Posted on May 14th, 2020
Overtime, like most aspects of CA business, is changing.
Read this article learn about some of the changes in overtime laws in California that you need to know.
As a business owner, you need to know about some significant changes in California labor law in 2020. Recent shifts in overtime laws will directly impact your bottom line.
New regulations just reclassified thousands of independent contractors as employees, and new arbitration rules will influence how you resolve workplace disputes. We are here to help you navigate the new regulations. Understand the future of overtime laws in California and don’t get left in the dark.
Overtime Laws in California: The Basics
First, some definitions. According to the State of California Department of Industrial Relations Website:
- Overtime is any time worked in excess of a workday or workweek.
- By definition, 8 hours constitutes a workday. A workweek is 40 hours.
- An employer is required to pay 1.5 times the hourly wage for hours worked over a typical 8 hour day.
- An employer is required to pay two times the hourly wage for hours worked over 12 hours in a day.
- An employer is required to pay two times the hourly wage for hours worked over 8 hours on the 7th day, if the employee has worked seven consecutive days
CA Overtime Laws Redefine Employees
Overtime law applies to employees only. Some exceptions include:
- Employees deemed professional, administrative, or executive. In other words, most salaried employees.
- Most union workers. Collective bargaining agreements typically have overtime provisions built-in.
- Outside Salespersons
- Taxi drivers, or drivers in industries where their hours are predetermined. Note, this does NOT include Uber and Lyft drivers.
There are more categories of employees exempt from California overtime laws. More types of employment are exempt, as well. You can find a summary at the California Industrial Relations Website.
How Recent Changes in California Law Affect You
In 2020, the state of California enacted some significant changes in the labor law. Most notably, Assembly Bills 5 and 51.
The new bills have a direct impact on overtime law because of how employers must now define employee versus an independent contractor. Also, modifications in dispute settlement will no doubt influence overtime rulings in the future.
Independent Contractors to Employees
California recently created historic regulations on what defines independent contractor status. Assembly Bill 5, which went into effect in January, outlines the “ABCs” of what defines an independent contractor (IC):
- A. A worker is an IC if they are not under the direction or control of the employer.
- B. A worker is an IC if they have other work.
- C. A worker is an IC if they do a similar type of work elsewhere. If the worker does other rideshare jobs, drives a taxi, etc.
No doubt, these bills directly targeted the rideshare companies Uber and Lyft, and the enormous gig economy they created. rideshare as their primary source of income. They drive full time and, the argument goes, must
Thousands of drivers use follow specific rules and guidelines that the rideshare companies dictate.
The win on behalf of rideshare drivers has turned thousands of independent contractors into employees overnight.
And it’s not just Uber and Lyft drivers. Based on the new definition, an entire swath of the work population can potentially now call themselves ICs instead of employees.
ICs and Overtime Law in California
Now that thousands of rideshare drivers are employees, they fall under California employment law statues, which includes overtime.
You can already imagine the maze of problems brewing here.
An essential aspect of overtime is a firm boundary around what defines a workday and a workweek. Agreed upon hours and days make it possible to understand the margins. Without time, there is no overtime, so these boundaries are essential.
Rideshare gigs, and most gig economy jobs, in general, lack this definition. Working when you want, for as long as you want, is the appeal of gig-work in the first place.
A Lyft driver may start a 3 pm, drive a few hours, then take an hour break. He then may go back and drive for another hour or two. He may do any combination of driving time and break time throughout the week. He may work one day, four days, or once a month.
Where does his week begin and end?
You can see the massive logistical problem this poses, particularly when it comes to overtime law.
Endemic to the issue is this: the rideshare companies Uber and Lyft never meant for their service to be a full-time job. By design, any single gig in the gig economy is supposed to be part-time. Rideshare mutated into full-time work out of necessity, and now the structure has to go through some significant growing pains to catch up.
If you are a business owner who suddenly has employees instead of ICs, you may find yourself with an entirely new set of issues, current pandemic aside.
Our legal team thrives on problem-solving for employers like you. We can help you navigate the ever-expanding field of employment law, especially when it comes to California overtime laws.
Changes in Arbitration Rules
Arbitration as a means of settling disputes is not uncommon. Throughout the country, the majority of employers use mandatory arbitration. Resolving workplace disputes in-house is a way to avoid costly court fees and potential bad publicity.
According to Assembly Bill 51, as an employer, you can still require arbitration. The only difference is that now you can no longer retaliate by firing or threatening employees who don’t sign.
Many overtime disputes have ended up in court. Whether the employee circumvents the arbitration mandate, or whether both parties decide for themselves that the court is the best place to resolve a dispute. Now more disputes relating to overtime will likely end up in court as a result of this decision.
As an employer, you may find yourself in an overtime dispute that does not make it through arbitration. California courts notoriously side with employees when it comes to issues regarding overtime, and you will need the guidance of specialists like us.
Our team has battled our share of workplace disputes, and we know overtime laws in California. If you feel you’re being taken advantage of, we can help. Contact us today for a free consultation.
