BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: April 11, 2012 20011-2012 Regular
Session
Consultant: Alma Perez Fiscal:No
Urgency: No
Bill No: SB 1115
Author: Dutton
As Introduced/Amended: February 17, 2012
SUBJECT
Flexible work schedules
KEY ISSUES
Should an alternative to the existing election procedure for
selecting a workweek schedule be established that would allow an
employee (employed by an employer with 10 or fewer employees) to
request to work up to 10 hours per day within a 40-hour workweek
without the payment of overtime compensation?
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 delete the required payment of 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, or a 40-hour workweek, 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 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 which allows an employer
to propose an alternative workweek for no longer than 10
hours per day within a 40-hour workweek and, if 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 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, as specified.
Hearing Date: April 11, 2012 SB 1115
Consultant: Alma Perez Page 2
Senate Committee on Labor and Industrial Relations
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 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 permit an individual nonexempt employee --
employed by an employer with 10 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 10 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
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 will consider an employee request to work an
employee-selected flexible work schedule, but shall not
induce a request by promising an employment benefit or
Hearing Date: April 11, 2012 SB 1115
Consultant: Alma Perez Page 3
Senate Committee on Labor and Industrial Relations
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, as specified.
� 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.
COMMENTS
1. Need for this bill?
Over the past several years, the issue of alternative workweek
schedules has been the subject of discussion in both Senate
and Assembly Committees. Similar versions of this bill have
been introduced every year since 2005. In the fall of 2011,
this Committee held an information hearing entitled,
"Workplace Flexibility and the 21st Century Economy: A Review
of California's Workplace Flexibility Laws and Regulations,"
at which both employers and employee representatives had the
opportunity to discuss their views on current law and any need
for improvement. 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
10 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
Hearing Date: April 11, 2012 SB 1115
Consultant: Alma Perez Page 4
Senate Committee on Labor and Industrial Relations
excess of 8 hours. The proportion of workers interested in
such individual accommodations is unknown.
2. Proponent Arguments :
According to the author, although current law establishes a
process for setting up alternative workweek schedule, the
process is cumbersome and often requires dedicated human
resource staff to set up. The author argues that small
businesses with less than 10 employees do not have the staff
or resources available to commit to establishing an
alternative workweek schedule. In addition, the author
argues, any inadvertent and minor violations in establishing
alternative work schedules can leave the business vulnerable
to costly and devastating law suits. 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.
Additionally, proponents argue that allowing employers to
offer a flexible schedule would help attract, retain and
motivate high-performing and experienced employees. This bill
would allow employers with 10 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. Proponents
argue that this bill would relieve small employers from the
administrative cost and burden of adopting an alternative
workweek schedule.
3. Opponent Arguments :
Hearing Date: April 11, 2012 SB 1115
Consultant: Alma Perez Page 5
Senate Committee on Labor and Industrial Relations
According to opponents, current law was carefully crafted to
ensure adequate flexibility for employers and employees while
protecting the basic right to overtime. Opponents argue that
employers who want to institute an alternative workweek
schedule can either negotiate one through collective
bargaining or conduct an employee election. Further,
opponents argue that employees who need an occasional schedule
change can request make-up time, allowing them to leave early
one day and work late the next without accruing overtime.
Moreover, opponents argue that over 15,000 California
employers have successfully used the alternative workweek
election process to establish alternative schedules for some
or all of their employees. 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 1) the employer has
the sole discretion over whether or not to conduct an
election, 2) which worksite or department are eligible, 3)
which schedule options to make available. Further, opponents
point out that even a unit of just one employee may be offered
this alternate schedule election.
Lastly, opponents are concerned that this bill would replace
the system of carefully crafted protections by giving small
employers the right to negotiate one employee at a time with
no specific criteria and nothing to prevent employers from
awarding desirable schedules to employees based purely on
favoritism.
4. Prior or Related Legislation :
SB 367 (Dutton) of 2011: Failed passage in Senate Labor & IR
Committee
This bill (SB 1115) is almost identical to last year's SB 367
which failed in this Committee. Last year, SB 367 would have
made the provisions of the bill applicable to small businesses
employing 25 or fewer employees. This years' bill applies to
Hearing Date: April 11, 2012 SB 1115
Consultant: Alma Perez Page 6
Senate Committee on Labor and Industrial Relations
employers with 10 or fewer.
AB 830 (Olsen) of 2011: Failed passage in Assembly Committee
on Labor and Employment
AB 830 would have allowed 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
AB 830 was identical to SB 1335, which also 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 Association of Bed & Breakfast Inns
California Chamber of Commerce
California Chapter of the American Fence Association
California Fence Contractors' Association
California Grocers Association
California Hotel and Lodging Association
California Independent Grocers Association
California Landscape Contractors Association
California League of Food Processors
California Manufacturers and Technology Association
California Newspaper Publishers Association
California Retailers Association
Engineering Contractors' Association
Flasher Barricade Association
Hearing Date: April 11, 2012 SB 1115
Consultant: Alma Perez Page 7
Senate Committee on Labor and Industrial Relations
Marin Builders Association
National Federation of Independent Business
OPPOSITION
California Conference Board of the Amalgamated Transit Union
California Employment Lawyers Association
California Labor Federation
California Nurses Association
California Professional Firefighters
California Rural Legal Assistance Foundation
California State Association of Electrical Workers
California State Pipe Trades Council
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore & Warehouse Union
Professional & Technical Engineers, Local 21
UNITE HERE
United Food and Commercial Workers Union, Western States Council
Utility Workers Union of America, Local 132
Western States Council of Sheet Metal Workers
Hearing Date: April 11, 2012 SB 1115
Consultant: Alma Perez Page 8
Senate Committee on Labor and Industrial Relations