Employers looking to retain or recruit talent realize that employees are not simply looking for a position with the highest salary. Employees may, for example, prioritize quality fringe benefits. These benefits may include traditional benefits, such as health and dental insurance, but also education allowances, surrogacy and adoption assistance, or unlimited vacation time. The COVID-19 pandemic has also shown that many employees are prioritizing office flexibility, including the ability to work remotely, so they can spend more time with their family and less time at the office or commuting.
An idea that has received media attention lately is a renewed push to transition to a four-day work week. In California, an employer is permitted to implement a four-day work week so long as employees either do not work more than eight hours in a day or so long as they are paid overtime for any work exceeding eight hours in a day.
Employers wanting to maintain a 40-hour work week without paying overtime, however, also have the option of implementing an Alternative Work Schedule (“AWS”). Employers, however, must comply with the requirements of California Labor Code § 511 and the Industrial Welfare Commission (“IWC”) Wage Orders before doing so. Failure to follow specific procedures may invalidate an AWS and could expose employers to significant liability for unpaid overtime and other wage and hour violations.
I. REVIEW THE REQUIREMENTS
The first step any employer should take before implementing an AWS is to review the Division of Labor Standards Enforcement Policies and Interpretations Manual. The manual discusses differences for AWS for different industries. Employers should also familiarize themselves with the IWC Wage Orders that apply to their specific industry.
II. VOTE BY AFFECTED UNIT EMPLOYEES
An AWS is only permitted upon approval of the employees. Therefore, the next step an employer must take to implement an AWS is to conduct a secret ballot of employees within the work unit. A work unit is defined under section 511(i) as “a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision thereof.” Given this, employers could implement an AWS for certain types of employees and not others. It is also possible to have an AWS for a single employee so long as that employee can be classified into a separate work unit.
Before a vote can be held, an employer must first determine the proposed schedule. An employer can propose a single schedule or a menu of optional schedules. For example, an employee could have the option of working a ten-hour shift four days per week, or an eight-hour shift five days per week, or even a nine-hour shift four days per week and a four-hour shift one day per week. Employers must present the proposed schedules to the work unit at least 14 days prior to the secret vote as well as documentation explaining how the AWS might impact pay, benefits, and hours. If more than five percent of employees speak another language, the employer must provide information regarding the AWS in that language as well.
The eventual vote must take place at the worksite during normal business hours and the employer is responsible for all associated costs. An AWS may only be implemented if at least two-thirds of the unit employees affirm.
If an AWS is adopted, an employer may not require employees to work the AWS for at least 30 days after the vote is held. Employees, however, may elect to start working the AWS immediately.
III. NOTICE TO THE DIVISION OF LABOR STANDARDS AND ENFORCEMENT
The election results must be reported to the California Division of Labor Standards and Enforcement (“DLSE”) within 30 days of the vote. According to the DLSE Website, the vote information should be sent to:
Attn: Alternative Workweek Election Results
Department of Industrial Relations
P.O. Box 420603
San Francisco, CA 94142-0603
The notice should include the following information:
• name of the business
• street address
• city, county, state, zip code
• nature of the business
• date of election
• date of letter
• final and full tally of the vote
• size of the affected work unit
• work schedule
IV. REASONABLE EFFORTS TO ACCOMMODATE
If an AWS is adopted and the employer elected to require workdays greater than eight hours per day, the employer is obligated to make reasonable efforts to provide an eight-hour workday to affected employee who are unable to work more than eight hours a day. Employers are permitted to provide an eight-hour work schedule to employees hired after the election date who are unable to work the AWS. Employers are also required to “explore any reasonable alternative means of accommodating the religious beliefs or observances of an affected employee that conflicts with” an AWS.
V. REPEALING AN ALTERNATIVE WORK SCHEDULE
Employees have the opportunity to later repeal an AWS. If at least one-third of employees petition to eliminate the AWS, the employer must again conduct a secret ballot within 30 days of the petition. If two-third vote to repeal, the employer must repeal the alternative work week within 60 days.
VI. HOW AN ALTERNATIVE WORK SCHEDULE IMPACTS OVERTIME
California generally requires an employer to pay an employee overtime at one and a half times the employee’s regular rate of pay if the employee works more than eight hours in a day or 40 hours in a week. An employee must be paid double the regular rate of pay for any work exceeding 12 hours in a day and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
How an AWS impacts overtime may depend on the Wage Order that applies to that specific industry. In many cases, however, an AWS does not require an employer to pay overtime unless an employee exceeds ten-hours in a day or 40 hours in a week. In most cases, employees must be paid overtime for work on days when the employee is not generally scheduled under the AWS and must be paid at least double the normal rate for any work exceeding eight hours on a non-scheduled day. Further, if an employer requires an employee to work fewer hours than regularly scheduled, the employee is entitled to overtime after the first eight-hours of work.
For more information contact:
Matthew Wallin is a senior associate in the Los Angeles office where he practices labor and employment law. He has extensive experience defending private business and public entities in litigation and advising clients on labor compliance issues.
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