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California Repeals Eight-Hour Overtime Rule
Date: June 1997
In a move designed to bolster the
competitive posture of California's businesses, the state Industrial
Welfare Commission ("IWC") voted 3-2 in April of this year
to abolish the requirement that obligated most California employers to
pay their employees overtime after they worked eight hours in a single
day. The new rule, which
is set to go into effect on January 1, 1998, would require employers
in most industries to pay their employees overtime only when the
employees' working hours exceed 40 in any single work week.
This system of overtime compensation is similar to that
required by the federal Fair Labor Standards Act, as well as the
overtime laws of 47 of the 50 states in the Union.
The new rules are designed to help
promote flexibility of work schedules.
Under the old rules, for example, employers became obligated to
pay employees overtime once their work hours exceeded eight in a work
day, or 40 in a work week. Under
the new system, however, employers will have greater flexibility to
implement schedules of up to 12 hours in a single day, three days per
week, without incurring overtime liability.
In addition, employees may now be scheduled to work seven days
within a work week without incurring overtime liability, as long as
their total hours do not exceed 30 hours for the week or six in any
one day.
The IWC vote will affect workers paid
on an hourly basis in some of California's biggest industries,
including, manufacturing,
retail and wholesale operations, restaurants and hotels and motels.
Also affected by the change will be workers in technical,
clerical and mechanical positions.
Significantly, the new rules will not impact government
employees or employees in the amusement and recreation, broadcasting,
or motion picture industries, nor will it affect exempt employees in
professional (i.e., doctors, lawyers, etc.), executive or
administrative positions. Also
unaffected by the change will be most employees covered by union
collective bargaining agreements.
Two lawsuits backed by organized labor
groups have been filed in an effort to challenge implementation of the
new rules. In addition,
two bills have been introduced in the California Legislature which
would also, in effect, repeal the IWC's decision.
The pending court actions and proposed legislation may delay or
prevent implementation of the new rules.
Employers wishing to modify their
employees' work schedules should consider consulting with labor and
employment counsel before doing so.
This is important for several reasons.
First, the pending court actions and legislation have created
uncertainty over whether new rules will actually be implemented on
January 1, 1998. Second, not all types of businesses are covered by the IWC's
action, and employers must be certain they are included. Third, while most employees covered by union contracts will
not be affected, the rule changes do affect some unionized employees.
Finally, it is important that any changes to employees'
schedules be in compliance with both state and federal laws in this
area.
If you have questions
regarding these new rules, general wage and hour issues, or employer labor policies and practices, please contact our Labor
and Employment Law Department at (310) 858-7700.
Our
Labor and Employment Law Department represents employers in wrongful
termination, employment discrimination, and sexual harassment cases in
state and federal courts. The
department also represents employers in collective bargaining
negotiations, arbitrations and matters before state and federal
administrative agencies. In addition, we provide general labor counseling on
unionization, personnel policies, grievances and wage and hour issues.
Rosenfeld,
Meyer & Susman, LLP, was founded in 1957. The
firm's areas of expertise include: Labor and Employment Law,
Litigation, Corporate, Entertainment, Trusts and Estates, Taxation,
Family Law, Insurance Coverage and Defense, Real Estate, Employee
Benefits and New Media Technologies.
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