According to California overtime law, non-exempt employees are entitled to overtime pay for hours over 8 hours in a workday or 40 hours in a workweek. However, the Labor Code and Industrial Welfare Commission (IWC) allows businesses to override the overtime law and save on overtime pay through an alternative workweek schedule (AWS).
In this guide, we’ll dissect the alternative workweek schedule in California. We’ll tell you what it is, its rules and procedures, and eligibility, and show you how to implement an alternative work schedule for your business. Moreover, we’ll show you how using employee scheduling software helps comply with AWS rules.
As the name suggests, an alternative workweek schedule refers to any flexible scheduling arrangement that doesn’t meet California overtime requirements.
Remember that a regular workday in California constitutes 8 hours of work in 24 hours, whereas a workweek is equivalent to seven consecutive days or a recurring period of 168 hours.
Also, in a regular workweek schedule, employees can work up to eight hours in a workday or 40 hours a workweek unless you compensate one-half times their regular pay rate or double the rates for double overtime.
The alternative workweek schedule overrides all these rules, meaning employees can work more than eight hours in a workday without overtime pay. The alternative workweek schedule can be a single schedule or several different schedules, and each employee chooses one that works in their favor.
The flexible scheduling arrangement in the state of California can take different forms, including (but not limited to):
While the alternative schedule overrides the California overtime law, you’ll be required to pay employees for hours worked in excess of the scheduled hours.
For example, in a 4/40 workweek, you have to pay employee overtime for hours above 40 hours per week. On the other hand, in a 9/80 schedule, you have to compensate employees for hours worked more than 80 hours in the two-week period.
As for the rate, the IWC Wage Order requires you to pay employees one and a half times their regular rate of pay for hours above the scheduled hours in a workday or those over ten and not more than 12 hours in a workday.
Moreover, you should compensate employees double their regular pay rate for hours over 12 hours in a workday.
Let’s take a case of an employee in a 4/40 workweek schedule earning $17 per hour. If, on a particular day, the employee clocks in at 8:00 a.m. and punches out at 10:00 p.m., they will log 14 hours on their timecard.
In this case, you must compensate them for the excess 4 hours — 2 hours of overtime and two hours of double overtime. The calculation of overtime pay is different from the regular California overtime. Here’s how you compute their total overtime pay:
The employee will earn one and a half times their rate for the first two overtime hours (below 12 hours), meaning ($17*1.5*2) = $51. Next, they will earn double overtime for the remaining two hours, meaning ($17*2*2) = $68.
Therefore, their total overtime pay for that workday is:
Total overtime pay: $51+ $68 = $119.
The calculations can be complicated depending on the number of hours and the size of your workforce.
Thankfully, with Timeero, you only need to enter the overtime and double overtime threshold. When employees trigger the preconfigured threshold, Timeero automatically groups their hours as overtime or double overtime. Easy peasy.
Eligibility of the California alternative workweek schedule isn’t determined by the employee’s classification or memorandum of understanding (MOU). Instead, you can create an alternative workweek schedule for any job classification, department, division, shift, company branch, or any other work unit with approval by affected employees (we’ll discuss the approval process in a bit).
However, employees must have achieved a satisfactory (or higher) rating on their latest individual development plan (IDP) or performance appraisal to take part in an AWS program.
In addition, they must maintain a cumulative balance of at least 20 hours between vacation and annual leave, excess hours (EH), and compensating time off (CTO). These hours supplement employee’s time when they fail to hit the required work hours in a pay period.
One AWS caveat is that if you implement it wrongly, your company could be subject to monstrous liability for overtime wages. For this reason, it’s prudent to follow the procedures regarding initiation, approval, and termination of the agreement.
Let’s walk you through the step-by-step procedure of implementing an alternative workweek in California:
The first step is to create a proposal for the alternative workweek schedule in the form of a written agreement. The agreement should designate the workweek schedule you intend to adopt with regularly recurring workdays and work hours — for example, a 4/40, 9/80, or any other schedule that fits the bill.
You don’t have to specify the workdays in a workweek, though.
You can propose a single workweek schedule to be instilled as the standard schedule for the affected work unit(s). Alternatively, offer a list of workweek schedules and allow employees to choose what works for them. Remember that if you propose multiple work schedule options, employees can switch between the available options.
The next step is to create a written disclosure and share it with the affected employees. The disclosure should detail the employees’ expected hours, wages, and benefits. It should also include a meeting, held purposely to deliberate about the effects of the proposed alternative workweek schedule.
You should hold the meeting at least 14 days before the voting day (we’ll discuss the election procedures in the next step). In addition, you should mail the disclosure to employees who didn’t attend the meeting. If 5 percent of affected employees are non-English speakers, California law requires that you translate the disclosure to a language they understand.
The stipulations in this step are very critical. If you violate any of them, the election will be null and void, and your plan to implement the alternative workweek won’t move forward.
For the proposed schedule to be valid, two-thirds of the affected workers must adopt it in a secret ballot election. You can conduct the election, but in some cases, such as when affected employees complain to the labor commissioner, you may be required to find a neutral third party to manage the election.
Regardless of the party conducting the election, it should occur during the affected employees’ regular working hours. Moreover, the election must take place at the affected employees’ job site, and you (the employer) bear the total cost.
Lastly, you cannot encourage employees to adopt or oppose the proposed workweek schedule. In the same breath, you cannot fire or discriminate against employees for airing their opinions either in support or opposition to the proposed plan.
Once you conduct the election, submit the results to the Division of Labor Statistics and Research at the Department of Industrial Relations within 30 days. The results report should be a public document showing the final tally, the number of affected employees, and the nature of your business.
