BRACE FOR NEW OVERTIME LAW
Many Silicon Valley
companies expected to see their labor costs go up after the state's new
overtime law went into effect Jan. 1, but some industries aren't sure
whether they'll be affected at all.
because the California Industrial Welfare Commission has until July 2000
to interpret parts of the law, even deciding whether certain industries
will be exempted from its provisions.
law, backed by organized labor, was signed earlier this year by Gov. Gray
Davis. In general, it requires most California employers to pay overtime
rates to workers after eight hours of work in a day, rather than after
40 hours of work in a week.
that have collective bargaining agreements with unions are exempt from
the new law. At least until next July, so are licensed hospitals, ski
resorts and a number of other businesses that were eventually exempted
from the original 8-hour-day law that's governed overtime pay in California
since 1911. The IWC will decide which of those groups will continue to
be exempt and may also consider requests for exemptions from other industries.
The IWC is
the same agency that ended daily overtime requirements in California beginning
in 1998 in a regulatory move that was supported by business interests,
who said it would make them more competitive with firms in other states,
most of which abide by the federal 40-hour workweek.
labor fought back with AB 60, "The 8-Hour Day Restoration and Workplace
Flexibility Act of 1999," which was backed by the California Labor Federation
companies likely to be faced with tough decisions and potentially higher
costs: manufacturers—including some of the valley's largest technology
firms—and nonunion construction companies.
"It will have
an impact. It all trickles down and ultimately somebody is going to pay
for this," said Tony Silveria of Gen-Con Inc., a Campbell-based general
contractor. His company's labor costs could increase if it hires nonunion
manufacturers here employ nonunion work forces.
more the traditional computer makers that would have to rethink the whole
situation," according to Teresa alternative schedules
them to work up to 10 hours a day within a 40-hour week without overtime
pay. And unions can negotiate alternatives to the regulations for their
valley general and subcontractors are unionized and won't be affected,
a substantial number of carpentry, dry walling, roofing and other building-related
trades here are nonunion. Higher labor costs for those companies will
be felt in the cost of construction.
will just increase the price of the project," said Diane Birch, human
resources director for W.L. Butler, a Redwood City-based general contractor.
W.L. Butler has about 115 employees; of those, 20 are paid by the hour
and therefore could be affected by the law. The general contractor builds
retail stores like Mervyn's, Target and Orchard Supply Hardware stores.
the administrative end, the new law will be a major headache because many
of W.L. Butler's hourly employees work at several job sites. It will be
job budget should incur the overtime costs, Ms. Birch said.
probably feel the increased costs. There is a huge amount of renovation
and seismic retrofitting under way funded by bonds. General contractors
will have to pay more for subcontractors, and that will leave schools
with less money for other projects, Gen-Con's Mr. Silveria said.
IWC will discuss how construction and other industries will be affected
by the law during public hearings in November and December.
Steuben, a senior consultant for Innovative H.R.M. Inc., a Santa Clara-based
human resources management consulting firm, said the new law potentially
could reduce companies' flexibility, but it all depends on how the law
is interpreted by the IWC.
are groping at the same time everyone else is," he said.
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