Episode 149: Two Approaches to Worker Scheduling

Welcome to the Workplace, a podcast by Cal Chamber. I'm Matthew Roberts, the Labor Law helpline manager and Employment Law Council with the California Chamber of Commerce. On deck for us today is a discussion about worker scheduling and flexibility. Beyond the health and safety measures that we've experienced and have implemented throughout the pandemic, there's at least one more enduring factor we're starting to see for our workforce. And there's this mutual agreement with employers and employees about trying to find some kind of flexibility in our work hours scheduling in order to provide as much flexibility as possible for getting the work done as well as meeting the needs of our employees. In this ever changing dynamic that we've had since the pandemic started, recent polling conducted by the chamber shows that there's really this overwhelming desire to allow for a mutual agreement in terms of flexibility. Some of the examples that we saw include 88% of respondents supporting changing overtime rules to allow for individual alternative work week schedules, a situation where an employee and an employer can come together and just design a workweek that works for them. 82% support allowing employees to take their rest periods whenever they want, which we know currently isn't the case based off court decisions, and 80% support allowing employees to forego meal periods if the employee chooses to allow them to go home earlier. Again, this doesn't jive very well with our rest and meal break rules under our wage and hour laws. And so unfortunately for everyone, as you can see, the California's labor code, which drives substantial litigation in California, is both inflexible and behind the times. Even more unfortunately for us, the legislature's most recent overtime proposal creates a more costly inflexible schedule. To discuss this proposal as well as other alternatives that the Chamber supports. We welcome back Cal Chambers policy advocate focusing on employment issues, Ashley Hoffman. And Ashley, thanks for joining me today.

Thanks, Matt. Good to be here again.

Excellent. So Ashley, you know, the proposal I alluded to there in the intro is designated Assembly Bill 2932, and it looks like it could create an incredibly costly new way to calculate overtime for workers that would severely overburden employers. Ashley, walk us through what AB 2932 proposes to do.

Sure. So AB 2932 changes the 40 hour overtime requirement to 32, so it drops it down by eight hours. So when you're talking about kind a classic 9 to 5 employee, that would mean that if you had them work on that Friday, right that fifth day, you would owe them overtime for that entire day. On top of that, the bill contains a provision Saying that you would have to keep their compensation the same. So how a lot of our employment attorneys are interpreting that would mean that you have to pay them the same amount that they would normally earn at 40 hours at 32 hours. So, for example, if someone makes like $20 an hour, um, so they make about $800 after 40 hours of work, they would now be owed that 800 after 32 hours. So what this means is that you're actually also increasing the hourly rate. So in that example, you're increasing it to $25 an hour. And then if you need them to come in that fifth day for overtime, that number becomes 3,750 an hour, which is an 87.5% increase, which is tremendous. Yeah.

And that's really, I think, a highlight that is missing this bill because it doesn't really talk about it as much as overtime rate would do it. It says, as you say, you need to make sure they're making the same amount of money in 32 hours as they were in 40 hours, but it raises that overtime rate. Your example, at $20 per hour, would normally be $30 per hour for overtime rate. Right. 1.5 times their regular rate. And as you highlight, when you go to 25 as their normal rate, then their 1.5 times goes up to 3750 for their overtime rate, which makes overtime even costlier.

This bill seems to have potential for incredible economic and operational impacts on employers. What specifically are our concerns about the bill? Obviously, beyond the economics.

Yeah. You know, so obviously there's economics. Right. There's a cost of it. But then it also puts employers in a really tough position. Do you pay out this extra money, or do you try and hire more people so that you're not having anyone working more than 32 hours? But as I'm sure all of our listeners have experienced, we are absolutely still going through a labor shortage right now. I've heard many stories from members who cannot get people to apply, or they have even hired some people only to have half of them show up. So it's a very difficult time to hire. And so this alternative of having other people on staff to cover after 32 hours is just really not an option for a lot of people.

So this is really why I think we call it a job killer here at the Chamber. Right. Is that this economic analysis backs us up in terms of the amount of job losses that you may have because overhead increases and not enough workers available. Maybe you can go into a little bit more detail about what that economic analysis looks like for us.

