by James W. Ward, J.D.; Employment Law Subject Matter Expert/Legal Writer and Editor, CalChamber
Employers often hear that employees want “flexibility” in the workplace. That can mean anything from flexible start and end times, working remotely, their choice of hours worked (flextime) or alternative weekly schedules, such as working four 10-hour shifts per week. A lot of employers explore these options because, depending on the circumstances, it can be good for employee morale, recruitment and retention.
There are many ways to modify schedules for exempt employees, but when it comes to nonexempt, hourly employees, California’s wage and hour laws — which are centered around the traditional eight-hours per day, five days per week schedule — are simply not very flexible. Plus, employers can run into problems, including unintended overtime liability, and meal and rest break issues.
One option employers may consider is the “alternative workweek schedule,” which is an interesting arrangement under California law that allows employers to create shift lengths for nonexempt employees up to 10 hours without requiring overtime pay. That may sound promising for those looking at different scheduling options; however, the requirements for establishing a valid alternative workweek schedule are strict, complex and might not offer the type of flexibility some employers are looking for.
In this article, we’ll take a closer look at the alternative workweek schedule, how to establish and maintain it, paying overtime under the schedule, repealing the schedule, compliance risks and some practical considerations.
Alternative workweek schedules are sometimes confused with the general idea of flexible work schedules where, for example, some employees begin the shift early in the day and others begin work later in the day. In that case, employers must pay their nonexempt employees overtime for hours worked in excess of 8 hours in a day, regardless of when they start their shift.
The alternative workweek, however, has a distinct legal meaning and specific requirements provided for in most Industrial Welfare Commission (IWC) Wage Orders (1 through 13, 16 and 17) and Labor Code section 511. The alternative workweek schedule is an arrangement that gives employers a way to create certain shift lengths for nonexempt employees of up to 10 hours per day within a 40-hour workweek without being required to pay overtime. This may allow, for example, four 10-hour days in a workweek and three days off — without overtime liability. Longer shifts and fewer days of work can reduce commuting costs and may help some employees with childcare/schooling issues.
However, employers can’t just unilaterally create an alternative workweek. Nor can an employee offer to work such a schedule without being paid overtime. Even a mutual agreement between the employer and the hourly, nonexempt employee isn’t enough. To avoid overtime issues created by a work schedule that exceeds eight hours in a day, an employer must follow a strict process to create a valid alternative workweek schedule.
There are many steps required to officially establish the alternative workweek schedule, including identifying affected employees, determining proposed schedules, disclosure of such agreements and more.
Identifying Affected Employees
The first step in adopting an alternative workweek schedule is to identify the work unit to which the alternative workweek will apply. There’s a lot of flexibility in determining the work unit, which may be a:
A work unit might be the entire company, a single division/department within the company (such as the warehouse workers), just one shift within that department (such as only the graveyard shift in the warehouse), or one physical location within that department (such as the warehouse workers in the Los Angeles location but not the San Francisco location).
Although the work unit can be fairly broad, the work unit must encompass the whole unit, not just select individuals within the unit. The work unit can, however, be just one employee if that employee is the only person in that division, department, classification or location.
Determining Proposed Schedules
Once the work unit is established, the employer must determine what alternative schedule or schedules to propose. Employers may propose a single alternative schedule or multiple schedules from which employees may choose. If proposing multiple schedule options, employees’ choice of which schedule to work may be subject to reasonable non-discriminatory conditions, such as seniority-based systems, provided that any limitation on the employees’ choice is disclosed in the proposal and approved as part of the alternative workweek vote. If the various shift options are limited by the number of employees who may choose that shift, employers must disclose that along with the nondiscriminatory method used to assign employees to a particular shift.
If proposing a menu of scheduling options and allowing employee choice is impractical, employers have the option to divide employees into separate units and propose a single schedule for each unit.
The employer’s proposal must designate the regularly scheduled number of workdays and hours within the workday, but it doesn’t have to specify the actual days in the week or the exact starting and ending times of the proposed shifts. For example, the employer may propose a workweek consisting of four 10-hour shifts but need not specify which days of the week employees would work or the specific shift start and end times.
While employers can set any schedule that fits their work needs, some common alternative schedules include:
Employers can create an alternative workweek schedule in any combination of hours, but they generally must pay overtime for all hours over 10 in one workday and over 40 in one workweek. Read more about paying overtime below.
Written Disclosure of Alternative Workweek Schedule and Voting
With the proposed schedule or schedules settled, the employer must provide a written disclosure to all affected employees in the schedule's defined work unit, as well as the effect on the employees’ wages, hours and benefits. If at least 5 percent of the affected employees speak a language other than English, the employer must provide the written disclosure in English and the other language(s).
The employer also must hold at least one meeting at least 14 days prior to scheduling an employee vote on the schedule to discuss the schedule and effects on wages, hours and benefits. If some affected employees can't attend the first meeting, the employer may need to hold further meetings. Additionally, the employer must mail the written disclosure to affected employees who don’t attend the meeting.
With disclosures and meetings complete, the employer hosts a secret ballot election during working hours at the worksite, in which all affected employees in the work unit are entitled to vote.
