Repeal of Overtime Rule Hits Part-Timers Hardest

If you work part time, get ready for longer hours on the job--but less overtime pay.

Those changes are among the likely, if little-noticed, results of the California Industrial Welfare Commission’s decision last week to repeal the state’s daily overtime rules covering 8 million workers.

If the repeal survives court and legislative challenges, as expected, it will mean that many California employers no longer will be obligated to pay overtime whenever a worker puts in more than eight hours in a day. Instead, those employers will be subject to the looser federal requirement, which mandates overtime pay only if a worker puts in more than 40 hours in a week.

The result: Part-timers who work long days but less than 40-hour weeks will lose out on overtime pay. Under the daily overtime repeal, “The people who are going to get hurt the most are part-timers, and we’re already hurt by not getting benefits like health insurance and paid vacations,” said Rosemary Hall of Studio City, a part-time law firm secretary.

Probably the main beneficiaries are employers, especially restaurants and other retailers, that have juggled work schedules so that weekend part-timers head home before hitting the eight-hour threshold.

“I’ll have the freedom to schedule some people nine or 10 hours,” said a pleased Thomas R. Burney, president of a firm that owns eight Jiffy Lube auto service franchises in the Los Angeles area.

In fact, Burney said his weekend employees, many of whom are students, often want more hours, and he contended that they will benefit from the daily overtime repeal. Even though these employees wouldn’t automatically receive overtime pay, he said, “They would much rather work two 10-hour days and get 20 hours of straight time [pay] than 16 hours of straight time” for two eight-hour days.

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Most of the debate at the tumultuous IWC meeting last week reflected concerns about whether ending daily overtime pay would benefit or hurt full-time employees.

Supporters of the repeal--which won’t take effect until July 1, at the earliest--argued that ending daily overtime would permit full-timers more flexible schedules. They contended that more employers will be willing to let workers take off early one day to, say, take care of children and then make up the lost hours by working extra time another day.

Opponents maintained that the change will lead to more employees being forced to put in 12-hour days against their will.

But for full-timers, because the 40-hour federal standard remains in effect, the possibility of losing out on overtime pay isn’t as much of an issue.

Yet the change could have a big impact on part-timers such as Hall. Ordinarily, she works evenings, putting in four hours a day, five days a week.

Occasionally, though, if someone on the day shift is ill or on vacation, Hall likes to fill in and work a 12-hour day. One of the pluses is that, under current state law, she receives time and one-half pay for four of those 12 hours.

Hall says she counts on that overtime money to pay for her own health insurance, and also regards the extra income as compensation for not receiving paid holidays, vacations or sick days.

With the daily overtime repeal, Hall said, getting a full-time job looks more attractive. “At least that way I can get benefits,” she said.

Still, some employers may keep paying a premium for eight-hour-plus days--particularly to workers accustomed to receiving the extra money--even after a repeal of the state law takes effect.

“It’s become an accepted and expected part of compensation,” explained Stephen Trejo, a labor economist at UC Santa Barbara who has studied daily overtime.

For employers that scrap daily overtime pay, he speculated, “the cost of hurting morale could be more than the benefit of the savings” in wages.

At the same time, Trejo estimates that only 1% to 2% of the 8 million workers covered by the rules facing repeal stand to lose money. “Most workers won’t be affected because they don’t work overtime or, if they do, they’re covered by the federal law,” he said.

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With some part-timers working longer hours, though, will other part-time or full-time jobs be lost? Trejo and other experts speculate that jobs could be lost at some companies, but that the overall labor market won’t lose, and may even gain, jobs. They maintain that the repeal of daily overtime rules will improve the state’s economic climate and, thus, create more employment.

The daily overtime repeal, covering workplaces with more than half the state’s work force, applies to such major industries as manufacturing, retail and wholesale trade and transportation. It also applies to the broad occupational category of professional, technical, mechanical and clerical workers.

Many other workers have never been subject to California’s daily overtime limits. Workers in that category include federal and state employees and exempt managers and professionals. Unions also have been free to waive daily overtime requirements in their labor contracts.