BILL ANALYSIS Ó
AB 2448
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Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 2448 (Jones) - As Amended: March 20, 2014
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
corresponding exemptions for certain classifications of
employees.
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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 2014."
Brief Background on AB 60
Beginning in 1913, the Industrial Welfare Commission (IWC) had
jurisdiction over working hours only of women and minors.
Exercising its authority, the IWC established daily overtime
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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
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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.
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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
-------------------------
<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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reconciliation, but in a manner that takes account of
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
-------------------------
<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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to diverge from rigid schedules, low-wage workers typically
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
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to Labor Code section 511(e). According to the database, there
are currently 26,016 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:
"The rights of workers and small businesses employees have
been exploited by outdated and inefficient workplace and
overtime rules. In essence, California law manipulates the
lives of Californians by squelching flexibility and
imposing rigid limitations on all aspects of work.
This creates an untenable situation, making it nearly
impossible for employees and their respective employers to
reach a mutually agreeable solution that fits the
individual needs of the worker and employer. Because
existing law does not permit an employer to allow an
individual worker to personally choose a flexible work
schedule of four 10-hour days per week without overtime
being paid, millions of workers consequently are barred
from setting a schedule that would best benefit them and
their families. California is one of only three states
that do not conform to the Federal Fair Labor Standards
Act, having some of the most restrictive overtime laws in
the nation."
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 are currently 26,016 reported alternative
workweek schedules on file with DLSE. 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
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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
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 AB 907 (Conway). AB 907 failed
passage in this Committee in January of this year.
This bill is also identical to SB 607 (Berryhill). SB 607
failed passage in the Senate Committee on Labor and Industrial
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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
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 :
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Support
Air Conditioning Trade Association
Associated Builders and Contractors - San Diego Chapter
Associated Builders and Contractors of California
Associated General Contractors
Brawley Chamber of Commerce
California Association for Health Services at Home
California Association of Winegrape Growers
California Automotive Business Coalition
California Chamber of Commerce
California Chapter of American Fence Association
California Fence Contractors' Association
California Grocers Association
California Hospital Association
California Manufacturers and Technology Association
California Pool and Spa Association
California State Council of SHRM
Central Coast Human Resource Association
Chambers of Commerce Alliance of Ventura and Santa Barbara
Counties
Coalition of Small and Disabled Veteran Businesses
Flasher Barricade Association
Fullerton Chamber of Commerce
Greater Riverside Chamber of Commerce
Huntington Beach Chamber of Commerce
Marin Builders Association
National Federation of Independent Business
Oxnard Chamber of Commerce
Palm Desert Area Chamber of Commerce
Pleasanton Chamber of Commerce
Plumbing-Heating-Cooling Contractors Association of California
Redondo Beach Chamber of Commerce
Society for Human Resource Management in California
San Jose Silicon Valley Chamber of Commerce
Santa Clara Chamber of Commerce
Simi Valley Chamber of Commerce
South Bay Association of Chambers of Commerce
Southwest California Legislative Council
The Chamber of the Santa Barbara Region
United Chambers of Commerce of the San Fernando Valley
Valley Industry and Commerce Association
Visalia Chamber of Commerce
Western Electrical Contractors Association
Wine Institute
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Sacramento Area Human Resources Association
Opposition
California Conference of Machinists
California Conference of the Amalgamated Transit Union
California Labor Federation, AFL-CIO
California Nurses Association
California Professional Firefighters
California Teamsters Public Affairs Council
Engineers & Scientists, Local 20
International Longshore and Warehouse Union, Coast Division
Professional & Technical Engineers, Local 21
State Building and Construction Trades Council of California
UNITE HERE
Utility Workers Union of America, Local 132
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091