BILL ANALYSIS
Senate Committee on Industrial
Relations 1999-2000 Regular Session Hilda L. Solis,
Chair
Fiscal: Yes
Urgency: No
Bill No: AB 60
Author: Knox
Version: As Amended May 27, 1999
Subject:
Daily overtime compensation
Support:
American Federation of State, County and Municipal
Employees
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Federation of Teachers
California Labor Federation
California Nurses Association
California State Association of Electrical Workers
California State Building and Construction Trades Council
California State Council of Laborers
California State Pipe Trades Council
California Teamsters Public Affairs Council
Engineers & Scientists of California
Hotel Employees, Restaurant Employees International Union
Long Beach Police Officers Association
Peace Officers Research Association of California
Region 8 States Council of the United Food & Commercial
Workers
Sacramento County Deputy Sheriffs' Association
Service Employees International Union
Westaff
Western States Council of Sheet Metal Workers
Numerous Individuals
Opposition:
ABC Service
All Phase Construction
Alliance Staffing Associates
Alta Insurance Agency, Inc.
American Eagle Wheel Corporation
Apex Painting Inc.
Apple Valley Transfer & Storage, Inc.
Associated Desert Newspapers, Inc.
Astro Seal, Inc.
ATL Trucking
Bank of Marin
Behr Process Corporation
Best Rents, Inc.
Blue Chip Inventory Service, Inc.
Broom & Broom Inc.
Bush's Automotive, Inc.
California Association for Health Services at Home
California Association for Local Economic Development
California Association of Health Facilities
California Bus Association
California Cartage Company Inc.
California Healthcare Association
California Landscape Contractors Association
California Manufacturers Association
California Newspaper Publishers Association
California Ski Industry Association
Cameron & Cameron, Inc.
camp frasier
CareMore Medical Management Company
Carlsbad Chamber of Commerce
Carter's Pet Mart
Catalina Island Camps
CellularOne of San Luis Obispo
Chateau La Jolla Inn
Choices Transitional Services
Christopher P. Thomas Accounting
Circle Machine Company
City of Porterville
Coast Lithographics
Columbia Steel Inc.
Consolidated Fabricators Corp.
Hearing Date: June 9, 1999 AB
60
Consultant: Stephen Holloway Page
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Senate Committee on Industrial Relations
Contractors Equipment Company
Coop Engineering, Inc.
Corning Truck & RV Center
Criterion Machine Works
David C. Coykendall, D.D.S., Inc.
De Best MFG. Co., Inc.
Diamond Well Drilling Company
Dominican College of San Rafael
Edward's Federal Credit Union
Fair Oaks Water District
Farr West Fashions
Fleetwood Motor Homes of California, Inc.
Fleetwood Travel Trailers of California, Inc.
Franklin Construction Inc.
Gateway Business Forms, Inc.
General Test Laboratory
GeoSoils, Inc.
Gibson Capital Management
glasforms inc
Golden State Fence Co.
Golden West K-9
Greater Stockton Chamber of Commerce
Griffin Property Management
Haddick's Auto Body and Towing
Hartis, Hare & Company, Inc.
Hayden Automotive
Hemet Federal Savings and Loan Association
Heritage Estates, Inc.
Hermosa Beach Chamber of Commerce
Holiday Inn Plaza Park
Hycor Biomedical Inc.
Hydro Fitting MFG. Corp.
HyPower Hydraulics
Industrial Contracting Engineers Inc.
Industrial Tools Incorporated
Industry Manufacturers Council
Intri-Plex Technologies
ITLA Capital Corporation
Jasmine Vineyards
Jazzercise, Inc.
Jonbec Care Inc.
Hearing Date: June 9, 1999 AB
60
Consultant: Stephen Holloway Page
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Senate Committee on Industrial Relations
Junior Steel Co.
KCAC, Inc.
L.P.G. Associates
Lake Henshaw Resort Inc.
Lakeview Professional Services, Inc.
Law Offices of Buresh, Kaplan, Jang, Feller & Austin
Lobel Financial
Long Beach Memoiral Medical Center
Los Angeles Cardiology Associates
Los Angeles Federal Credit Union
Lustre-Cal Nameplate Corporation
Manteca Community Action Programs and Services
Marin Produce Company, Inc.
McCormick & Company, Inc.
Medical Home Care Professionals, Inc.
