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 ----------------------------------------------------------------- |Author: |Berryhill | |-----------+-----------------------------------------------------| |Version: |January 4, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Brandon Seto | | | | ----------------------------------------------------------------- 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 SB 368 (Berryhill) Page 2 of ? 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. SB 368 (Berryhill) Page 3 of ? 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 SB 368 (Berryhill) Page 4 of ? 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 SB 368 (Berryhill) Page 5 of ? 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 SB 368 (Berryhill) Page 6 of ? 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 -- END --