A bitter battle from the 1990s may get a replay in Sacramento, as business groups, fresh off election victories that restricted lawsuits and overturned a health care mandate, try to repeal the state's daily overtime law.

"This is the number one concern for small businesses right now," said Martyn Hopper, state director for the National Federation of Independent Business.

The law, which requires employers to pay hourly workers overtime if they work more than eight hours a day, was overturned in 1997. That's when members of a five-member commission appointed by then Gov. Pete Wilson voted to require overtime only after an hourly worker puts in more than 40 hours in a week.

At the time, employers argued that a weekly overtime limit would better accommodate flex-time schedules. They also argued that California was one of only three states to require daily overtime pay, putting it at a competitive disadvantage.

But the labor community labeled it a $1 billion "take-away" from working families, and it became a potent campaign issue for Gray Davis as he sought the governorship the following year. Within days of being sworn in, Davis had legislation introduced to restore daily overtime and he signed it into law in July 1999.

The business-friendly Schwarzenegger administration has changed the landscape, although workers' compensation reform and the defeat of an employer health care mandate were the top priorities of business last year.

Now, Hopper said, there's talk of forming a coalition of business groups to push for legislation that would repeal the overtime law.

Labor groups vehemently oppose any move.

"We found that when Pete Wilson took daily overtime away, we had one of the largest groundswells of activation of workers that we've seen in a long time," said Art Pulaski, executive secretary and treasurer of the California Labor Federation. "Let them introduce this again. It will be a battle royal and a grand mobilizer for lots of workers."

If Schwarzenegger were to support a repeal of daily overtime, he's likely to run into the same buzz-saw of opposition that hit after an obscure commission last month voted to change the rules regarding lunch breaks for hourly employees. The commission ultimately backed off and agreed to hold hearings this month.

A spokeswoman for Schwarzenegger said the governor does not comment on legislation that has not been introduced.

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