Remote working during the pandemic provided quite a bit of flexibility for both employers and employees. Now that we’re in a period of relative stability regarding COVID-19 workplace rules, employers continue to increase the amount in-person work, while employees continue to desire flexibility. With a fluctuating job market, employers are looking for ways to retain and attract staff, but California, unfortunately, makes flexible workplace scheduling difficult.
California wage and hour laws have not kept up with the changing workplace dynamic, making flexible workhours more difficult to offer individual employees. To start, employers must pay overtime to nonexempt employees when the employee works more than eight hours in a workday or 40 hours in a workweek. Even if the employee and employer agree to a work schedule where the employee works more than eight hours in a day (e.g., four ten-hour days), the employer will still owe the employee overtime.
Instead, employers may only establish an alternative workweek — where a nonexempt employee works more than eight hours in a day but does not receive overtime pay for those hours — if the employer follows strict procedures for creating an alternate work schedule.
The first step is to identify the work unit that the proposed schedule affects. Although a work unit may be only one employee, employers will be less likely to identify one employee as a work unit if they do substantially similar work as other employees. In that case, although employers only want to create a flexible schedule for one employee, employers will still need to include all other employees in the work unit during the creation of the schedule.
Once employers have identified the work unit, they need to propose a menu of options. This can just be one alternative schedule or multiple options that employees may work if the schedule is ratified. After proposing the schedule, employers must provide a written disclosure to the affected work unit of the impact the alternative schedule has on their wages, hours and benefits. Then, employers must hold at least one meeting to discuss the proposal at least 14 days before allowing employees to vote.
Once eligible, the secret-ballot vote must take place, and at least two-thirds of the affected employees must vote to approve it. If an employee declines or is unable to vote, they count as a ‘no’ vote for these purposes. If the affected employees approve the schedule, employers must submit the results to the California Department of Industrial Relations (DIR). Unless an employer follows this procedure, the alternative workweek is invalid, and any overtime worked is subject to overtime pay.
Although exempt employees are not subject to overtime, employers still have to consider how a flexible schedule may impact their salary. For example, if an employer wants to align their exempt employees with a nonexempt employee’s alternative workweek, the employer cannot reduce the exempt employee’s salary. This is due to the rule that an exempt employee that performs any work in a work week is entitled to their weekly salary.
Employers considering creating an alternative workweek schedule, or some other type of flexible scheduling, should consult with legal counsel to evaluate any wage and hour issues that may arise from such a schedule.