Once you adopt the alternative workweek schedule, you can’t demand that affected employees switch to the new work hours immediately. The law stipulates that employees may stick to the old schedule for at least 30 days after the declaration of the final results before transitioning to the new schedule.
The alternative workweek schedule should be renewed regularly, preferably at the beginning of the calendar year.
Employees may repeal any alternative workweek schedule authorized by the California Labor Code section. A third of the affected employees should petition the agreement to initiate the repeal process.
A secret ballot election should take place at most 30 days after the submission of the repeal petition. Likewise, the repeal election must be at employees’ worksite during regular work hours.
A two-thirds vote by affected employees is all it takes to annul the alternative schedule.In this case, you must comply within 60 days of the election.
However, the Division of Labor Standards Enforcement may grant more time for compliance when you provide solid proof of undue hardship emanating from the revocation of the alternative schedule.
Note that the repeal election cannot be held less than 12 months since the same identifiable work unit held an election to adopt the alternative workweek schedule.
In other words, if employees adopt an alternative workweek schedule in January, they can only have a repeal election in January of the following year.
The alternative workweek schedule has advantages and disadvantages.
The biggest perk is that this flexible workweek arrangement helps you sidestep overtime pay. The California overtime law requires employers to compensate employees for work done over 8 hours a day.
With the alternative workweek schedule, employees can work 10 hours per day within a 40-hour workweek, and you don’t have to compensate them for hours above 8 hours per day. Remember that if employees exceed the work hours stipulated in the alternative workweek schedule agreement, you still have to pay them for overtime work.
The alternative workweek schedule is also beneficial for the employees. For example, adopting a 4/40 workweek schedule means employees will work four days a week. They still have to hit the weekly work hour limit, but the compressed schedule gives them an extra day in a workweek to rest or run their errands.
On the flip side, the alternative workweek schedule can be costly. First, the process of adopting the workweek schedule isn’t straightforward. Creating the proposal, holding an election, and implementing the alternative workweek leave room for missteps and roadblocks. Not to mention, your company bears the total cost of these procedures.
Second, the company will be subject to huge fines and compensation in case of a violation. For example, if you’ve more than 5% of non-English speakers in the work unit and fail to translate the disclosure in their language, that’s a violation.
If you press ahead with the plans and implement the workweek schedule, you could be in for huge compensation. You have to pay employees two or three years of overtime they accrued while implementing an invalid alternative workweek schedule. Not to mention that you’ll incur legal fees and penalties for delaying overtime pay.
Timeero scheduling comes in handy during the implementation of the alternative workweek schedule. Remember, manually tracking employee hours, overtime, and double time can be difficult. Timeero allows you to automate scheduling and track employee time accurately.
Here are the main benefits of using Timeero for alternative workweek scheduling:
Timeero enables you to create employee schedules that align with the agreed alternative workweek schedule.
If you adopted a 4/40 schedule, you only need to create a schedule for the day when your workweek starts. If the workweek begins on Monday, make a 10-hour schedule (such as 9:00 a.m. to 7:00 p.m.) and check the “repeat” box.
Next, configure the repeat type to “weekly,” set the repeat end data, and select Monday, Tuesday, Wednesday, and Thursday as the repeat days. Assign the schedule to relevant employees and hit “publish.” Timeero will send affected employees an in-app and email notification about their new shifts.
The alternative workweek doesn’t follow the California overtime rule. In this case, you pay employees one and a half times for hours over 10 hours and double overtime for hours over 12 hours per day. Here’s how you can configure the alternative workweek schedule:
In the company settings, click “Add New Overtime Rule” to open the overtime configuration page. Set the overtime and double overtime pay rates and select the “custom overtime rules” option. Set the weekly overtime to 40 hours, daily overtime to 10 hours, and daily double overtime to 12 hours. Click “save” and that’s it.
Once you create the schedule and set the overtime threshold and rates, the next thing is to track time. Timeero time tracker is easy to use for employees, including the non-tech savvy. It notifies employees of an upcoming shift, and you can set reminders to prompt them to clock in.
Clocking in is as easy as selecting the job and hitting “clock in” on the mobile app or Timeero terminal kiosk. When employees clock in, Timeero will automatically track their time, including rest and meal breaks, and compute their overtime and double overtime pay.
This way, when the pay period elapses, you’ll only need to generate relevant reports and forward them to the finance department for remuneration. Remember that with geofencing and facial recognition, Timeero eliminates offsite and buddy punching, ensuring employees’ timecards are accurate. Learn more about the features in our full Timeero review.
Adopting an alternative workweek schedule in California requires jumping through many hoops. We have highlighted the most critical stipulations when implementing the alternative workweek schedule.
However, other underlying issues would require the help of an HR or legal expert well-versed in California employment law. Before you move forward with the plans, seek legal counsel to clear hurdles that may hinder the proper development, implementation, and running of the alternative workweek schedule.
In addition, use reliable employee scheduling and time tracking tools to smoothen the transition and the implementation. Timeero is the best GPS time tracking and employee scheduling tool out there. Start a 14-day free trial today and take Timeero features for a whirl, risk-free.
An alternative workweek schedule is any schedule that doesn’t match the regular California workweek schedule and overtime rules.
A 9/80 workweek is an alternative schedule where employees work eight days of 9 hours followed by one eight-hour day. Employees work 80 hours in nine days, hence the name 9/80 workweek.
In a 4/40 workweek schedule, employees work four workdays of 10 hours daily. In other words, they work 40 hours in just four days of the workweek, hence the name 4/40.
The California alternative workweek schedule overtime rule requires employers to pay employees for hours over the agreed limit. Employers pay workers overtime for hours above ten and not more than 12 hours a day and double overtime for hours over 12 hours.