"9 To 5 --
Analysis Of New Wage Orders Issued By The Industrial Welfare Commission"
by Richard S. Rosenberg, Jeffrey P. Fuchsmam and John P. Schaedel

On January 1, 2000, the "Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999" (commonly referred to as AB 60), went into effect. AB 60 made sweeping changes to California wage and hour law. AB 60 mandated that the Industrial Welfare Commission ("IWC") issue new regulations embodied in a series of "Wage Orders" to implement the law. The IWC issued an Interim Wage Order earlier this year while it held public meetings over its final regulations. On October 1, 2000, the IWC issued its long-awaited Wage Orders implementing AB 60. The new Wage Orders take effect immediately. Law firms are covered by Wage Order 4. Wage Order 4 makes important changes to the rules which law firms must follow on such diverse topics as overtime, alternative workweeks, meal periods, and rest breaks, to name a few. The following summarizes the most significant changes affecting law firm operations.

• Meal Periods. The new Wage Order imposes a new penalty equal to one hour's pay for every work day that the firm fails to comply with existing meal period requirements. Under the Wage Order, the firm must provide an unpaid one-half hour meal period every work day. The meal period must be an uninterrupted period of at least thirty minutes for an employee who is scheduled to work for five hours or longer. Notably, the meal period may be waived by mutual consent if the employee works no longer than six hours. A second meal period must be provided if the employee works more than ten hours. This second meal period may be waived if the employee works no longer than twelve hours, provided the employee did not waive the first meal period. Additionally, unless an employee is relieved of all duty during the meal period, the meal period must be compensated. Normally, an "on duty" meal period will not be permitted in a law firm context. An on duty meal period is permissible only when the nature of the work prevents an employee from being relieved of all duty and the firm and employee have agreed in writing to the arrangement. Most white collar work settings do not meet this standard. When permissible, the written on duty meal period agreement must indicate that the employee may revoke his or her consent at any time. In light of the new fine (200% of the meal period), it is advisable to keep accurate daily time records of all meal periods.



• Rest Periods. The new Wage Order also imposes a new penalty equal to one hour's pay for every work day on which the firm fails to comply with IAC mandated rest period requirements. Under the law, an employer must provide a paid ten-minute rest period for every four hours of scheduled work. Most firms do not ordinarily keep track of rest periods. However, since the new fine is equal to 600% of the rest period, it is advisable for the firm to devise a reliable record of all rest breaks taken.

Under existing California law, an employer must pay an overtime premium equal to time-and-a-half the employee's regular hourly rate for all hours worked beyond eight in a day. The overtime premium is increased to twice the hourly rate for work in excess of twelve hours in a day or after eight hours on the seventh day if worked in the workweek. (This differs from federal law, under which overtime premium pay is not required until the employee has worked 40 hours in a week.) The new law allows employers to avoid paying "daily" overtime under certain limited circumstances if a properly established "alternative workweek" arrangement is established. The new Wage Order severely restricts how a firm may implement these alternative workweek arrangements.

• Ten Hour Per Day Limitation. The most significant restriction found in the new Wage Orders is the limit on the length of a scheduled workday in an alternative workweek. IWC has stated that a valid alternative arrangement could consist of ten hours per day or no more than forty hours in a workweek. If the firm regularly schedules the employee for a longer workday, the arrangement will not pass muster with the enforcement authorities.



• Election to Adopt Alternative Workweek. To have a valid, alternative workweek, certain procedures must be followed as well. This arrangement must be ratified in a secret ballot election by at least two-thirds of the affected employees in the work unit. No less than 14 days prior to an election, the firm must provide employees with written disclosures detailing the effect of the proposed arrangement on the employees' wages, hours, and benefits, the number of hours to be worked per day and the number of days to be worked per week under the proposed alternative workweek. (The days must be regularly scheduled, although the actual days to be worked need not be specified in the disclosure.) Additionally, at least one meeting must be scheduled no less than fourteen days prior to the election to discuss these matters. Disclosure must be provided in languages other than English if at least five percent of affected employees speak such languages, and must be mailed to employees who do not attend the meeting(s). Moreover, employees may not be disciplined for their opposition to an alternative workweek arrangement. Once such an arrangement is in place, if one-third of the affected employees sign a petition to repeal an alternative workweek, the firm must hold an election to do so within 30 days. However, the firm need not honor a request to repeal the arrangement within the first year following the election in which the employees voted in the alternative workweek. The results of any election must be reported to the Division of Labor Statistics and Research within 30 days. Notably, the firm may not reduce an employee's regular rate of pay as a result of adoption or repeal of an alternative workweek arrangement.



