Articles: California Overtime Law Effective January 1, 2000

Contents:

• Premium Pay
• Work Week and Work Day
• Exemptions
• Alternative Work Week Schedules
• Make Up Time
• Hours of Operation and Work Schedules

Since the beginning of 1998, California’s dentists, doctors and other health care practitioners have only been required to pay overtime to employees who work in excess of 40 hours in a week.

However, on July 20, 1999, Governor Davis signed into law the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999 ("AB 60").

While this statute, which became effective on January 1, 2000, does reinstate the requirement that employees be paid for daily overtime, it does much, much more.

Premium Pay

As of January 1, an employer must pay overtime at the rate of one and one half (1.5) times an employee's regular rate of pay to hourly employees for hours worked over eight (8) in a workday or for the first eight (8) hours worked by the employee on his or her seventh consecutive day of work in a work week.

An employer must also pay overtime at the rate of two (2) times an employee’s regular rate of pay for hours worked over twelve (12) in a workday or for hours over eight (8) on the seventh day of the work week.

Work Week and Work Day

In order to minimize potential overtime obligations, an employer must insure that it has clearly defined the starting and ending time of both the work week and work day.

This is particularly critical for employers who currently define the work week as ending on a pay day, i.e. every Friday, since most health care providers have a full complement of employees working during the week.

Most employers will want to establish Sunday as the seventh day of the work week.

Exemptions

Although AB 60 maintains the current overtime exemption for professional, executive and administrative employees, it dramatically increases the minimum level of compensation for an exempt white collar employee to no less than two times the state minimum wage for full time employment, the equivalent of $1,993.33 per month or $23,920 per year.

Moreover, because the law is directly tied to the minimum wage, this amount will automatically increase whenever the minimum wage increases.

Under the new law, even if a salaried employee is paid more than $23,920 per year, he or she will only be exempt if primarily engaged in exempt duties, and "primarily" is defined to mean "more than one-half of the employee’s work time."

The Industrial Welfare Commission ("IWC") is directed to review the duties that qualify as exempt and, if it chooses, to issue regulations that clarify the standards in this area. It is not expected that any such regulations will be issued until sometime after July 1, 2000.

In the meanwhile, employers are advised to carefully review the exempt/non-exempt status of their employees and to carefully consider how they will treat those employees falling into a gray area.

Alternative Work Week Schedules

Although AB 60 permits employers to continue to use alternative work week schedules, no schedule in excess of ten (10) hours in a work day is permitted.

The only alternative work week schedule that is allowed consists of four (4) days, not exceeding ten (10) hour per day.

It appears that an employer will have to pay one and one half (1.5) times an employee’s regular rate of pay for the first eight (8) hours worked on a non-regularly scheduled work day (although this is not altogether clear as AB 60 is drafted) and two (2) times an employee’s regular rate of pay for any hours in excess of eight (8) on a non-regularly scheduled work day.

An employer’s proposal to adopt an alternative work week schedule must be approved in a secret ballot election by at least two thirds of all affected employees in a work unit.

However, AB 60 does not define "work unit" and it will be up to the IWC to define the term by regulation. It is also up to the IWC to adopt regulations pertaining to the manner in which secret ballot elections must be carried out.

While an employer is allowed to terminate an alternative work week schedule, the IWC must adopt standards governing the manner and timing of such a termination.

AB 60 requires an employer to make a reasonable effort to accommodate employees who are eligible to vote in the secret ballot election and who do not want to work an alternative work week schedule, by providing them with a traditional eight hour per day, five day per week schedule.

The employer is permitted, but not required, to accommodate employees hired after an election.

In addition, an employer must explore "any available reasonable alternative means of accommodating the religious belief or observance of an affected employee that conflicts with" an alternative work week schedule.

An employer must report the results of an alternative work week schedule to the Division of Labor Statistics and Research.

AB 60 automatically renders null and void any previously adopted alternative work week schedule with the exception of employees working a regular schedule of no more than ten (10) hours per day pursuant to a schedule that was adopted by a two thirds vote of affected employees in a secret ballot election held prior to 1998.

Finally, AB 60 establishes a special "grandfather" status for employees who were voluntarily working an alternative work week schedule as of July 1, 1999, that provided for a regular work schedule of up to ten (10) hours in a work day.

Such an employee may continue to work the alternative work week schedule without daily overtime pay provided that the employer approves a written request of the employee to continue to work such a schedule.

While many of the fine points of the alternative work week schedule provisions of AB 60 still await clarification, it is apparent that any employer currently utilizing such a schedule, as well as any employer that may want to establish such a schedule, will have to address a number of issues.

Make Up Time

Although AB 60 allows an employer to permit employees to make up work time that is lost as a result of personal obligations under limited circumstances, this is a narrow exception to the daily overtime rules. It is not a compensatory time off provision and does not allow employees to bank or stockpile overtime hours so that they can take time off later.

The employer is allowed to approve a written request of an employee to make up lost work at straight time, even if the make up time is in excess of eight (8) hours in a day.

The make up time must be performed in the same work week in which the work time was lost, the employee must submit a written request each time that make up time is requested, the make up time must not cause the employee to work in excess of eleven (11) hours in a day or forty (40) hours in a work week, and the employer may not encourage or solicit an employee to request its approval to take personal time off and make up the missed time.

In addition to establishing an express make up time policy, an employer that chooses to avail itself of this portion of AB 60 needs to create a form for use by employees requesting to work make up time, and must modify its time clocks or computerized time systems to reflect make up time.

Hours of Operation and Work Schedules

In addition to reinstating daily overtime, AB 60 prohibits the existing practice of "on-duty" or "working" meal periods.

Beginning January 1, 2000, employees must be given at least a one-half (.5) hour, fully relieved meal period. An employer must make certain that employees actually take their meal period. An employer may no longer permit an employee to work through the meal period so that the employee can either come to work late or leave early.

This article was contributed by the Employment and Labor Law Department of Silver & Freedman, a law firm based in Century City, California. For further information concerning the requirements of AB60, or compliance with the new law, contact Silver & Freedman at (310) 556-2356.

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