BILL ANALYSIS                                                                                                                                                                                                    Ó





          SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
                             Senator Tony Mendoza, Chair
                                2015 - 2016  Regular 

          Bill No:               SB 368       Hearing Date: January 13,  
          2016     
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          |Author:    |Berryhill                                            |
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          |Version:   |January 4, 2016                                      |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Brandon Seto                                         |
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                          Subject:  Employment:  work hours


          KEY ISSUES
          
          Should individual employees, on a one-on-one basis, be allowed  
          to request an alternative workweek schedule from their employer?  
          
          
          Should employers have final say in approving these individual  
          alternative workweek requests from their employees without the  
          requirement of a secret ballot election by the entire work unit?


          ANALYSIS
          
           Existing law: 
           
             1)   Defines a full workday as 8 hours, and 40 hours as a  
               workweek. Overtime wage rates must be paid for any time  
               worked beyond those previously mentioned definitions (Labor  
               Code §510). 

             2)   Requires overtime to be paid at the rate of no less than  
               one and one-half times an employee's regular rate of pay  
               for work performed beyond 8 hours in a day or 40 hours in a  








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               week. Furthermore, work performed beyond 12 hours in a day  
               is to be compensated at twice the regular rate of pay  
               (Labor Code §510). 

             3)   Defines a "work unit" as a division, a department, a job  
               classification, a shift, a separate physical location, or a  
               recognized subdivision thereof. A work unit may consist of  
               an individual employee as long as the aforementioned  
               criteria for an identifiable work unit is met (Labor Code  
               §511).

             4)   Authorizes the adoption of alternative workweek  
               schedules for work units, provided  2/3 of employees in a  
               work unit vote by secret ballot to approve an alternative  
               workweek schedule which allows employees to work up to 10  
               hours a day within a 40-hour workweek without the payment  
               of overtime (Labor Code §511). 

             5)   Under these existing alternative workweek schedule  
               options, employers pay their employees at overtime rates of  
               one and one-half times their regular rate of pay for time  
               worked beyond 10 hours a day or for any work in excess of  
               40 hours in a week. Also, any work beyond 12 hours in a day  
               must be compensated at twice the employee's regular rate of  
               pay (Labor Code §511).  
           

          This Bill: 
           
          Would enact the California Workplace Flexibility Act of 2016  
          which would allow employees to request a flexible work schedule  
          of up to four 10-hour days per week without the obligation on  
          the employer to pay overtime for the 9th and 10th hours worked  
          per day in that schedule. Specifically, this bill would:

             1)   Require employers to pay overtime rates after 10 hours  
               of work in a day or 40 hours in a week for workers who have  
               chosen a flexible schedule pursuant to this act. After 12  
               work hours in a day, the worker would have to be paid  
               double the regular rate of pay by their employer. 

             2)   Allow individual employees to request alternative  
               workweek schedules from their employers without the  
               requirement of a secret ballot decision by 2/3 of the work  
               unit.  







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             3)   Enable employers to consider employee requests for  
               alternative work schedules, but not to induce such requests  
               through promises of detriment or benefit to the employee.

             4)   Allow either employer or employee to terminate the  
               alternative work schedule through written notice. 

             5)   Exclude public employees or those covered by a  
               collective bargaining agreement. 


          COMMENTS
          

          1.  Need for this bill?

            This bill's stated intent is to provide flexibility to  
            employers and employees in terms of work schedules. It  
            contends that California's overtime and alternative work  
            schedule laws are prohibitive, which is detrimental both to  
            employers and their employees. According to the author, this  
            bill would create greater efficiency for employers and greater  
            work-life balance for employees. 

            This bill is nearly identical to legislation proposed over the  
            past decade to change overtime and work scheduling laws. Much  
            of the law that this bill seeks to revise originated from AB  
            60 (Knox) of 1999, which enacted provisions for alternative  
            workweek schedules, provided that they were decided upon by a  
            secret ballot election in which 2/3 of the affected employees  
            approved such a schedule.  This bill would remove that  
            requirement and would also alter the definition of the 8-hour  
            workday. 




