BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted Lieu, Chair
Date of Hearing: March 23, 2011 2009-2010 Regular
Session
Consultant: Alma Perez Fiscal:No
Urgency: No
Bill No: SB 367
Author: Dutton
Version: As introduced February 15, 2011
SUBJECT
Employment: working hours
KEY ISSUE
Should an alternative to the existing workplace election
procedure for electing a particular workweek schedule be
established that would: (a) allow an employee (employed by an
employer with 25 or fewer employees) to request to work up to 10
hours per day within a 40-hour workweek, and (b) relieve the
employer of the obligation to pay overtime compensation under
such a schedule?
Should the Legislature establish a different policy on workweek
scheduling for employees of small businesses?
PURPOSE
To allow for greater flexibility in the scheduling of individual
worker's hours and to delete a requirement for overtime
compensation if an alternative workweek schedule has been agreed
upon.
ANALYSIS
Existing law, with certain exceptions, defines a day's work as
eight hours of labor. Any additional hours worked in excess of
eight hours in one day, as specified, must be compensated with
the payment of overtime.
Under existing law, the payment of overtime compensation is as
follows:
� Any work in excess of eight hours in one workday, any
work in excess of 40 hours in any one workweek, and the
first eight hours worked on the seventh day of work in any
one workweek shall be compensated at the rate of no less
than one and one-half times the regular rate of pay for an
employee;
� Any work in excess of 12 hours in one day shall be
compensated at the rate of no less than twice the regular
rate of pay for an employee;
� Any work in excess of eight hours on any seventh day of
a workweek shall be compensated at the rate of no less than
twice the regular rate of pay of an employee.
Existing law provides that the standard requirements for the
payment of overtime compensation do not apply where:
a) An employee submits a written request to make up work
time that would be lost as a result of a personal
obligation of the employee if the make-up work time is
performed in the same workweek in which the work time was
lost. Such make-up work time may not be counted towards
computing the total number of hours worked in a day.
b) An alternative workweek schedule has been adopted
pursuant to Labor Code Section 511. Under this procedure,
an employer may propose an alternative workweek for no
longer that 10 hours per day within a 40-hour workweek and,
if it is approved, the employer is not required to pay
overtime compensation for such a work schedule. The
employer must specify the workers in a work unit and
conduct a secret ballot election. If two-thirds of the
workers in the work unit approve, the new workweek is
deemed adopted. The employer is required to make a
Hearing Date: March 23, 2011 SB 367
Consultant: Alma Perez Page 2
Senate Committee on Labor and Industrial Relations
reasonable effort to find a work schedule not to exceed
eight hours for a worker unable to work the alternative
schedule.
c) Employees have adopted an alternative workweek schedule
pursuant to a 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 regular hourly rate of pay for those employees of not
less than 30 percent more than the state minimum wage.
d) An alternative workweek schedule is inapplicable because
the work relates to cases of emergency or the protection of
life or property, to the movement of trains, or to certain
hardship exceptions as specified by the Chief of the
Division of Labor Standards Enforcement.
In addition, existing law provides that the standard
requirements for overtime compensation do not apply to certain
exempt executive, administrative, and professional employees, as
specified. (Labor Code � 515)
This Bill would enact the Small Business Workplace Flexibility
Act of 2011 which would permit an individual nonexempt employee
-- employed by an employer with 25 or fewer employees -- to
request an employee-selected flexible work schedule, as
specified, and would allow an employer to implement this
schedule without any obligation to pay overtime compensation.
Specifically, this bill:
� Provides that an individual nonexempt employee employed
by an employer with 25 or fewer employees may work up to 10
hours per workday without any obligation on the part of the
employer to pay an overtime rate of compensation if the
employee requests this schedule in writing and the employer
approves the request.
� Specifies that if an employee-selected flexible work
schedule is adopted, the employer shall pay overtime at one
Hearing Date: March 23, 2011 SB 367
Consultant: Alma Perez Page 3
Senate Committee on Labor and Industrial Relations
and one-half times the employee's regular rate of pay for
all hours worked over 40 hours in a workweek or over 10
hours in a workday, whichever is the greater number of
hours. All work performed in excess of 12 hours per workday
and in excess of eight hours on a fifth, sixth, or seventh
day in the workweek shall be paid at double the employee's
regular rate of pay.
� Provides that an employer may inform its employees that
it is willing to consider an employee request to work an
employee-selected flexible work schedule, but shall not
induce a request by promising an employment benefit or
threatening an employment detriment.
� Specifies that an employee or employer may discontinue
the employee-selected flexible work schedule at any time by
giving written notice to the other party and specifies the
effective date of the request.
� Provides that this section does not apply to any
employee covered by a valid collective bargaining agreement
or employed by the state, a city, county, city and county,
district, municipality, or other public, quasi-public, or
municipal corporation, or any political subdivision of this
state.
� Provides that this section shall be liberally construed
to accomplish its purposes;
� Specifies that the Division of Labor Standards
Enforcement shall enforce this section and shall adopt or
revise regulations in a manner necessary to conform and
implement this section.
� Specifies that this section shall prevail over any
inconsistent provisions in any wage order of the Industrial
Welfare Commission
� Provides that the provisions of this act are severable.
In addition, this bill sets forth certain Legislative findings
Hearing Date: March 23, 2011 SB 367
Consultant: Alma Perez Page 4
Senate Committee on Labor and Industrial Relations
and declarations relating to the need for additional work-hour
flexibility for individual workers and for worker protections
connected with this flexibility.