Memorial Health Services
Metech International Inc.
Michael's Restaurant
Millennium Home Theatre & Audio
Modesto Chamber of Commerce
National Federation of Independent Business
NDS Drainage & Landscape Products
Nevada City Citizen's Restaurant
New Directions Sign Service
Norquist Salvage Corporation
Northern California Grocers Association
Norton Packaging Incorporated
Outboard Jets
Pacheco Brothers Gardening, Inc.
Pacific Millennium
Pacific Millennium Trading Corporation
Packaging Innovators Corporation
Pharmaceutical Care Network
Pizza World Supreme
Planet Kids
Poly Seal Industries
Preventive Dental Care Centers Management Services, Inc.
Printing Industries of California
Professional Community Management, Inc.
ProFlame, Inc.
Rangers Die Casting Company, Inc.
Hearing Date: June 9, 1999 AB
60
Consultant: Stephen Holloway Page
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Senate Committee on Industrial Relations
Redding Oil Company
Rhyne Design Cabinets
Ronald L. Wolfe & Associates
Sacramento Animal Medical Group
Sacramento Metropolitan Chamber of Commerce
Salinas Valley Chamber of Commerce
San Carlos Agency, Inc. Real Estate
San Lorenzo Lumber Co., Inc.
San Rafael Chamber of Commerce
Santa Barbara Association of Realtors
Seawright Custom Precast
Secure Transportation
Sheraton Los Angeles Harbor Hotel
Simi Valley Chamber of Commerce
Skip Gibbs Company, Inc.
Small Engine and Power Tool Repair, Inc.
SmileCare Dental Group
Squires-Belt Material Company
Stiern Southwest Veterinary Hospitals
Teknor Apex Company
The Go Between Incorporated
Today's Staffing Source
Tom Sawyer Camps, Inc.
Tow Industries, Baatz Enterprises Inc.
Trico Drum Sales Inc.
Tulare County Alcoholism Council, Incorporated
Tulare County Board of Supervisors
Turning point of Central California, Inc.
Turnkey Technologies, Inc.
UAE Energy Operations Corp.
Victorville Chamber of Commerce
Visalia Chamber of Commerce
Western Carwash Association
Western Wood Fabricators
Wild Sports
Wolfard Glassblowing Co.
Numerous Individuals
Purpose:
To establish a statutory framework for daily overtime
Hearing Date: June 9, 1999 AB
60
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Senate Committee on Industrial Relations
compensation.
Analysis:
1) Existing law provides that eight hours of labor
constitute a day's work, unless
otherwise stipulated by the parties to a contract.
This provision does not apply to work performed in the
necessary care of animals, crops
or agricultural lands, nor any common carrier connected
with the movement of any
train, nor employees covered by a collective bargaining
agreement. In addition to the
above exceptions, the Chief of the Division of Labor
Standards Enforcement (DLSE)
may, when hardship may result, exempt any employer or
employees from the above
requirement.
Existing law provides separate working hour requirements
for railroad employees, pharmacies, smelters and
underground workings, ski employees, commercial passenger
fishing boat employees, stable employees, and organized
camps.
2) Existing law also requires payment of overtime for work
in excess of eight hours per
day or 40 hours per week when performed by employees
of public works contractors.
3) The California Constitution empowers the Legislature to
provide for minimum wages
and the general welfare of employees and for those
purposes may confer on a
commission legislative, executive and judicial powers.
The Legislature has delegated
these powers to the Industrial Welfare Commission
(IWC).
4) IWC wage orders:
Hearing Date: June 9, 1999 AB
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Consultant: Stephen Holloway Page
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Senate Committee on Industrial Relations
On April 11, 1997, the IWC voted to amend five wage orders
(there are fifteen in all) covering the following industry
or occupational groups: Manufacturing; Professional,
clerical, mechanical and similar occupations; Public
housekeeping industry; Mercantile industry; and,
Transportation industry. The amendments eliminated the
eight-hour day and expressly provided that "No overtime pay
shall be required for hours worked in excess of any daily
number." The amendments also deleted alternative workweek
provisions. The IWC announced that the amendments would
make California's workweek "more worker friendly." These
orders were effective January 1, 1998.
The remainder of the wage orders require, generally, the
payment of time-and-one-half compensation for work
exceeding eight hours per day, 40 hours per week, and for
the first eight hours on the seventh consecutive day of
work. Double time is generally required for work in excess
of 12 hours per day and in excess of eight hours on the
seventh consecutive day of work.
