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IP: Re: If you work at a California company, look out (AB60)
From: Dave Farber <farber () cis upenn edu>
Date: Wed, 14 Jul 1999 17:19:43 -0400
X-Sender: agoel007 () mindspring com X-Mailer: QUALCOMM Windows Eudora Light Version 3.0.5 (32) Date: Wed, 14 Jul 1999 12:50:54 -0700 To: farber () cis upenn edu From: Arvind Goel <agoel () orchest com> Subject: Re: IP: If you work at a California company, look out (AB60) Cc: declan () well com Wait a minute! This report (and the Wired story) seems to be an overreaction engendered by a misunderstanding of standard labor laws. Here's my read - Firstly, the law and change therein does NOT apply to professional workers, also called 'exempt' employees. Netscape's programmers (see Wired story) will not be affected as long as they make twice the minimum wage. $30,000/year programmers at startups will not be affected. Companies that manufacture hardware may be affected if they employ hourly assembly workers. Secondly, affected workers are *already* paid 1.5x wage for time worked over 40 hours in a week. Hourly workers are already required to use time cards or other systems of tracking time worked. This is certainly standard practice in New York, and probably elsewhere (apparently in CA as well). The new bill does not introduce any new privacy invasions. The bill wants workers to be paid 1.5x for time worked over 8 hours in a day. This will reduce flexibility - workers will be less able to 'make up for lost time' - but even that can be changed by collective consent if most workers want to keep the flex time option. The bill does not appear to be motivated by a desire to boost wages. Informed legal opinion is welcome, but it seems to me that the bill is not as draconian as it is being made out to be. Arvind At 07:12 AM 7/14/99 -0400, you wrote:From: Declan McCullagh <declan () well com> Subject: FC: If you work at a California company, look out (AB60) The governor of California is about to sign a particularly pernicious bill into law. It says companies must pay their employees overtime if they work more than an eight-hour work day. Obviously anyone of good conscience wants everyone to be well off as possible. The question is, though, how best to do it? This soon-to-be-law's counterproductive effect: Less efficient companies or startups already teetering on the edge of cashflow sufficiency will go out of business. To take this a step further, we'll have higher production costs in the near term, which means higher prices, which means people can buy fewer California products with the same paycheck. In the long term? Firms have hired the number of employees necessary to complete a certain amount of work. In the long run, employees could simply be given a reduced salary so their inflated overtime wages will roughly equal their old. (Actually depending on salary, the law may restrict this.) It means reduced privacy for individuals (though I don't see any privacy groups complaining). California firms covered by the law will be required to track their employees' behavior and put in a kind of time clock system with additional record-keeping and monitoring of workers. The additional staff-hours required to record time worked will also cost the firm more. It puts California firms at a competitive disadvantage compared to companies located in other states or other countries. In no case will this law reduce California companies' costs; it can only increase them and give a nice boost to firms in Seattle or Boston. Again, marginal companies who could barely survive before are history. It could reduce investment in California companies and cause would-be entrepreneurs to launch their firms elsewhere. Why go through the headaches of dealing with this bureaucratic nonsense when other jurisdictions are happy to be home to the next yahoo.com? California's tax base would be affected. It goes against the history of tech startups, where someone may be paid a pittance but rewarded with fat stock options. Companies can no longer employ, say, 100 people at $30,000 a year and expect 80 hours a week at the same salary. They can't cut wages in half and hire twice as many 40-hr/wk people because (based on my reading of the law) it sets a fairly high minimum-wage floor for salaried employees. If you have just $3 million in venture capital and you need those 80-hour workweeks, your company may not exist. Oops. The Industrial Welfare Commission (bureaucrats really are 50s relics, aren't they?) will decide what firms are affected or not. This would be a perfect opportunity -- I'm not saying it will happen, just that it could happen -- for well-connected lobbyists to try to screw over their competitors by immunizing themselves at the expense of their rivals. Will computer engineers be exempt but not software engineers? Who decides this? (Talk about a perfect catalyst for lawsuits...) It's not that California politicos are malicious; they may even be well-intentioned. But they clearly don't look at the long-term consequences of their favorite pieces of legislation. If they did, they'd see that if their goal really was to boost wages, they could just go ahead and cut taxes. But instead they're happy pandering to the economically-illiterate. The text of the bill: http://www.leginfo.ca.gov/pub/bill/asm/ab_0051-0100/ab_60_bill_19990708_enro lled.html A Wired News story on the bill: http://www.wired.com/news/news/politics/story/20692.html -Declan -------------------------------------------------------------------------- POLITECH -- the moderated mailing list of politics and technology To subscribe: send a message to majordomo () vorlon mit edu with this text: subscribe politech More information is at http://www.well.com/~declan/politech/ --------------------------------------------------------------------------_______________ Arvind Goel agoel () orchest com
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