COMMENTS
1. Need for this bill?
Over the past several years, the issue of an alternative
workweek schedule has been the subject of discussion in both
Senate and Assembly Committees. Similar or identical versions
of this bill have been introduced every year since 2005. In
most cases, the need for flexibility in the scheduling of
workweeks has come from employers making the argument on
behalf of their businesses and their employees, but much less
frequently do we hear from employees themselves articulating
their reasoning for wanting more flexible working hours.
Some employers see an advantage to be gained in reduced
overhead costs (through energy savings, etc.) by adopting an
alternative workweek, and some may wish to accommodate their
employees' wishes to reduce their commuting hours. For this
purpose, and only for employees employed by an employer with
25 or fewer employees, this bill would provide for a process
under which individual employees may make a request for an
alternative workweek schedule, giving up overtime for work in
excess of 8 hours. The proportion of workers interested in
such individual accommodations is unknown.
2. How many California employers have established an alternative
workweek schedule?
The Division of Labor Statistics and Research, under the
Department of Industrial Relations, provides on their website
a database listing all California employers that have filed
alternative workweek election results with the division
pursuant to Labor Code � 511(e). According to the database,
there are currently 20,389 employers that have successfully
established an alternative workweek for their employees. Last
Hearing Date: March 23, 2011 SB 367
Consultant: Alma Perez Page 5
Senate Committee on Labor and Industrial Relations
year when this Committee heard similar bill proposals, there
were 18,844 employers that had successfully established an
alternative workweek schedule.
3. Proponent Arguments :
According to the author, although current law establishes a
process for setting up alternative workweek schedules, the
process is cumbersome and often requires dedicated human
resource staff to set up. The author argues that small
businesses with less than 25 employees do not have the staff
or resources available to commit to establishing an
alternative workweek schedule. The author believes that this
bill would provide employees of small businesses with the same
opportunities that employees of larger businesses have.
According to proponents, current law allows a business to
adopt an alternative workweek schedule if the employer
recommends it and if two-thirds of the employees vote for it.
Proponents argue that the current two-thirds vote requirement
makes it more difficult for employers to meet the scheduling
needs of individual employees. The author and proponents
believe that this bill will provide greater flexibility to
individual employees to request a flexible work schedule and
will accommodate individual employees' diverse family
obligations, personal pursuits, commuting issues and
environmental concerns by allowing a small business to agree
to provide scheduling options requested by an employee. This
bill would allow employers with 25 or fewer employees to
establish alternative workweek schedules, defined as no more
than 10 hours per day, with a maximum of 40 hours a week.
4. Opponent Arguments :
According to opponents, current law requires employers to pay
non-exempt employees overtime for all time worked in excess of
eight hours per day and 40 hours per week. In addition, they
argue that Labor Code Section 511 allows employers to adopt
alternative work schedules under which employees may work more
than eight hours in a day without payment of daily overtime,
provided a two-thirds majority of employees in the affected
work unit vote in favor of it. Opponents argue that this bill
Hearing Date: March 23, 2011 SB 367
Consultant: Alma Perez Page 6
Senate Committee on Labor and Industrial Relations
effectively repeals Labor Code Section 511 for employers with
25 or fewer employees.
Opponents argue that, although the bill purports to be in the
"mutual interest" of employers and employees, current law
already allows employees to vote on a menu of alternative
schedules, which may include the option of four ten-hour
shifts without payment of daily overtime. In addition,
opponents argue that Section 511(a) also allows an employee
to, with employer consent, change from one work schedule on
the menu to another on a weekly basis. Additionally, Section
513 provides that an employee may, with employer permission,
makeup work time during the same workweek without incurring
daily overtime, except for hours in excess of 11 in one
workday. Opponents argue that current law governing
alternative workweeks was specifically designed to protect
employees from being pressured, overtly or in more subtle
ways, from waiving their rights to daily overtime pay.
Moreover, opponents argue that this bill enables favoritism by
affording employers unfettered discretion to grant and revoke
individual alternative work schedules. Opponents believe that
this sort of favoritism pits employees against each other and
lowers morale. In addition to removing protections against
involuntary waiver of overtime rights, opponents argue that
this bill would also undermine the values of employee
cooperation and workplace engagement fostered by the election
procedure in Labor Code Section 511.
5. Prior or Related Legislation :
AB 830 (Olsen) of 2011: Currently in Assembly Committee on
Labor and Employment
AB 830 would allow an individual nonexempt employee to request
an employee-selected flexible work schedule providing for
workdays up to 10 hours per day within a 40-hour workweek, and
would allow an employer to implement this schedule without any
obligation to pay overtime compensation for those additional
hours in a workday.
SB 1335 (Cox and Dutton) of 2010: Failed passage in Senate
Labor & IR Committee
Hearing Date: March 23, 2011 SB 367
Consultant: Alma Perez Page 7
Senate Committee on Labor and Industrial Relations
AB 830 is identical to last year's SB 1335, which failed
passage in its first policy committee.
SBX8 66 (Cox) of 2010 was identical 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, and AB 640 (Tran) of 2005 were essentially
identical or very similar to this bill. All of these bills
failed passage in their first policy committee.
SUPPORT
Associated Builders and Contractors of California
California Chapter of the American Fence Association
California Fence Contractors' Association
California Landscape Contractors Association
California Restaurant Association
California Retailers Association
Engineering Contractors' Association
Flasher Barricade Association
Marin Builders' Association
National Federation of Independent Business
OPPOSITION
California Employment Lawyers Association
California Labor Federation, AFL-CIO
California Nurses Association
California Teamsters Public Affairs Council
Service Employees International Union
Hearing Date: March 23, 2011 SB 367
Consultant: Alma Perez Page 8
Senate Committee on Labor and Industrial Relations
Hearing Date: March 23, 2011 SB 367
Consultant: Alma Perez Page 9
Senate Committee on Labor and Industrial Relations