The Fair Labor Standards Act (FLSA) establishes the national rule for when employees get overtime. Generally, employees who work over 40 hours per week must be paid at one and one-half times the employee’s regular salary. Some salaried employees may be exempt from this rule, if they are paid a minimum salary of $455 a week (or $23,660 per year) and are primarily involved in white-collar work.
A handful of states have overtime requirements not just on a weekly basis, but also daily. Alaska, California, and Nevada all impose overtime when an employee works more than eight hours in a day. Colorado requires overtime pay after working twelve hours in a day. Alaska, California, Colorado, and Nevada also have many exceptions to their overtime rules. Workers in certain industries may be exempt from the state overtime laws. For non-exempt employees, Alaska and California allow employers and employees to agree to an alternative work schedule (or flexible hour plan) to avoid overtime liability.
Avoiding Daily Overtime with Alternative Work Schedules
In California, an alternative work schedule (AWS) is a way for employers to provide a flexible work schedule for employees without overtime liability. Flexible hour plans are the Alaska equivalent of the AWS, although the process for adopting a flexible hour plan is much simpler. Two of the most common AWSs are the “4/10” or “9/80” schedules. Under a 4/10 schedule, employees work four 10-hour days and have an extra day off every week. The 9/80 schedule compresses 80 hours of work biweekly into 9 days, and the employees have an extra day off every two weeks. If the employer follows the proper procedure for adopting the AWS, up to the first 10 hours of work in a single day are not counted as overtime.
What California Employers Need to Know
The procedure for adopting an AWS is notoriously complicated, and the burden is on the employer to make sure that each step is followed exactly. As a California court recently found in Maldonado v. Epsilon Plastics, the penalty for an improper AWS is steep, including unpaid overtime plus interest and attorney’s fees. The general requirements for adopting an alternative work schedule are:
(1) the employer must propose the alternative work schedule in writing;
(2) the proposal must disclose how the employees’ wages, hours, and benefits will be affected by the proposed schedule (if 5% or more of the affected employees speak a language other than English, the disclosure must be provided in that language);
(3) at least two-thirds of the affected employees must approve of the alternative work schedule in a secret ballot vote;
(4) at least 14 days before the vote, the employer must hold a meeting with the affected employees to discuss how the alternative work schedule will affect them;
(5) the election results must be reported to the California Department of Labor Standards Enforcement within 30 days; and
(6) there must be at least a 30-day waiting period between the election and implementation of the alternative work schedule.
In addition, each type of industry has a different Wage Order that applies, with different rules for adopting an AWS. Some industries’ Wage Orders do not allow for an AWS at all. It is especially important for employers to consult with a qualified employment law specialist before adopting an AWS.
More details on the FLSA can be found in our NFIB Guide to Wage and Hour Laws.
*While the information provided here is intended to be accurate, it is not legal advice. Employers are advised to seek counsel from a trusted employment law attorney.
