United States: New Overtime Laws

California's overtime laws will change again on January 1, 2000. The Legislature has recently passed, and Governor Gray Davis has signed, Assembly Bill 60. Among other things, the new law reinstates daily overtime in California.

The Basic Overtime Rules.

Starting January 1, 2000, eight hours of labor will once again constitute a day's work for employees who are not exempt from the overtime regulations. Unless special arrangements are made, as described further below, all employees who work more than eight hours in a single workday must be paid one-and-a-half times their regular hourly rate for their hours worked in excess of eight. Those employees must also be paid one-and-a-half times their regular rate for hours in excess of forty during the regular workweek.

Employees who work in excess of twelve hours in any single day must be compensated at a rate of no less than twice their regular rate of pay for those excess hours. If those employees work on the seventh day of any workweek, they must be paid no less than twice their regular hourly pay for hours worked in excess of eight on that seventh day.

These changes reinstate what had been the standard overtime rules in California prior to legislation signed by Governor Pete Wilson in 1997. But the bill does not merely reinstate prior law; there are new provisions for alternative workweeks as well.

Alternative Workweeks.

Starting January 1, 2000, an employer who wishes to avoid paying overtime to employees who work in excess of eight hours a day may propose an alternative workweek. The new law will permit the employees to work up to ten hours per day, forty hours per week, at their regular rate, without entitlement to overtime.

The alternative week can only be established through a vote of the employees. Once an employer proposes an alternative workweek to the employees, the statute requires that at least two-thirds of the affected employees in each work unit then vote in a secret ballot to adopt the proposed alternative week. The employer must report the election results to the Division of Labor Standards Research within thirty (30) days after final results are tabulated.

Once an alternative workweek has been established, an employee working between eight and twelve hours a day will be entitled to pay at one-and-a-half times her regular hourly rate for hours in excess of the regularly scheduled daily work hours. For example, if the employees have successfully voted on an alternative ten-hour day, four days a week, then the employee who works ten hours that day will not be entitled to overtime. The employee who works eleven hours that day will be entitled to one hour of overtime. If, after completing the four day workweek the employee works a fifth day, the employee will be entitled to time-and-a-half overtime pay for the first eight hours worked on that fifth day.

If an employee working under an alternative workweek schedule works more than twelve hours in one day, he or she shall be entitled to double time for the hours worked in excess of twelve. The double time rule also applies to any hours over eight worked by an employee under alternative workweek schedule when that employee works on a work day not regularly scheduled. As noted above, if the employee is scheduled to work Monday through Thursday, ten hours a day, and also comes in on Friday, the employee must be paid at the regular time-and-a-half overtime rate for the first eight hours on Friday, those hours being in excess of forty per week. The employee will also be entitled to double time for hours worked in excess of eight that Friday.

Employer Must Make Reasonable Efforts To Accommodate Employees.

The alternative workweek may present obstacles to some workers. Day care, educational schedules, and disabilities, among other things, may limit the number of hours an employee can reasonably work in one day. In such cases, the employer is required to make a reasonable effort to find a work schedule that will accommodate an employee who was eligible to vote on the alternative workweek but is unable to work an alternative schedule. On the other hand, if an employee who has been hired after the election establishing the alternative workweek claims to be unable to work the alternative workweek hours, the employer may accommodate an employee's request with a standard eight-hour day schedule. Nothing in the statute requires the employee to accommodate or make a reasonable effort to accommodate an employee hired after the election. Finally, when religious beliefs conflict with an adopted alternative workweek schedule, an employer must "explore any available reasonable alternative means of accommodating the religious belief or observance of an affected employee."

Under the existing rules, an employer may not employ an employee for work of more than five hours a day without providing a meal period of at least thirty minutes.

Under separate provisions of the new law, if the employee works no more than six hours, the meal period may be waived by mutual consent of both employer and employee. It appears that this waiver does not require an election. The language of the statute refers to a consent that is mutual between an employer and a single employee. Note also that an employer is usually required to provide a second meal period of not less than thirty minutes for an employee who works more than ten hours a day. Under the new law, the second meal period may be waived by mutual consent of the employer and employee, if the employee does not work in excess of twelve hours that day. However, the second meal period may only be waived if the first meal period has not been waived.

Change In Minimum Salary For Exempt Employees.

Executive, administrative and professional employees are generally exempt from overtime law requirements provided they are paid a minimum monthly salary. Under prior law, regulations and wage orders exempt employees primarily engaged in intellectual, managerial or creative work that requires the exercise of discretion and independent judgment. When the new law takes effect, on January 1, 2000, the same exemptions may apply, but, the minimum monthly salary will be increased to $1,993.33 a month ($23,920 annually). That amount is twice the state minimum wage based on a forty hour workweek. If the minimum wage is raised further, the minimum salary required for exempt personnel may also rise.

Personal Liability Of Payroll Personnel For Late Wage Payments.

Finally, as of January 1, 2000, any person, including employees acting on behalf of employers, can be personally liable for a civil penalty if they violate any portion of the Labor Code regulating hours and days of work. That penalty is fifty dollars for each employee, each pay period, for an initial violation. Such a person can be fined $100 for each employee, each pay period, for subsequent violations.

This update only addresses certain portions of the new law. Other provisions deal with make-up time and amendments that only affect workers in certain industries, including the health care industry, the seasonal ski industry, agriculture, horse racing, railway common carriers and industries operating under collective bargaining agreements. If you have questions regarding the new law and its implementation, please do not hesitate to call us.