Silicon Valley's Overtime Mandate

A new California measure would require employers to pay overtime for anything over eight hours in a single day. Critics claim it's bad business, and small start-ups will be hit the hardest. By Heidi Kriz.

Many have been lured by Silicon Valley's sweet siren call, one that promises fun, creativity, and riches in exchange for ... your life. Or at least 80 hours of it, each week.

But if California Governor Gray Davis has his way, a new bill he's expected to sign this week will put an end to that.

The Eight-Hour Day Restoration and Workplace Flexibility Act mandates overtime pay for anything more than an eight-hour work day.

"The governor thinks this is a commonsense approach for working California families," said Davis spokesman Michael Bustamante. Of course, the tech industry thinks it's anything but.

"California government should be trying to take obstacles out of the way of California business," said Mark Pincus, founder and CEO of software company Tioga. "Instead, this new bill is just creating new obstacles, especially for small start-ups. It flies in the face of the entrepreneurial spirit of Silicon Valley."

The bill, authored by Assemblyman Wally Knox (D-Los Angeles), would require that employers pay employees time-and-a-half for anything over eight hours worked in a single day. The current law requires time-and-a-half pay for employees who work more than 40 hours in a single week.

Under the new law, critics say, if an employee takes two hours off one day on urgent family business, and wants to make it up by working a 10-hour day later that week, her employer would be required to pay her overtime for the additional two hours.

"This is just the sort of thing that will stick it to the small start-up types," said Pincus.

Many industry associations agree. "Especially in Silicon Valley, where you have 24-hour-a-day companies, it's important for individuals to have a flexible, negotiable work schedule," said Kelly Slattery, program manager for the American Electronics Association.
Under the new law, which industry observers say is union-backed, employees would only be able to make changes to their schedule through a two-thirds majority vote, by secret ballot, in each work unit.

"This is creating a union-type situation, where you have a group of employees setting the standards for individual employees," said Allan Zaremberg, president of the California Chamber of Commerce. "Silicon Valley companies will almost certainly discourage that."

The "eight-hour day" bill does have a grandfather clause that allows for longtime employees to continue under a 40-hour-work week overtime system. But in the case of those working 40 hours a week in four days (10 hours a day), a request would have to be made to continue under that arrangement. New employees won't have that option. That means you could have two employees at the same company, doing the same job and pulling the same hours, but the new employee would make more money than his veteran colleague.

"Obviously, this will create strife," Zaremberg said.

Nevertheless, there are many Silicon Valley workers who would favor the bill, believing that exploitation of employees does go on, especially in the name of the so-called start-up culture.

"I remember at Netscape, there were these rooms with futons, the idea being that you didn't have to ever go home -- you could just catch a little sleep and go back to work," said Aga Cena, founder of Milo, an Internet-based products and services company.

"There were also awards given out to people for staying until 4 a.m. -- which is crazy, because nobody is going to be doing anything useful at 4 a.m." said Cena, who worked as a freelance programmer for 11 years. "You don't want to squeeze your employees like a tube of toothpaste."