Employees in agricultural occupations, however, may work up
to ten hours in one day without the payment of overtime and
employees in a licensed hospital may vote to work three
12-hour days without overtime pay.
With the exception of those orders covering agricultural
and domestic workers, the orders contain provisions
allowing the institution of an alternative workweek of four
ten-hour days without the payment of overtime compensation
as long as the work does not exceed 40 hours per week.
Alternative workweeks must be approved in a secret ballot
election by two-thirds of the affected employees.
These orders affect various industry or occupational
groups, but exclude on-site work in the construction,
mining, drilling or logging industries and administrative,
executive, or professional employees whose work is
primarily intellectual, managerial or creative and who
receive a salary of not less than $1150 ($900 for some
Hearing Date: June 9, 1999 AB
60
Consultant: Stephen Holloway Page
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Senate Committee on Industrial Relations
orders) per month, transportation employees subject to
specified federal and state regulations, and public
employees. Outside salesmen (sic) are statutorily exempt
from the ambit of the IWC.
5) The Federal Fair Labor Standards Act (FLSA), requires
the payment of time-and-one
-half compensation after 40 hours per week. The FLSA
exempts from this overtime
provision a variety of occupations, including
agricultural employees, camp
employees, and administrative and professional
employees.
6) Executive Orders: In January 1994, Governor Wilson
issued an executive order (W
75-94) which suspended the eight-hour day rule for
counties affected by the
Northridge earthquake. The order was lifted on
September 29, 1994. On January 10,
1997, the Governor issued a similar order (W-142-97)
for counties affected by the
recent floods. This order was lifted February 13,
1997.
7) A brief history: The eight-hour day was first
established for women in several
industries in 1911. The IWC was created in 1913. By
1968, the IWC had 14 orders
covering women and children. In 1974, the orders
were applied to men for the first
time, but were successfully challenged on procedural
grounds and never went into
effect. Orders promulgated in 1976 were also
challenged, but the California Supreme
Court held on July 10, 1980 that the IWC's wage
orders were enforceable. In 1980,
the IWC issued 15 orders and, for the first time, all
orders remained in effect to
protect men as well as women. These orders required
overtime after eight hours in
Hearing Date: June 9, 1999 AB
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Senate Committee on Industrial Relations
one day, but allowed an exception for a ten-hour
four-day workweek.
This Bill:
1) Requires the payment of daily overtime compensation at
a rate of one and one half
times the regular rate of pay after eight hours of
daily work and 40 hours of weekly
work; at a rate of twice the regular rate of pay after
12 hours of daily work and after
eight hours of work on the seventh day of any
workweek. The bill deletes the
authority of parties to a contract to otherwise
expressly stipulate the number of hours
that constitute a day's work.
2) Establishes a procedure for an employer to propose an
alternative workweek
schedule which may be approved by a 2/3 vote of
affected employees. An alternative
workweek schedule established pursuant to this
procedure could allow up to 10 hours
of daily work before overtime compensation is
required. The Industrial Welfare
Commission (IWC) is required to adopt regulations
governing the procedures for the
adoption, repeal, and implementation of alternative
workweek schedules.
3) Nullifies alternative workweek schedules adopted
pursuant to five wage orders
amended effective January 1, 1998 ( 1- Manufacturing
industry; 4 - Professional,
technical, clerical, mechanical and similar
occupations; 5 - Public housekeeping
industry; 7 - Mercantile industry; 9 -
Transportation industry) except as provided.
Provides an employer shall not reduce an employee's
regular rate of hourly pay as a
result of the adoption, repeal, or nullification of an
Hearing Date: June 9, 1999 AB
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Senate Committee on Industrial Relations
alternative workweek schedule.
4) Permits employers in the health care industry to retain
until July 1, 2000, an
alternative workweek schedule with workdays up to 12
hours without overtime
compensation, provided such schedules were approved by
employee elections
pursuant to work orders 4 or 5 in effect prior to
1998.
5) Establishes that within a workweek, an employee may,
based on a specific written
request, with the consent of an employer, take time
off for a personal obligation, and
then make up the lost time on other days within the
same workweek without payment
of daily overtime compensation for the extra hours
worked on the makeup day(s). The
bill limits the daily makeup-time to 11 hours per day.