Yeah. So we had an independent firm and seen advisors do an economic analysis, and they showed that between 340,000 and 1.02 million jobs would be lost as a result of this. Another issue to point out is that doesn't even necessarily maybe factor in some of the other costs that we're all experiencing right now, the cost of gas. This is sure to increase other things like the cost of child care. Right. One of the groups on our post letter has to do with child care, you know, because this would significantly increase costs of staffing for that, probably decreasing the amount of slots available. There's a lot of other factors, too, that, you know, are specific to kind of the time we're in right now and the increased cost of goods. And this is really going to have a tremendous effect on the costs for employers and employees.

And something that we should touch on, really, is that, you know, we have both large and small business listeners here on the, on the podcast. Does this bill make a distinction between the size of the employer as to who it applies to?

It does. It only applies to employers with 500 or more employees. But it's very important to note that in California that that's really just a matter of time. Right. Before it gets dropped, as we saw, for example, with CFRA recently. Right. It's. It would only be a matter of time before it dropped down to.

Absolutely. And there's been a lot of, I think, attention to this bill. I think many of our listeners will have heard some bits and pieces of it. I think you've done a great job explaining exactly what it is. So the question that's top of mind for many is what is the status of this bill? Where is this thing going?

So the assembly has a number of deadlines that are coming up. Next week is the last time to hear a fiscal bill that means something has to go to the Appropriations Committee. This one is tagged as fiscal. So really as of the day, we're recording this tomorrow, but it's April 20th, labor and Employment hearing, but it was not set for hearing. So at this point, you know, we don't anticipate it being heard. You know, it's pretty unusual for something to be heard after that point, especially with the upcoming deadline. So, yeah, we don't expect, honestly, I don't expect this bill to move forward.

Excellent. As you and I both know, though, when something makes its proposal the first time in the legislature, that doesn't necessarily mean it won't come back up again in the future. Future. So, yeah, again, out there. If you're concerned about this kind of bill, again, make your voice heard in terms of this actual economic disaster the bill could impose on employers. So then let's move forward and actually stay in touch with the 21st century needs of both employers and employees. I understand the chamber supports a different legislative proposal that's titled the Workplace flexibility Act of 2022 or otherwise known as AB 1761. You know, one of the most inflexible parts of California wage and hour law is the actual creation of an alternative work week. So for those of us where that phrase is sort of familiar to us, you know, we have what Ashley described the nine to five, five days a week, right? You work eight hours a day, 40 hours a week, and anything over that, you know, we run into daily and weekly overtime issues. Well, there is a provision that allows you to create an alternative work week schedule that as long as the schedule still remains 40 hours or shorter, you can have situations where they work, say four tens or the nine, eight, eight, zero schedule where they work, you know, nine hours each of these days and then get like a half day on Friday or a full Friday off every two weeks. But it requires a lot of bureaucratic processes and it's not really designed to be a one off where you can do it with those individual employees. So talk to me, Ashley, about what AB 1761 does.

So AB 1761 is a bill that has been run for many years. We have run similar bills to no avail in the California Legislature where it would allow employees to decide one on one to have an alternative work week schedule and to enter into such an agreement with their employer instead of having to go through the process that you just described where they have to have their entire work unit also on board with that. We've had a lot of members reach out wishing they could do this. I've heard a lot from a lot of members, have a lot of employees asking for this, like for trial care, other responsibilities maybe that they have. Unfortunately, though, it continues to face opposition from certain groups of the legislature. And this year, like last, didn't even get set for a hearing.

So I guess much like the four day workweek bill, these are kind of test proposals we're seeing out there in the legislature, but not going to see much more of those going forward, at least this year. But again, as with the other one, if this is something you're interested in, again, make your voice heard. Make sure you let everybody know that this is something that both you and your employees are looking for because that's really what I think we're looking for with this designation is that employees want this flexibility. It's the employers who are prohibited to do it by the labor code and the wage order. Well, Ashley, thank you for joining us and talking through these recent legislative developments as they pertain to overtime calculations. And thank you listeners, for joining this discussion on the workplace. Please comment, share and subscribe to Cal Chamber's podcast by visiting calchamber.com.