BILL ANALYSIS Ó
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: April 24, 2013 2013-2014 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: SB 554
Author: Anderson
As Introduced/Amended: February 22, 2013
SUBJECT
Employment: overtime compensation.
KEY ISSUE
Should the Legislature create an exception to the 8 hour day for
24 hour residential care facilities?
ANALYSIS
The California Constitution endows upon the Legislature the
ability to provide for minimum wages and the general welfare of
employees and for those purposes may confer on a commission
legislative, executive, and judicial powers. (Article XVI,
Section I)
Existing law, with certain exceptions, defines a day's work as
eight hours of labor. Any additional hours worked in excess of
eight hours in one day, or a 40-hour workweek, must be
compensated with the payment of overtime. (Labor Code § 510)
Under existing law, the payment of overtime compensation is as
follows:
§ 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 any
one workweek shall be compensated at the rate of no less
than one and one-half times the regular rate of pay for an
employee;
§ Any work in excess of 12 hours in one day shall be
compensated at the rate of no less than twice the regular
rate of pay for an employee;
§ Any work in excess of eight hours on any seventh day of
a work week shall be compensated at the rate of no less
than twice the regular rate of pay of an employee.
(Labor Code § 510)
Existing law provides that the standard requirements for the
payment of overtime compensation do not apply where:
a) An employee submits a written request to make up work
time that would be lost as a result of a personal
obligation of the employee if the make-up work time is
performed in the same workweek in which the work time was
lost (Labor Code § 513);
b) An alternative workweek schedule has been adopted
pursuant an alternative workweek election, where two-thirds
of the workers have approved a specific schedule or a menu
of optional schedules (Labor Code § 511); and
c) Employees have adopted an alternative workweek schedule
pursuant to a 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 regular hourly rate of pay for those employees of not
less than 30 percent more than the state minimum wage
(Labor Code § 514).
Existing law also provides that the standard requirements for
overtime compensation do not apply to certain exempt executive,
administrative, and professional employees, as specified. (Labor
Code § 515)
This bill would provide that employees of 24-hour nonmedical
out-of-home licensed residential facilities of 15 beds or fewer
for the developmentally disabled, elderly, or mentally ill
adults may, without violating any provision of this chapter or
Hearing Date: April 24, 2013 SB 554
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
any applicable order of the commission, be compensated as
follows:
1) One and one-half times the employee's regular rate of
pay for more than 40 hours of work in a workweek;
2) Two times the employee's regular rate of pay for more
than 48 hours in a work week;
3) Two times the employee's regular rate of pay for more
than 16 hours in a work day; and
4) An employee may not work more than 24 consecutive hours
until the employee receives not less than eight consecutive
hours off-duty immediately following the 24 consecutive
hours of work. Time spent sleeping shall not be included
as hours worked.
COMMENTS
1. SB 554 and the Industrial Welfare Commission (IWC):
Historically, the Legislature has bestowed authority of wages,
hours, and general working conditions on the Industrial
Welfare Commission (IWC), as provided by the California
Constitution. However, since July 1, 2004, the IWC has been
out of operation due to a lack of budget funding. This lack
of funding dates back to a series of IWC emergency orders
promulgated during the Schwarzenegger Administration which
sought to undermine statutory requirements regarding overtime
and the 8-hour day. In the absence of the IWC, the
Legislature is the sole authority on wages, hours, and general
working conditions.
In February of 2001, the California Alliance of Child and
Family Services petitioned the IWC to allow for an exception
to overtime laws for 24-hour residential facilities, arguing
that the laws were too restrictive. The IWC held hearings,
taking testimony from stakeholders on the impact of such a
change. While opposed by Service Employees International
Hearing Date: April 24, 2013 SB 554
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Senate Committee on Labor and Industrial Relations
Union (SEIU), the IWC found that overtime charges were
necessary because the state government was the primary
consumer of the 24-hour residential facilities, limiting the
ability of the facilities to shift costs.
After hearings, the IWC approved the overtime exception for
24-hour residential facilities in March of 2001. However, in
July of 2001, a sunset provision was added, making the
exception sunset on July 1, 2005. This sunset was not
extended, and therefore the overtime exception for 24-hour
residential facilities sunset. SB 554 would put a nearly
identical exception to overtime laws as was provided by the
IWC for 24-hour residential facilities.
2. Proponent Arguments :
Proponents argue that California's 8 hour day requirements are
too stringent, pointing to the fact that most states use the
federal standard of a 40 hour work week for overtime
calculation. Proponents therefore support SB 554 as an
initial step of relief for non-medical licensed residential
homes. Proponents also note that SB 554 still provides
overtime beyond 40 hours and double time beyond 48 hours in a
workweek. Additionally, proponents note that the existing law
has not led to increased worker wages, but rather increased
shifts, and that a change in overtime laws would lead to
better continuity of care for residents, a safer environment,
and better pay for workers.
3. Opponent Arguments :
Opponents note that California law currently provides nearly
all non-exempt employees with overtime after the 8th hour.
The 8 hour day is a longstanding practice in the State of
California and has been a cornerstone of California Labor Law.
Opponents argue that SB 554 targets a specific group of
employees without appropriate justification for why they
should be exempted from California labor law protections.
Opponents argue that these employees should be protected like
nearly all other non-exempt employees in California, and that
there is no justification for any disparity between workers
who care for those who development disabilities and other
Hearing Date: April 24, 2013 SB 554
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations
non-exempt workers.
4. Current Legislation :
SB 607 (Berryhill), which will be heard by the Committee at
the same time as this bill, would repeal the 8 hour work day.
SUPPORT
Noah Homes (Sponsor)
California Chamber of Commerce
OPPOSITION
California Association of Electrical Workers
California Labor Federation, AFL-CIO
California Nurses Association
California School Employees Association
California State Pipe Trades Council
Consumer Attorneys of California
Service Employees International Union-California
Western States Council of Sheet Metal Workers
Hearing Date: April 24, 2013 SB 554
Consultant: Gideon L. Baum Page 5
Senate Committee on Labor and Industrial Relations