Legislation Loosens Up Alternative Work Week Schedule Rules

 

California labor law imposes some of the toughest restrictions on alternative schedules in the country, primarily through overtime law. The only loophole to a traditional five-day, eight-hour (or 5/8) work week for non-exempt employees is through a convoluted election process. But with the passage of ABX2 5 (as part of the balanced budget bill), the rules soon will be more accommodating to employers and employees alike.

Technical changes to the Labor Code with respect to overtime law may encourage more businesses to allow employees to work four 10-hour days (4/10), for example, which can give workers an extra day off and cut down on expenses related to commutes and childcare. The new rules – taking effect on May 21 – will allow employees to vote on a menu of work schedule options that also may include the standard 5/8 work week. Currently, workers can only vote for or against a menu of alternative schedules.

The election process under the new law still must be followed perfectly in order to avoid potentially costly labor disputes. Regardless, the employer community seems excited about the changes.

“One of our clients, a small California-based non-profit, had one employee who really wanted to be able to work an alternative schedule, when the other employees did not,” explains Sandra Dickenson, president of Your People Professionals, a professional employer organization based in Santa Maria. “[The new rule] allows the employee to work a schedule that is better for her, and the non-profit doesn’t have to lose someone that’s valuable to them.”  

“[The new rule] allows the employee to work a schedule that is better for her, and the non-profit doesn’t have to lose someone that’s valuable to them.” – Sandra Dickenson, Your People Professional   

Breaking the 9 to 5 Routine

The state’s labor laws require payment of overtime to non-exempt employees who work more than eight hours per day, regardless of how many total hours are worked within a given week. California Labor Code Section 511 governs alternative work week schedules, enforced by the Department of Labor Standards Enforcement, which waives the overtime requirement up to 10 hours if certain procedures are followed.

Employers that choose to provide alternative work schedules for their employees must conduct a secret ballot election among the particular work unit that would be affected by the change, even if only one employee requests it. Employers have the final say on which alternative schedules end up on the ballot.     

The election process itself is so technical and the legal risks of bungling it are so great, Los Angeles attorney Margaret Rosenthal says, that consulting legal counsel is strongly advised. Generally speaking, employers must call a meeting about the proposed schedule change, followed by a secret ballot election, and then submit the results to the Division of Labor Statistics and Research.

“Employers have to be sure they’re using the correct wage order, because they can vary,” says Rosenthal’s colleague Sabrina Shadi, also a partner with Baker Hostetler LLP. In addition to the standard minimum wage, California’s Industrial Welfare Commission recognizes 17 different wage orders that correspond with various industries.

If at least two-thirds of the work unit votes in favor of the schedule(s), then each may choose from the menu of options if the employer approves, but the traditional 8/5 arrangement may not be one of the choices (until the new rules take effect). Employers must make a reasonable effort to accommodate employees who cannot work the alternative schedule, for religious or other reasons, and may not require employees to work the new schedule for at least 30 days.

If a two-thirds majority of employees decide they don’t like the new schedule, they may revoke it, but the timing depends on the particular work order (typically 12 months after the election).

New Rules, Greater Flexibility

The new law will affect the implementation of alternative work week schedules through three specific changes to the law: A menu of schedule options may include the standard weekly schedule of five eight-hour days; employees may, with consent of management, change from one schedule option to another as often as every week; and “work unit” finally has a proper definition.

Work unit is now defined as “a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision thereof,” which Shadi says is consistent with how the term has been defined by regulators and the courts. A work unit can be as small as one employee, under the new law.

By including the traditional work week schedule along with a menu of alternatives, attorneys say, more employees will be willing to vote in favor of flexible schedules. The ability to switch from one schedule to another would create even more flexibility, perhaps even giving skeptics an opportunity to try it out. Businesses called for greater flexibility when gasoline prices hit record highs a few years ago, which could happen again and stoke demand.

“When gas hits astronomical prices, an employer could propose an alternative workweek schedule of, for example, a 4/10 and a 5/8 schedule,” says Los Angeles-based attorney Teresa Tracy, a partner with Berger Kahn, A Law Corporation. “If the employees approve this menu of schedules through the required process, the employees could ‘flex’ between the two schedules with employer approval, without the employer incurring overtime.”

A 4/10 schedule, perhaps the most popular alternative to the traditional workweek, would allow workers to cut their commute by 20%, attend continuing education classes, work a second job or reduce child care costs, says human resources consultant Charles A. Conine. But he’s quick to point out that the process itself remains tedious, at best.

“Authorizing an alternate workweek schedule in California still requires a cumbersome secret ballot procedure, allegedly so that employees feel no pressure to adopt an alternate schedule, and this process can take nearly two months to implement,” says Conine, principal consultant of Irvine-based Consilium Advisory Services LLC. 

“Authorizing an alternate workweek schedule in California still requires a cumbersome secret ballot procedure, allegedly so that employees feel no pressure to adopt an alternate schedule.” – Charles A. Conine, Consilium Advisory Services LLC. 

The arrangement also is seen as a strong incentive for recruiting and retaining top talent, which business owners say is still a challenge despite the economic recession and resulting high rate of unemployment. Scott Hauge, president of Small Business California and the president/owner of San Francisco-based CAL Insurance & Associates Inc., says juggling different schedules can be tricky, “but it’s a great morale builder for the employees.”

Even under the current rules, some employers find that they are better able to control labor costs while also meeting the demands of employees.

“My employees love it as many of them are students and like working more hours in fewer days,” says Melinda Myers, owner of Eureka-based Good Relations, which sells intimate apparel and related products. “If I couldn’t do that, they’d have fewer hours because I’d have to hire more people to avoid paying overtime the business can’t support.”

But if you choose to go down that path, make sure you consult with your attorney first.