CALIFORNIA
DAILY OVERTIME
IS COMING BACK!
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On July 20, 1999, Governor Davis signed Assembly Bill 60 -- which will reinstate daily overtime for workers employed in California, effective January 1, 2000. AB 60, denominated the "Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999", amends § 510 of the California Labor Code to read:
"(a) Eight hours of labor constitutes a day's work. Any work in excess of 8 hours in one workday and any work in excess of forty (40) hours in any one work week and the first eight hours worked on the seventh day of work in any one work week 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 twelve hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee. In addition, any work in excess of eight hours on any seventh day of work of a work week shall be compensated at the rate of no less than twice the regular rate of pay of an employee. ..."
With the amendment to the Labor Code, daily overtime now extends to all employees in California who are not specifically exempted ("exempt" employees), not merely to those employees whose industries or activities had been subject to a Wage Order issued by the Industrial Welfare Commission ("IWC"). Formerly, employees engaged in on-site construction activities, on-site logging, or on-site drilling and mining activities were not subject to any IWC regulations, with the exception of those related to minimum wages.
There is some limited flexibility in the 8 hour daily overtime rule. The amended Labor Code allows for the adoption of alternative work week schedules. The new law provides that, upon the proposal of an employer, the employees may adopt a regularly scheduled alternative work week that allows up to 10 hours per day within a 40 hour work week. To adopt an alternative work week program, two-thirds of the affected employees must vote for the program in a secret ballot election. If an alternative work week is adopted, overtime is payable at time and one half the regular rate for any work in excess of the regularly scheduled hours through the twelfth hour per day, and at double time the regular rate for hours worked in excess of 12 per day. An employer must make a reasonable effort to find a work schedule not to exceed 8 hours in a workday in order to accommodate any affected employee who is eligible to vote in the election and who is unable to work the alternative schedule. The results of any election conducted must be reported to the Division of Labor Statistics and Research within 30 days after the results are final. In addition, if an employee is voluntarily working an alternative work week schedule providing for a regular work schedule of not more than 10 hours work in a work day as of July 1, 1999, the employee may continue to work that alternative work week schedule without daily overtime compensation if the employer approves a written request of the employee to continue that schedule on and after January 1, 2000.
AB 60 also allows some limited flexibility for scheduling make-up time at the employee's request. If an employer approves a written request of an employee to make up work time that is or would be lost as a result of a personal obligation of the employee, up to three hours of make-up work time in any given day (in excess of 8 hours work per day), is not counted towards computing the total number of hours worked in a day for purposes of the overtime requirement. If an employee works more than a total of 11 hours in one day in order to make up lost work time, however, those hours worked in excess of 11 do count toward the daily overtime requirements. Each time an employee works more than 8 hours in a day in order to make up lost work due to personal obligations, the employer must have the employee's written request on file in order to avoid the daily overtime obligation. This new law also specifically prohibits employers from encouraging or otherwise soliciting an employee to request the employer's approval to make up the work hours lost due to personal time off.
The status of overtime exemptions for executive, administrative, professional and outside sales employees -- "exempt" employees -- is unsettled. A new § 515 is added to the Labor Code which will allow the IWC to establish those exemptions for employees who are "primarily" engaged in the duties which meet the test of the exemption and who earn a monthly salary of at least two times the state minimum wage for full-time employment (approximately $1,993.33 per month). The IWC must convene a public hearing to adopt or modify regulations pertaining to the duties which meet the test of the exemption by no later than July 1, 2000. In the meantime, however, the provisions regarding exempt employees contained in formerly superseded Wage Orders 1-89 (Manufacturing Industry), 4-89 as amended in 1993 (Professional, Technical, Clerical, Mechanical and Similar Occupations), 5-89 as amended in 1993 (Public Housekeeping Industry), 7-80 (Mercantile Industry), and 9-90 (Transportation Industry) are reinstated until the effective date of new wage orders issued by the Industrial Welfare Commission on or before July 1, 2000.
AB 60 also outlines the meal break requirements. Specifically, employers may not employ persons for a work period of more than 5 hours per day without providing the employee with a meal period of 30 minutes or more. Provided, however, that if the total work period per day of the employee is no more than 6 hours, the meal period may be waived by mutual consent of both the employer and employee. An employee may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes. If the total hours worked is no more than 12 hours, however, the second meal period may be waived by mutual consent (only if the first meal period was not waived).
The provisions of this chapter are not applicable to persons employed in agricultural occupations, as defined in Wage Order 14-80, nor are they applicable when the employer and a Labor Organization representing employees have entered into a valid collective bargaining agreement.
Finally, a new § 558 is added to the Labor Code to provide penalties for violations of these requirements. Any employer or other person acting on behalf of an employer who violates, or causes to be violated, these requirements is subject to a civil penalty:
for a first violation, $50.00 for each underpaid employee for each pay period of underpayment, in addition to the unpaid wages; and,
for a subsequent violation, $100.00 for each underpaid employee for each pay period for which the employee was underpaid, in addition to underpaid wages.
This comprehensive legislation will impact all California employers -- even if your company already pays overtime after 8 hours. It is important that employers take the time to determine the specific impact of this legislation on their operation -- don't be caught unprepared on January 1, 2000.
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