Global Compliance Desk – California

Alternative Work Schedule System in California

Under California law, employees normally accrue daily overtime for hours worked over 8 hours in a day. Alternative Workweek Schedules (AWS) permit workplaces to adopt different schedules longer than 8 hours without accruing overtime. According to California Labor Code 511 and Industrial Welfare Commission (IWC) orders, An AWS is a variation of the standard 5-day/40-hour work schedule in which a full-time employee completes a 40-hour workweek in a compressed schedule but works more than 8 hours in a 24-hour period within the regularly scheduled workweek.

There are differences within the IWC orders and among the industries covered by the specific orders both in the schedules that may be adopted and in the election procedures that are to be used. Alternative workweek permits fall under the IWC Wage Orders from  1-13 and 16 apply to specific industries such as manufacturing, transportation, agriculture, etc. The 17th one covers any occupations not covered by another order. There are different rules to be applied depending upon which Order is applicable to the employees.

The California Division of Labor Standards Enforcement Policies and Interpretations Manual explains detailed wage order provisions for alternative workweek arrangements. The implementation of schedules or election methods is different within the orders and among the industries covered by the specific orders. Therefore it is important to identify the procedure which is appropriate to the businesses. Also, special alternative workweek rules apply to certain health care employees.

Process for Adopting an AWS

It is important to identify and select which group(s) of employees will be eligible for the alternative workweek schedule. The Labor Code Section 511 (i) defines a “work unit” as a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision thereof. A work unit may also consist of an individual employee; for example, only one employee exists in a particular department or job.

Then a proposal for an alternative workweek must be in the form of a written agreement which is submitted to the employees by the employer through a collective bargaining agreement. The proposal must designate a regularly scheduled alternative workweek of a specified number of regularly recurring workdays.

Employers can adopt any common alternative workweek schedules. The most commonly used AWS models in California workplaces are: 

• a 4-day workweek, at 10 hours per day (known as a 4/10 work week),
• 8 days of 9 hours, 1 day of 8 hours, and an extra day off in a 2-week period (known as a 9/80 schedule, because it spaces the 80 hours over only 9 days), and;
• 3 days of 10 hours and 2 days of 5 hours.

An alternative workweek schedule can be created for any readily identifiable work unit through a secret ballot election of which at least two-thirds of the affected employee’s approval is needed as provided by IWC Orders, Section 3 (C). On approval, employers must inform the Division of Labor Standards Enforcement at the Department of Industrial Relations within 30 days.

Employees affected by a change in work hours resulting from the adoption of an AWS may not be required to work those new hours for at least 30 days after the announcement of the final results of the election.

Record-Keeping Requirement

The employer shall maintain all copies of alternative workweek schedule proposals, employee meeting communications, and election results also other supporting information and documentation, including documentation regarding hours and days worked and overtime pay. Timekeeping and records affecting specific employees can be maintained in individual personnel files; other types of documentation, such as election results, may be kept in a separate employer file.

The alternative workweek schedule may not require more than 10 hours of work per day or more than 40 hours of work in a workweek.

Overtime under AWS

According to Cal. Lab. Code § 511(b):

• If an employee with an alternative workweek works more than the scheduled work hours on any day, the employee is entitled to be paid at one and half times the regular rate of pay for the excess hours worked up to 12 hours, and for any time worked in excess of 40 hours that week. 
• If the employee worked more than 12 hours in a day, the employee is entitled to be paid double time for time worked in excess of 12 hours.
• An employee is also entitled to receive double time for any time worked beyond 8 hours on a day that is not a scheduled workday. 

In the event of any failure to comply with the disclosure requirements set out in the IWC Orders will result in the election being null and void. (IWC Orders, Section 3(C)(3)). If the election is null and void any alternative workweek established based on that election is null and the employer must pay the premium overtime for any hours after eight (8) hours in any workday.

Meal and Rest Breaks 

Implementing an AWS has no impact on California meal or rest break requirements.  Employers are required to adhere to the same meal and rest period timing and provisions as per Cal. Lab. Code § 512 and the Industrial Welfare Commission Wage Order No. 4.

Impact on working AWS on the paid leave benefits of vacation, sick, and holiday leave

As there is no specific provision under law that addresses the issue, employers must establish policies for employees working on AWS to address the number of hours that will be charged when an employee takes a vacation or sick day as well as the number of holiday hours to be paid.

Adopting a similar rule for all AWS is one of the most commonly used methods by employers, where if the regularly scheduled workday is greater than 8 hours, the employee shall be given vacation/paid time off to make up for the time in excess of the 8 hours that the employee was scheduled to work.

For example, if the employee works 10-hour shifts and the employer’s policy is to pay 8 hours of holiday pay, the employer would be required to make up the additional two hours by giving 2 hours of paid leave to the employee.

Seasonal Schedules

California’s Division of Labor Standards Enforcement via In Opinion Letter 2009.03.23 has authorized a variant on alternative workweek scheduling whereby employers could use alternative workweek schedules during particular times of the year ( summer schedules) provided the schedules are fixed and regularly recurring and the employer adheres to the other requirements for adopting such schedules.

Conclusion 

For both the organization and the employee, an Alternative Work Schedule System can prove to be a useful alternative to the regular work schedule. The employee has a better work-life balance, and the organization gets a break on daily overtime charges. Having said this, employers are liable in the event of misconduct or negligence while adhering to AWS regulations.