NHEH Publications

Can Overtime Be Waived?

By Sharilyn R. Payne, Attorney
Noland, Hamerly, Etienne & Hoss

One of your non-exempt hourly employees asks you if she can continue to work forty hours a week, but working four instead of five days per week.  She tells you that in exchange, she will agree to waive any overtime pay.  Can you do this?  The answer is . . . there is never an easy answer in California employment law.

For most employers, any hours that a non-exempt employee works beyond eight hours in a workday, beyond forty hours in a workweek, and the first eight hours worked on the seventh day worked in a workweek must be paid at 1½ times the regular rate of pay.  If an employee works more than twelve hours in a workday, and more than eight hours on the seventh day worked in a workweek, the employee must be paid at twice the regular rate of pay.  Unless an employer defines it differently, the California Division of Labor Standards Enforcement (DLSE) assumes a workday is from midnight to midnight, and a workweek is from Sunday to Saturday.

The California Labor Code and some of the Industrial Welfare Commission (IWC) wage orders allow an “alternative workweek schedule” (AWS), which is a regularly scheduled workweek of not more than ten (10) hours per day within a 40-hour workweek that does not require the payment of overtime for those 10-hour days.  The establishment of an AWS involves several steps:

1.    Make sure the wage order that applies to your business allows for an AWS.  Wage order 14 (agricultural occupations) and 15 (household occupations) do not allow an AWS.

2.    Identify the “work unit” to which the AWS would apply, i.e., a job classification, a separate office, a department.  An AWS can apply to just one employee if that employee’s position can be distinguished from others.

3.    Prepare a written agreement with the proposed alternative schedule.  The most common schedules are a 4/10 (working 4 days a week, 10 hours a day), or a 9/80 (working 80 hours in 9 days over two workweeks).  A 3/12 schedule, i.e., three 12-hour days, is only allowed for certain employers in the health care industry. An employer can propose just one single schedule or a menu of work schedule options.   

4.    Meet with the employees whose schedules would be affected and give them a written disclosure of the proposed schedule and its effects on employee wages, hours and benefits, as well as the proposed written agreement.  This meeting must take place at least 14 days before the secret ballot election.  Wait -- secret ballot election???

5.    A secret ballot election must be held at the affected employees’ worksite.  Only the employees in the work unit may vote.  For the proposed AWS to be adopted, at least 2/3 of the employees in the work unit must vote to approve it.  If approved, the employer must provide the employees in the work unit with the written agreement (see paragraph 3) to sign.

6.    The employer must report the election results, whether for or against the AWS, to the Division of Labor Statistics and Research (Division of Labor Statistics & Research - About DLSR (ca.gov)) within 30 days after the results are final.

7.    If the employees in the work unit vote to approve the AWS, the employer must wait 30 days to implement the schedule.

The employer must follow all of these steps or the AWS will be invalid, which can result in significant liability since an employer is not paying overtime because it believes an AWS is in place.  Employees would be entitled to unpaid overtime wages plus various penalties provided for under California law.

If an employer has gone through all of the above steps and 2/3 of the work unit vote for a 4/10 schedule, the employer does not have to pay overtime for the hours worked up to ten per workday during those four days.  But if the employee works more hours or days, the overtime rules become complicated.  If on one of the four scheduled days the employee works more than ten hours up to twelve hours, overtime is owed at 1½ times the employee’s regular rate of pay.  If the employee works more than twelve hours in the workday, the employee is owed double the regular rate of pay.  If the employee works more than four days, any hours worked on those additional days up to eight are owed at 1½ times the regular rate of pay, and all hours worked beyond eight are owed at double the regular rate of pay.  Additionally, if an employee scheduled to work ten hours is required to work fewer hours, the employee is owed overtime at a rate of 1½ times the regular rate of pay for all hours worked over eight.  For example, if the employer directs a 4/10 employee to only work nine hours on a scheduled day, then the employee is owed one hour of overtime at time-and-a-half.

You may be thinking, if my employee proposed this schedule, she obviously wants it, so can’t I just have her sign an agreement and forego this lengthy process?  The answer, unfortunately, is “no.”  Even if an AWS is being offered to just one employee who clearly wants it, the above procedures, including the secret ballot election, must be followed.

Because of the involved process in establishing an AWS, it is wise to consult with an employment law attorney for assistance.

 

This article is intended to address topics of general interest and should not be construed as legal advice.
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