By JONATHAN FRASER LIGHT
Hourly workers are demanding more flexibility in their work schedule, but if employers aren’t careful, trying to accommodate their employees’ wishes could trigger overtime pay issues. Surprisingly, it’s not California’s laws that can do the damage, but federal law.
Federal law trumps state law when it comes to employee compensation. Federal law prevents private companies from allowing their employees to “bank” accrued compensatory time (comp time) and using the hours as time off at a later date. Let’s say an employee works an extra two hours a week for a month with the hopes of taking a full day off (eight hours) the following month. Under federal law, that can’t be done. The employer would be required to pay overtime for each of the extra hours worked.
So how can employers keep workers happy without incurring overtime costs? They have two workable options.
California has something called “make-up time.” Private employers in California (and to some extent public employers) are subject to the California Wage Orders (found in the California Code of Regulations) that govern all industries and occupations. The wage orders reference “make-up time.”
Here’s how it works. An employee can only request make-up time for reasons related to personal needs. The reason cannot be business-related. For example, an employee can say, “I want to work two extra hours on Tuesday so that I can leave two hours early on Thursday to watch my child play soccer.” With the advance approval of the employer in writing, the employer need not pay overtime for the 9th and 10th hours worked on Tuesday. The time taken off and the time worked can be done in any order, as long as it is in the same workweek.
In contrast, an employee in accounting says on Monday, “I am going to work really hard on Tuesday and Wednesday (10 hours each) to get out the company payroll, so I’d like to leave four hours early on Friday.” That’s not a personal reason and the overtime would still be owed for the extra hours worked on Tuesday and Wednesday.
The second way employers can create flexible work hours without triggering overtime is through the “alternative workweek” schedule option found in the same wage orders. An alternative workweek schedule, or AWS, allows the employer to establish a fixed schedule that contains what would otherwise be daily overtime hours.
For example, the employer implements a schedule of a Monday through Thursday work week, 10 hours a day, for a total of 40 hours. No overtime would be owed for the 9th and 10th hours on each of those days. Similarly, some employers implement what is known as a “9/80” AWS. Under this schedule, hourly employees work 9-hour days on Monday through Thursday, and then 8 hours every other Friday. The 7-day work week begins in the middle of the shift on Friday, so that the employees see every other Friday off, with workweeks of 36 and 44 hours, alternating from week to week. Since the “workweek” officially starts at noon on Friday, the law sees it as a 40-hour workweek every week, so there is no weekly overtime.
Employees affected by this change in schedule must vote for it in a secret ballot election. If two-thirds approve the schedule, the employer may implement it. Once the successful vote has been taken, the employer is required to send a letter containing the ballot results to the state Labor Commission’s Office of Policy, Research and Legislation. The agency then publishes those results on its website. If that vote is not published, then it can be void and the employer would owe overtime and related penalties.
An AWS can work well in a more rigid schedule such as a manufacturing operation. It does not work as well in more fluid operations in which the schedule can be variable, such as in construction or a medical office.
Although these options can be somewhat complicated to set up and implement, they avoid overtime costs for the employer and are typically very popular with employees who now expect greater job flexibility.
Jonathan Fraser Light is the managing attorney at LightGabler in Camarillo.