A California Court of Appeal has declared that Industrial Welfare Commission (IWC) Wage Order 16-2001 ("Wage Order 16"), regulating wages, hours and working conditions for employees in the on-site construction and mining industries, is valid. If they have not already done so, employers in the construction industry should promptly ensure their practices comply with all of the requirements of Wage Order 16, including whether a new alternative workweek schedule election is necessary. See Small v. Superior Court, 55 Cal. Rptr. 3d 410 (2007).

In 1999, the California Legislature enacted Assembly Bill 60 (AB 60). AB 60 restored the eight-hour workday and mandated overtime pay for all non-exempt employees in all industries for work in excess of eight hours in a workday. It allowed, however, an exception for employees working an alternative work schedule, such as a four 10-hour-day workweek instead of a traditional five 8-hour-day workweek. An alternative workweek schedule is “deemed adopted only if it receives approval in a secret ballot election by at least two-thirds of affected employees in a work unit.”

On January 28, 2000, the IWC adopted Interim Wage Order-2000 (Interim Wage Order), which applied to all non-exempt employees in California, including, for the first time, employees in the on-site construction and mining industry that would later be covered by Wage Order 16. Wage Order No. 16 became effective January 1, 2001. Among other things, it requires a new alternative workweek schedule election whenever “the number of employees that are employed for at least 30 days in the work unit that adopted an alternative workweek schedule increases by 50% above the number who voted to ratify the employer-proposed alternative workweek schedule”.

In Small v. Superior Court, a group of construction workers sued their employer for unpaid overtime wages allegedly owed for working over eight hours in a day while working in an alternative workweek schedule. The basis of the worker's claim was that, although workers had voted to adopt a four 10-hour day alternative workweek schedule in December 1999, the employer construction company did not conduct further alternative workweek schedule elections after January 1, 2000 when AB 60 became effective. The trial court concluded that the employer had properly adopted the alternative workweek schedule in December 1999 and that Wage Order 16 did not invalidate the alternative workweek schedule or require another election because Wage Order 16 is invalid and "unreasonable, arbitrary, capricious and unfair."

The Court of Appeal reversed the trial court and held that Wage Order 16 is valid. The Court of Appeal ordered the trial court to reevaluate whether, "assuming a secret ballot election to adopt an alternative work schedule was conducted in December 1999, [the employer] was required to conduct one or more elections after AB 60 became effective on January 1, 2000."

Employers in the construction, drilling, logging, and mining industries and similar occupations should promptly evaluate their practices to ensure they are in full compliance with Wage Order 16. Employers who previously held an alternative workweek schedule election before AB 60 became effective should determine whether a new election is necessary to comply with the requirements of Wage Order 16. If you have questions about these issues or any other employment-related matter, please contact one of our Labor and Employment attorneys.