• Existing Alternative Workweek Arrangements. Certain arrangements in place prior to January 1, 2000 may continue if the employees were voluntarily working under an alternative workweek as of July 1, 1999, (based on an agreement that went into effect after January 1, 1998), which provides for a workday not exceeding ten hours. These arrangements may continue without an election, if the employees requested to do so in writing, prior to May 30, 2000, and the firm approved such request. All such arrangements must be reported to the Division of Labor Statistics and Research no later than January 1, 2001.



• Accommodating Employees Who Don't Wish to Work Alternative Workweek. The firm must explore reasonable accommodations for any employee who is eligible to vote on the arrangement, but is unable or unwilling to work an alternative workweek. The accommodation process is described in the Fair Employment and Housing Act (Cal. Govt. Code Û 12940(j)). The firm must attempt to accommodate these employees by scheduling them on an eight hour per day schedule. Employees hired after the establishment of an alternative workweek may request similar accommodation, but the firm need not honor this request.



• Make Up Time. An employee who requests time off to attend to a personal obligation may ask the firm to make up the time on another day within the same week without paying daily overtime on the longer workday. The enforcement authorities will permit such an arrangement so long as the employee works no more than eleven hours in any single day, or a total of 40 hours in any week. As a practical matter, the make up time will have to occur within the same workweek as the time off. Every request for make up time must be in writing. The new law allows the firm to inform employees of this benefit but, in no case may the firm solicit or encourage employees to use it.

• Computer Professionals. Under a new law which went into effect on October 1, 2000, certain employees who work with computers are now exempt from overtime provisions of the Wage Order under the so-called professional exemption. Several criteria must be met for the exemption to apply. The employee must be primarily engaged in intellectual or creative work requiring the exercise of discretion and independent judgment, and the employee's duties must consist of at least one of the following: (i) application of systems analysis techniques and procedures, including consultation, (ii) design, development, analysis or testing of computer programs, or (iii) programming work related to the design of software or hardware for computer operating systems. The employee also must be highly skilled and proficient in theoretical and practical application of specialized information to computer systems analysis, programming and software engineering. Finally, the employee must be paid no less than $41.00 per hour (this threshold is to be adjusted annually for inflation.) Careful attention must be paid to actual job duties when evaluating the application of this exemption. Most MIS and other computer functions in a typical law firm setting will not meet these requirements.



• Exempt Status. The Wage Orders expressly adopt more favorable federal regulations, developed under the Fair Labor Standards Act, for determining exempt status under the so-called executive, administrative, and professional exemptions to the overtime law. The Wage Orders indicate that federal regulations are to be followed in determining whether an employee's duties meet the applicable exemption requirements. Careful attention should be paid to law firm personnel who are classified by the firm as exempt for overtime purposes. Generally, with the exception of the attorney staff and some high ranking supervisory or administrative positions, most law firm personnel are simply not exempt from the applicable federal and state overtime laws. Every hourly paid employee must be paid overtime, even if that position would be exempt had the employee been paid a weekly salary.

These new Wage Orders add additional exposure in the form of penalties for not complying with day-to-day wage-hour guidelines. Since these penalties can add up, it is incumbent on the firm to maintain records demonstrating compliance. Also, be aware that any sort of retaliation against an employee who demands compliance or speaks out for others is illegal and could form the basis of an expensive civil action as well.

Richard S. Rosenberg and Jeffrey P. Fuchsman are partners in Ballard, Rosenberg, Golper & Savitt LLP. John P. Schaedel is an associate at the Universal City firm which exclusively represents management in labor and employment matters.