BILL ANALYSIS                                                                                                                                                                                                    ”



                                                                    AB 1038


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          Date of Hearing:  April 22, 2015


                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT


                               Roger HernŠndez, 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. 
          ---------------------------


          <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  

          ---------------------------


          <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