace Ordinance"  

          On October 1, 2013, the San Francisco Board of Supervisors  
          adopted a "Family Friendly Workplace Ordinance," which went into  
          effect on January 1, 2014.

          The ordinance is a "right to request" ordinance which, among  
          other things, grants covered employees the right to request  
          changes to help them meet family responsibilities.  These  
          workplace changes can include hours of work, work schedules,  
          work location, work assignment, and predictability of work  
          schedule.

          An employer is required to respond to a request within 21 days.   
          If the employer denies the request, it must do so in writing and  
          explain the reasons for the denial.  The employee may then  
          request reconsideration within 30 days.  The ordinance also  
          provides that an employer may deny a request based on specified  
          bona fide business reasons.

          In addition, the ordinance also makes it unlawful for an  
          employer to take adverse employment action against a person  
          because he or she is a "caregiver," as specified.

          The "Family Friendly Workplace Ordinance" differs from this bill  
          in a number of significant respects.  First, the ordinance  
          essentially grants employees the rights to make a request and  
          provides that the employer may deny a request for bona fide  
          business reasons.  Under this bill, an employer is not  
          prohibited from denying a request for an alternative workweek  
          for any reason.  In addition, unlike this bill, the ordinance  
          does not relieve an employer from the obligation to pay daily  
          overtime under state law for work in excess of eight hours in a  
          workday.










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           ARGUMENTS IN SUPPORT  :

          The author states the following in support of this measure:

               "[This bill] is an approach that would provide a mutually  
               beneficial and voluntary arrangement between employers and  
               employees.  Workplace flexibility benefits working  
               families, women, students, and caregivers to better suit  
               their personal needs.  California is one of three states  
               that do not conform to the Federal Fair Labor Standards  
               Act, having some of the strictest overtime laws in the  
               nation.  [This bill] is a step in the right direction to  
               putting California back on track and restores our  
               reputation of being an anti-jobs climate."

          Similarly, supporters of this bill argue that the current law  
          covering alternative schedules does not provide flexibility for  
          small businesses.  They contend that the rigid controlled  
          process effectively eliminates most employers and employee from  
          choosing schedule options such as flextime, part-time job  
          sharing, telecommuting and compressed workweeks.  They argue  
          that this bill helps to address this problem by establishing a  
          voluntary, employee-driven process where the employee can  
          request an alternative workweek schedule of no more than 40  
          hours per week.  Any work performed beyond the schedule would  
          remain subject to current overtime rules.

          Other supporters, including the California Chamber of Commerce,  
          state that there were 23,994 reported alternative workweek  
          schedules with DLSE in 2012.  According to the Employment  
          Development Department's calculations in 2009, there are  
          approximately 1,347,245 employers in California.  Therefore,  
          they contend that at best, approximately 2 percent of California  
          employers are utilizing the alternative workweek schedule  
          option.  However, more realistically, given that the information  
          in the database is according to work unit instead of employer,  
          it is likely that less than 1 percent of employers in California  
          are utilizing this process.  Supporters contend that this bill  
          would relieve employers, especially smaller employers, from the  
          administrative cost and burden of adopting an alternative  
          workweek schedule.

           ARGUMENTS IN OPPOSITION  :

          Opponents contend that this bill is in direct conflict with  









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          decades of worker protection and adopts findings that undermine  
          the very essence of our wage and hour laws.  Masked by the term  
          "flexible work schedules," this bill could permit unscrupulous  
          employers to force ten-hour schedules on employees who fear  
          losing their jobs and lack the financial resources to sustain  
          themselves and their families while an employment claim is  
          pending.  Opponents argue that the discretion granted to  
          employers in approving employee requests also allows for  
          inconsistent company policies and creates the potential for  
          favoritism.

          The California Labor Federation, AFL-CIO argues that the reality  
          is that it is the employer who has the most to gain, a  
          significant financial incentive, in moving an employee from  
          daily overtime to weekly overtime.  They contend that permitting  
          for individual deals, without the protections of an election or  
          a union, opens the door to all manner of employer pressure,  
          intimidation, and retaliation.  They argue that existing law was  
          carefully crafted to balance the interest in flexibility with  
          the need to protect workers.  This bill simply does not reflect  
          the reality of the power imbalance in most workplaces where  
          workers are "at will" and can be let go at any time for any  
          reason.

           RELATED AND PRIOR LEGISLATION  :

          As mentioned above, this bill is the latest in a long (and  
          almost annual) history of bills seeking to amend the overtime  
          and alternative workweek provisions of existing law.

          This bill is identical to SB 607 (Berryhill).  SB 607 failed  
          passage in the Senate Committee on Labor and Industrial  
          Relations.

          This bill is also identical to AB 830 (Olsen) from 2011.  AB 830  
          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 Committee on Labor and  









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               Industrial Relations.

          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 Committee on Labor and Industrial  
          Relations, but a vote was never taken.

          Over the past several years, the following bills have been  
          introduced which were similar, but not identical, to the current  
          proposal.  Each of the following bills failed passage in the  
          first policy committee:

                 SB 1335 (Cox) of 2010
                 SB 187 (Benoit) of 2009
                 AB 2127 (Benoit) of 2008
                 AB 510 (Benoit) of 2007 
                 AB 2217 (Villines) of 2006
                 SB 1254 (Ackerman) of 2006 
                 AB 640 (Tran) of 2005
                 AB 244 (Maze) of 2003

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Air Conditioning Trade Association
          Associated Builders and Contractors of California
          Associated General Contractors
          Automotive Service Councils of California
          California Association for Health Services at Home
          California Association of Winegrape Growers
          California Business Properties Association
          California Chamber of Commerce
          California Farm Bureau Federation
          California Grocers Association
          California Hospital Association









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          California League of Food Processors
          California Lodging Industry Association
          California Manufacturers and Technology Association
          California Newspaper Publishers Association
          California Restaurant Association
          California Retailers Association
          Plumbing-Heating-Cooling Contractors Association of California
          Valley Industry and Commerce Association
          Western Electrical Contractors Association

           Opposition 
           
          American Federation of State, County and Municipal Employees
          California Conference Board of the Amalgamated Transit Union
          California Conference of Machinists
          California Labor Federation, AFL-CIO
          California Nurses Association
          California Rural Legal Assistance Foundation
          California School Employees Association
          California State Council of the Service Employees International  
          Union
          California Teamsters Public Affairs Council
          Consumer Attorneys of California
          Engineers and Scientists of California
          International Longshore & Warehouse Union
          Professional & Technical Engineers, Local 21
          UNITE HERE!
          United Food and Commercial Workers, Western States Council
          Utility Workers Union of America, Local 132
           

          Analysis Prepared by  :    Ben Ebbink / L. & E. / (916) 319-2091