A two-thirds vote of all affected employees is required to adopt the schedule. This means that if, for example, nine employees are in the affected work unit, there must be at least six votes in support of the schedule. Employees are not required to vote, and a nonvote is treated as a “no” vote.
Employers must bear the cost of conducting elections and are prohibited from intimidating or coercing employees regarding elections.
Reporting Results and Implementing Schedule
If the new alternative workweek schedule is approved, the employer must report it to the Department of Industrial Relations’ Office of Policy, Research and Legislation within 30 days.
Employees affected by a work hour change following adoption of an alternative workweek schedule may not be required to work those new hours for at least 30 days after the announcement of the election's final results.
Employers must keep complete records of the alternative workweek election, as well as documentation showing how the schedule is being followed.
Employers may make occasional changes to the days or hours scheduled if they provide employees with reasonable notice. Changes must only be occasional occurrences. More frequent changes may result in the loss of the exemption from the eight-hour day requirements. The DLSE considers one week to be reasonable notice.
In some circumstances, employers must try to accommodate employees who can't work the alternative workweek schedule, depending on whether they were eligible to vote in the election and the reasons they're unable to work the schedule. Employers must also explore any available reasonable alternative means to accommodate an affected employee’s religious belief or observance that conflicts with an alternative workweek schedule.
New employees hired into the unit working an alternative workweek will generally be assigned to work the alternative workweek schedule, though the IWC Wage Orders provide that an employer may, but is not required, to provide a traditional schedule that doesn’t exceed eight hours in a workday if the employee was hired after the date of the alternative workweek election and is unable to work the alternative workweek schedule.
The IWC Wage Orders allow employees to substitute one shift for another of the same length, which is permissible at the employee’s request. Additionally, if an employer has a menu of alternative workweek options for its employees, the law allows employees, with the approval of their employer, to move from one alternative workweek schedule to another.
Setting up an alternative workweek schedule doesn’t mean employers never have to pay overtime. Generally, under an alternative workweek schedule, employers must pay overtime for any hours worked in excess of the regularly scheduled hours or for working more than 40 hours per week.
For example, if an employer’s alternative workweek schedule consists of four 10-hour days in the workweek and an employee works 11 hours on one of the days, the employee earns one hour of overtime that day. If the schedule uses nine-hour days, any time worked over nine hours in the day is subject to overtime.
Employers must pay an employee one-and-a-half times their “regular rate of pay,” which may be different from an employee’s normal hourly amount (see Calculating Overtime), for hours worked in excess of the regularly scheduled hours, up to 12 hours a day, and for all work performed beyond 40 hours per week.
Employers must pay an employee double their regular rate of pay for hours worked in excess of 12 hours per day.
If an employee works outside of their regular schedule, then — assuming they aren’t substituting one shift for another at their request as previously discussed — the employee is entitled to an overtime rate for that time, which is one-and-a-half times their regular rate for work up to eight hours and double their regular rate for any work in excess of eight hours.
An employer may terminate an alternative workweek schedule unilaterally without holding a repeal election, but only after providing reasonable advance notice to employees.
Employees may choose to repeal the schedule, but doing so is a bit more complicated. First, at least one-third of the affected employees must petition to repeal the schedule. After that, there’s another secret ballot election to vote on the schedule’s repeal. A two-thirds vote of the affected employees is required to reverse the alternative workweek schedule.
Employers must hold the election to repeal the alternative workweek schedule not more than 30 days after the employees’ petition is submitted and must bear the election costs. An employer can’t hold an election to repeal an alternative workweek more often than every 12 months after the last election date (except under Wage Order 16, which is six months).
If the alternative workweek schedule is revoked, the employer must terminate the schedule within 60 days. The DLSE may grant an extension if the employer can show that revoking the schedule within 60 days would cause undue hardship on normal business operations.
The process for adopting an alternative workweek schedule is complex and detailed. In addition to the general rules described in this article, there are nuances and exceptions depending on the industry and applicable IWC Wage Orders. For a schedule to be valid, employers must ensure they’ve taken all steps correctly. The Labor Commissioner invalidates alternative workweeks for many reasons. Some of the most common reasons include:
If the schedule is deemed invalid, all hours worked in excess of eight in a day will be subject to overtime.
Employers who are considering an alternative workweek schedule should consult with their legal counsel about the pros and cons for their circumstances, and what exactly is permitted and required for their particular industry under the applicable IWC Wage Order.
If an alternative workweek schedule doesn’t fit the employer’s needs, it may still be able to create some flexibility for its nonexempt employees. For example, a make-up time exception to overtime, pursuant to Labor Code section 513, allows an employee to work late one day in order to make up time that fell short on a previous workday, so long as the time was requested in advance and the employee doesn’t work over a certain number of hours.
The employer may also break up working hours by making shifts earlier or later in the day, or redefine what the workweek is by setting the start and end days differently.
Regardless of what work arrangement employers adopt (remote, hybrid, in-office, flexible scheduling, etc.), it’s important that employers remember to keep track of the hours their nonexempt employees’ work, be mindful of meal/rest break and overtime rules, and maintain accurate records.
