BILL ANALYSIS Ó SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS Senator Tony Mendoza, Chair 2015 - 2016 Regular Bill No: SB 985 Hearing Date: June 22, 2016 ----------------------------------------------------------------- |Author: |Berryhill | |-----------+-----------------------------------------------------| |Version: |April 14, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |Yes |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 the Legislature require the Division of Labor Standards Enforcement (DLSE) to develop an alternative workweek schedule request form to be utilized by employees and kept on file by employers and the DLSE? Should the Legislature require a report from the DLSE which describes employee experiences relating to alternative workweek schedules, including the total number requested by employees? ANALYSIS Existing law 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). SB 985 (Berryhill) Page 2 of ? 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 week. Furthermore, work performed beyond 12 hours in a day is to be compensated at twice the regular rate of pay (Labor Code §510). Utilizes regulations created by the Industrial Welfare Commission (IWC) in the form of "wage orders" to determine the wages, hours, conditions, and scheduling options of labor and employment in the various occupations, trades, and industries in California (Labor Code §1173 and §517). 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). 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). 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: SB 985 (Berryhill) Page 3 of ? 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 work 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. Allow individual employees, using a form provided by the DLSE, to make written requests for flexible work schedules from their employers without the requirement of a secret ballot decision by 2/3 of the work unit. Specify that this form, in addition to the provisions mentioned above, includes a statement indicating that the flexible work schedule was not a condition of employment, and that employee participation is voluntary. Require employers to retain these signed request forms in their records and to send a copy to the DLSE. Enable employers to consider employee requests for flexible work schedules, but not to induce such requests through promises of detriment or benefit to the employee. Allow either employer or employee to terminate the flexible work schedule through written notice. Exclude public employees or those covered by a collective bargaining agreement. Specify that its scheduling provisions will replace the scheduling provisions in any Industrial Welfare Commission wage order, thus making it the standard practice for flexible scheduling options. Require the DLSE to prepare and submit a report to the Legislature no later than January 1, 2021evaluating the provisions of this bill including, but not limited to, the following: 1) The number of employee complaints regarding employer delay in approving a flexible work schedule. 2) The number of employees who have complained of being coerced to sign the employee-selected flexible SB 985 (Berryhill) Page 4 of ? work schedule form. 3) The total number of employer-approved flexible work schedules received by the DLSE. State that its provisions will be repealed on January 1, 2022, unless a statute enacted before January 1, 2022, deletes or extends that date. Be considered as an urgency statute. 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. 2. Proponent Arguments : Proponents state that California is presently the only state that requires daily overtime but offers no mechanism for individual employees to request, or for private employers to provide flexible schedules. While Labor Code § 511 authorizes so-called "alternative workweek schedules" if approved by a "work unit", it presently applies only to "proposal[s] of an employer," not individual employees. In this regard, the Labor Code provides a mechanism for employers to request an alternative workweek schedule, but does not provide a mechanism in the scenario where an employee is seeking an alternative schedule. Proponents state that this bill would resolve the conflict and complexity of California's current overtime premium pay requirements by permitting the 4-day workweek to be paid at straight time rates, if the employee requests the flexible work schedule. Proponents further argue that flexible work schedules benefit both employees and employers. Workers benefit by having an extra day to spend with family, complete SB 985 (Berryhill) Page 5 of ? household chores, volunteer at their children's school and more. Flexible work schedules benefit employers by improved employee morale, increased productivity and as a helpful recruitment aid. In addition, proponents say that SB 985 would result in both traffic and environmental benefits for California due to reduced commuting. 3. Opponent Arguments : The California Labor Federation opposes SB 985, which they believe would undermine the fundamental right to an 8-hour day. The vast majority of California's workers are "at will" and will agree to virtually any waiver of rights if it is communicated directly or indirectly that the waiver is supported by the employer. This puts many workers at risk of waiving a core labor protection to avoid angering their boss. Eliminating overtime can result in significant savings to an employer. This reality makes it even more important that workers be protected from suggestion or coercion to waive this right. Opponents state that significant flexibility already exists under state law. Workers can request "make-up time" so they can leave early one day and work late the next without accruing overtime. In addition, Labor-Management negotiations created the pre-existing alternative workweek process. This process allows the adoption of an alternative schedule with safeguards to protect workers from employer pressure. Opponents argue that they have yet to see evidence that this model is not working and thus see no reason to change the rules and jeopardize vulnerable workers. Opponents claim that employers already have the right to be as flexible or as inflexible as they want when it comes to shifts and scheduling, SB 985 (Berryhill) Page 6 of ? so long as they pay for overtime hours. If the problem is workers sitting in traffic at peak hours, employers can adjust start times or stagger shifts. They can give workers as many or as few hours as they like, avoiding any overtime obligations. Finally, opponents state that nothing in this bill guarantees SB 985 (Berryhill) Page 7 of ? workers any additional flexibility. While they can request an alternate schedule, the employer has the power to allow or deny. This opens the door to favoritism, where only certain employees get schedule changes approved. In short, opponents believe that this bill provides no real benefit to workers. 4. Prior Legislation : Although this bill has added, among other things, a sunset date and a reporting requirement, there have been many previous bills that were similar to this one, and all failed passage in the first policy committees in their respective houses of origin. They include: SB 368 (Berryhill) of 2016 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 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 Acclamation Insurance Management Services Allied Managed Care American Insurance Association Associated General Contractors Association of California Insurance Companies Bay Area HR Executives Council California Association for Health Services at Home California Association of Joint Powers Authorities California Chamber of Commerce California Coalition on Workers' Compensation California Delivery Association California Grocers Association California Hotel & Lodging Association California League of Food Processors SB 985 (Berryhill) Page 8 of ? California Manufacturers & Technology Association California Retailers Association California School Boards Association California Special Districts Association California State Association of Counties California State Council of SHRM (CalSHRM) CAWA - Representing the Automotive Parts Industry Central California SHRM Central Coast HR Association Central Valley HR Management Association CSAC Excess Insurance Authority Culver City Chamber of Commerce HR Association of Central California Inland Empire Society for HR Association Management Kern County Society for Human Resource Management League of California Cities National Association of Mutual Insurance Companies National Federation of Independent Business Northstate SHRM Professionals in Human Resources Association Property Casualty Insurers Association of America Rural County Representatives of California Sacramento Area HR Association San Diego Society of Human Resource Management San Joaquin Human Resource Association Santa Barbara HR Association SHRM of Tulare/Kings County Sierra Human Resources Association Southern California Wine Country SHRM OPPOSITION California Labor Federation -- END --