An employer is prohibited from
encouraging or soliciting such a request.
6) Requires IWC to adopt wage orders consistent with this
bill without convening wage
boards.
7) Authorizes the IWC to exempt "administrative,
executive, or professional employees"
from overtime premium pay requirements, provided that
these employees meet
specified wage and duty requirements.
8) Authorizes the IWC to review, retain or eliminate any
exemptions from any hours of
work provision in a valid work order in effect prior
to 1997. Provides that the IWC
may until January 1, 2004, establish additional
exemptions to hours of work
requirements where it finds that hours or conditions
of labor may be prejudicial to
Hearing Date: June 9, 1999 AB
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Senate Committee on Industrial Relations
the health or welfare of employees in any occupation,
trade or industry.
9) Exempts from overtime premium pay requirements
employees who are covered by a
collective bargaining agreement which meets specified
criteria.
10) Sunsets, effective July 1, 2000, specific statutory
provisions governing daily and
weekly overtime requirements for employees of a ski
establishment (i.e., no daily
overtime; weekly overtime after 56 hours); a
licensed commercial passenger fishing
boat (i.e., no daily or weekly overtime); a licensed
hospital (i.e., daily overtime after
12 hours); and a stable (i.e., daily overtime after
10 hours; weekly overtime after 56
hours). Authorizes IWC, prior to July 1, 2000, to
conduct a review, and then adopt
regulations regarding overtime in these industries.
Also requires IWC to review
wage and hours issues with respect to licensed
pharmacists and outside salespersons.
11) Nullifies the five wage orders which were amended and
effective January 1, 1998.
Comments:
1. Proponents :
The bill finds and declares the necessity for its
enactment, as follows:
a) The eight-hour workday is the mainstay of protection
for California's working
people, and has been for over 80 years.
b) In 1911, California enacted the first daily overtime
law setting the eight-hour daily
Hearing Date: June 9, 1999 AB
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Senate Committee on Industrial Relations
standard, long before the federal government enacted
overtime protections for
workers.
c) Without the eight-hour limitation, many employers
would lengthen the workday to
12 or more hours, resulting in extreme fatigue and
stress to workers.
d) Ending daily overtime would result in a substantial
pay cut for California workers
who currently receive daily overtime.
e) Numerous studies have linked long work hours to
increased rates of accident and
injury.
f) Family life suffers when either or both parents are
kept away from home for an
extended period of time on a daily basis.
g) In 1998, the Industrial Welfare Commission adopted
wage orders that deleted the
requirement to pay premium wages after eight hours
of work a day in five wage
orders regulating eight million workers.
h) Therefore, the Legislature affirms the importance of
the eight-hour workday,
declares that it should be protected, and reaffirms
the state's unwavering
commitment to upholding the eight-hour workday as a
fundamental protection for
working people.
2. Opponents :
Opponents generally argue that relief from existing
overtime rules as provided in the amended work orders
gives them the flexibility to control their production
schedules.
Hearing Date: June 9, 1999 AB
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Senate Committee on Industrial Relations
Employers should be able to work employees 10 or 12 hours
a day, without the penalty of overtime if competitive
forces necessitate such work schedules.
Former IWC orders were too restrictive and did contain
flexible work schedules. This bill is more restrictive
than the former IWC orders. The alternative workweek
process is too cumbersome. Employees need more
flexibility to respond to today's work and life needs.
California should conform to federal requirements in
order to allow California business to compete with other
states. This bill sets California even farther apart
from overtime rules in other states.
Hospitals and other industries which have adopted 12-hour
day schedules argue that the cost of maintaining this
schedule while paying overtime after eight hours (or
10 hours in the case of an alternative work schedule)
would be prohibitive. The ski industry, and certain
other industries, argue that conditions of employment in
their
industry is unique and justify a continuing exemption
from daily overtime requirements.
3. The author may present amendments in committee which
are technical and clarifying and which reinstate wage
orders 1-89, 4-89, 5-89, 7-80, and 9-90 until July 1,
2000 or until such time as they are superceded by
regulations, whichever date is earlier.
4. Prior Legislation :
SB 680 (Solis), vetoed by the Governor, 1997; AB 1167
(Floyd), vetoed by the Governor, 1997
Hearing Date: June 9, 1999 AB
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Consultant: Stephen Holloway Page
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Senate Committee on Industrial Relations