Workforce.com

In California, Flexible Schedules Are Tightly Regulated

July 31, 2008
Nearly 10 years ago, California lawmakers enacted legislation that provided employers with the apparent flexibility to accommodate nonexempt workers who wanted to switch from the standard five-day, 40-hour week to the so-called 4-10 work schedule. The lawmakers even named it the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999.

Since then, more than 14,000 employee "work units" have voted to adopt alternative schedules in the sealed ballot elections required by the bill, codified as Labor Code Section 511(a). "Who wouldn’t want a three-day weekend?" says Stacy E. James, an employment law attorney at Littler Mendelson in San Diego. With the recent sharp rise in fuel costs, moreover, the four-day, 10-hour-per-day option is expected to become only more attractive to employees.

"I’ve noticed in the last two months that I’m getting more phone calls about the alternative workweek," says Mark D. Budensiek, who practices employment law at Rutan & Tucker in Costa Mesa, California. "There’s a bottom-up demand from employees."

But both James and Budensiek warn that Section 511(a) can be a bureaucratic minefield for the unwary employer. While in theory the law promised "workplace flexibility," in practice it imposes rigid procedural requirements on employers, who could be exposed to an employee claim for unpaid overtime if they make just one false step.

"If you make a mistake on any one of these requirements, you are vulnerable to a claim that the alternative workweek arrangement was not legally proper," Budensiek says. "Every step is an opportunity to make a mistake."

Large employers with professional HR departments can probably navigate the Section 511(a) bureaucracy with little difficulty, experts say. But small to medium-size companies may not have such resources and, says James. "I wouldn’t be surprised if they don’t know about the procedures that have to be followed." The law can also come as a surprise to companies that are based outside California but have workers there, she says.

For employers, an improper 4-10 arrangement could turn out to be costly. "Even if you have only a handful of employees on alternative workweek, it could cost you a significant amount of money for unpaid overtime," Budensiek says. And the statute of limitations on an unpaid overtime claim is a generous three to four years.

As its name suggests, the 1999 legislation had two primary purposes: One was to restore the general requirement for overtime pay after eight hours of work in a day, which the Industrial Welfare Commission had eliminated from five of its wage orders in 1998. The other, related purpose was to address work-schedule flexibility.

"Upon the proposal of an employer," Section 511(a) says, "the employees of an employer may adopt a regularly scheduled alternative workweek that authorizes work by the affected employees for no longer than 10 hours per day within a 40-hour workweek without the payment to the affected employees of an overtime rate of compensation pursuant to this section."

California is one of a handful of states, including Alaska, Nevada and Colorado, that deviate from the federal 40-hour-per-week overtime rule.

"It’s only because we have daily overtime that the alternative workweek rule exists," Budensiek says of California, adding that the procedural requirements "are there to ensure that employers don’t use the alternative workweek as a way to get out of paying overtime." While none of the requirements individually are "a significant pain in the neck," he says, the sum total is "fairly onerous."

Under the law, employers must do the following:

  • Determine a work unit of employees that will be affected by the schedule. Recent elections have included work units varying from 12 employees of an Escondido, California, company to 69 employees of a Mira Loma, California, company.

  • Describe the plan in a written notice to affected employees and hold a meeting with them to discuss it.

  • Hold a secret ballot election no fewer than 14 days after the meeting. More than two-thirds of the work unit must vote to approve the schedule.

  • Inform the state Division of Labor Standards Enforcement of the results within 30 days of the election.

In addition, workers cannot be required to work the new schedule for another 30 days. All told, James says, "You’re talking about at least 44 days" from start to finish of the process, with work stoppages for the meeting and election.

Since the enactment of Section 511(a), the business lobby in the state has backed legislation that would ease the process for getting alternative workweek schedules approved. But none of the bills made it out of legislative committees.

For the foreseeable future, employers will have no choice but to jump through the procedural hoops.

"You have to cross the t’s and dot the i’s," James says.