          2.  Proponent Arguments  :
            
            According to the author, existing law is entirely too  
            difficult to be a viable option for establishing work schedule  
            flexibility for a vast majority of employers. Any time after  
            10 hours/day is subject to overtime. Work in excess of the  
            schedule established by the agreement must be paid at 1.5  







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            times the employee's regular rate of pay. "Work in excess of  
            the schedule" means any work outside of the regular schedule.  
            For example, if an employer asks an employee to work a day  
            that is not part of the employee's regular alternate workweek  
            - maybe the employer needs that person to cover a shift of an  
            ill co-worker - the employee must be paid overtime for the  
            entire shift. 

            Proponents argue that a flexible workweek option prescribed in  
            this bill will have multiple effects benefiting California's  
            workforce and economy. Allowing more employees to have a  
            flexible work schedule would result in them working different  
            hours than the standard 8:00am to 5:00pm. This would in turn  
            mean far fewer cars on the road during peak rush hour, less  
            traffic congestion and less automobile emission from idling  
            cars. A reduction in commute time and pollution would improve  
            the quality of life for all. Also, California law regarding  
            hours and overtime is complex and unclear, which, is part of  
            the reason there are so many work hours and overtime  
            class-action lawsuits. This simple change would be a benefit  
            to workers and might help reduce the number of lawsuits as a  
            result of confusion regarding overtime laws. 

            Additionally, the author argues that the states bordering  
            California have more flexible rules. In Oregon, employees  
            working overtime must be paid at 1.5 times their regular rate  
            of pay after working 40 hours in a single week. In Washington,  
            most employees paid hourly are entitled to 1.5 times their  
            regular rate of pay for any time worked over 40 hours in a  
            seven-day workweek. Some salary- or commission-based employees  
            also must be paid overtime. Arizona does not have state-set  
            overtime rules and instead requires employers to use the  
            40-hour requirements set out in the federal Fair Labor  
            Standards Act. In Nevada, an employer must pay 1.5 times an  
            employee's regular rate of pay whenever an employee works more  
            than 40 hours in a week or more than eight hours in any  
            workday, unless the employee and employer have made a specific  
            agreement providing for a scheduled 10-hour day with a  
            four-day workweek.

          3.  Opponent Arguments  :

            Opponents argue that this bill would undermine the 8-hour day  
            and allow workers to be pressured to waive daily overtime.   
            They argue that existing law already permits the adoption of  







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            alternate schedules through either an election or a collective  
            bargaining agreement. It also permits workers to request "make  
            up time" as needed to leave early one day to attend to  
            personal or family errands and stay late the next without the  
            employer incurring overtime liability. Opponents argue that  
            California's strong labor laws protect employees from being  
            forced to accept unsafe and unfair working conditions and this  
            bill is in direct conflict with decades of worker protection  
            efforts. 

            Opponents contend that the current process is not a  
            complicated or burdensome one. In fact, they argue that its  
            provisions are the result of Labor-Management discussions at  
            the Industrial Welfare Commission to establish terms that both  
            sides thought were fair and workable.  Additionally, opponents  
            argue that the current process is largely in the hands of the  
            employer since the employer has sole discretion over 1)  
            whether or not to conduct an election, 2) which worksites or  
            departments are eligible, 3) which schedule options to make  
            available.  Furthermore, opponents point out that even a unit  
            of just one employee may be offered this alternate schedule  
            election.    

            Additionally, opponents argue 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. Permitting  
            individual deals, without the protections of an election or a  
            union, open the door to all manner of employer pressure,  
            intimidation, and retaliation.  The discretion granted to  
            employers in approving employee requests also allows for  
            inconsistent company policies and creates the potential for  
            favoritism.  

          4.  Prior Legislation  :

            There have been many previous bills that were similar or  
            nearly identical to this one, and all failed passage in the  
            first policy committees in their respective houses of origin.  
            They include:
                 AB 2448 (Jones) of 2014
                 AB 907 (Conway) of 2014
                 SB 607 (Berryhill) of 2013
                 SB 1115 (Dutton) of 2012
                 SB 367 (Dutton) of 2011
                 AB 830 (Olsen) of 2011







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                 SB 1335 (Cox and Dutton) 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


          SUPPORT
          
          Air Conditioning Trade Association (ACTA)
          California Chapters of the American Fire Sprinkler Association  
          (AFSA) 
          Plumbing-Heating-Cooling Contractors Association of California  
          (CAPHCC)
          Western Electrical Contractors Association (WECA)


          
          OPPOSITION
          
          California Labor Federation, AFL-CIO



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