BILL ANALYSIS Ó
AB 1038
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 1038
(Jones) - As Introduced February 26, 2015
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 and requires the
flexible work schedule to contain specified information and
the original signature of the employee and employer.
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, as specified.
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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.
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.
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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 2015."
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
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.
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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
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."
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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
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regularly hourly rate of pay at least 30% above the state
minimum wage.
"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.
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<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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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 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
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<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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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 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.
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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).
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.
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The "Family Friendly Workplace Ordinance" differs from this bill
in a number of significant respects. First, the ordinance
essentially grants employees the right 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.
Arguments in Support
The California Chamber of Commerce and other supporters state
that California is one of only three states that require
employers to pay daily overtime after eight hours of work and
weekly overtime after 40 hours of work. Even the other two
states that impose daily overtime requirements allow the
employer and employee to essentially waive the daily eight-hour
overtime requirement through a written agreement. California,
however, provides no such common sense alternative. Rather,
California requires employers to navigate through a multi-step
process to have employees elect an alternative workweek schedule
that once adopted must be "regularly" scheduled. This process
is filled with potential traps for costly litigation, as one
misstep may render the entire alternative workweek schedule
invalid and leave the employer on the hook for claims of unpaid
overtime wages.
Lastly, they argue that currently, there are 27,865 reported
alternative workweek schedules with the Division of Labor
Standards and Enforcement. According to the Employment
Development Department's calculations for the first quarter of
2014, there are approximately 1,370,292 employers in California.
At best, approximately 2% of California employers are utilizing
the alternative workweek schedule option. However, more
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realistically, given that the information in the database is
according to work unit instead of employer, it is likely that
less than 1% of employers in California are utilizing this
process
Arguments in Opposition
Opponents collectively argue this bill introduces an exemption
to the 8 hour work day in which employers make agreements with
individual employees to waive daily overtime pay. Employers
have a significant financial incentive to move an employee from
daily overtime to weekly overtime and permitting individual
deals, without protection, opens the door to all manners of
pressure, intimidation and retaliation by the employers.
Finally, they argue current law was carefully crafted to balance
the interests of flexibility with worker protection. Without
this balance workers lose valuable overtime pay to support their
household.
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.
AB 2448 (Jones) of 2014 was nearly identical to this bill and
failed passage in this Committee.
This bill is nearly identical to AB 907 (Conway). AB 907 failed
passage in this Committee in January 2014.
This bill is also identical to SB 607 (Berryhill) of 2013. SB
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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
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.
REGISTERED SUPPORT / OPPOSITION:
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Support
Bay Area HR Executives Council
Brea Chamber of Commerce
California Association for Health Services at Home
California Attractions and Parks Association
California Chamber of Commerce
California Farm Bureau Federation
California Manufacturers and Technology Association
California Trucking Association
Camarillo Chamber of Commerce
Central California SHRM
Central Coast HR Association
Central Valley HR Management Association
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Chamber Alliance of Ventura and Santa Barbara Counties
El Centro Chamber of Commerce & Visitors Bureau
Fullerton Chamber of Commerce
HR Association of Central California
Inland Empire Society for HR Association Management
Kern County Society for Human Resource Management
Lake Tahoe South Shore Chamber of Commerce
National Federation of Independent Business
Northstate SHRM
Orange County Business Council
Oxnard Chamber of Commerce
Professionals in Human Resources Association
Rancho Cordova Chamber of Commerce
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Sacramento Area HR Association
San Diego Regional Chamber of Commerce
San Diego Society of Human Resource Management
San Joaquin Human Resource Association
San Jose Silicon Valley Chamber of Commerce
Santa Barbara HR Association
Santa Maria Valley Chamber of Commerce Visitor & Convention
Bureau
SHRM of Tulare/Kings County
Sierra Human Resources Association
Southern California Wine Country SHRM
Southwest California Legislative Council
The California State Council of SHRM
Valley Industry & Commerce Association
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Opposition
CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
California Federation of Teachers
California Labor Federation, AFL-CIO
California Professional Firefighters
California Rural Legal Assistance Foundation
California School Employees Association
California Teamsters Public Affairs Council
Consumer Attorneys of California
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Engineers & Scientists of CA, IFPTE Local 20
International Longshore & Warehouse Union
Professional & Technical Engineers, IFPTE Local 21
UNITE-HERE
Utility Workers Union of America
Analysis Prepared by:Lorie Alvarez / L. & E. / (916) 319-2091