Abill recently introduced in the California Assembly seeks to make the four-day workweek the standard for large employers, replacing the familiar five-day workweek.
AB 2932, introduced in February by Assembly Members Cristina Garcia and Evan Low, is currently working its way through the legislative process in the Committee on Labor and Employment.
The bill does not explicitly mandate a four-day workweek. Rather, it amends Labor Code section 510 to say that nonexempt employees are entitled to overtime pay at one and one-half times their regular rate of pay for any work in excess of 32 hours in any one workweek. Currently, nonexempt employees are only entitled to overtime after working 40 hours in a workweek.
In addition, the bill prevent employers from reducing an employee’s compensation to avoid paying the additional overtime that would be due if the employee continues to work 40 hours per week:
The compensation rate of pay at 32 hours shall reflect the previous compensation rate of pay at 40 hours, and an employer shall not reduce an employee’s regular rate of pay as a result of this reduced hourly workweek requirement.
Significantly, the new overtime requirement would only apply to employers with 500 or more employees, which translates to about 2,600 companies in California covering roughly 20 percent of the state’s workforce.
Co-sponsor Garcia stated that she introduced the bill in response to the so-called “Great Resignation,” the large number of employees who quit their jobs during the two-plus years of the COVID-19 pandemic. “They’re sending a clear message they want a better work-life balance–they want better emotional and mental health.” Further, Garcia noted that “there has been no correlation between working more hours and better productivity.”
Perhaps not surprisingly, the California Chamber of Commerce has labeled the bill a “job killer.” The increased labor costs that will result from implementation of AB 2932, the Chamber argues, “will reduce businesses’ ability to hire or create new positions and will therefore limit job growth in California.”
At the federal level, the Fair Labor Standards Act continues to provide that overtime at the rate of one and one-half times the regular rate of pay must be paid for any time worked in excess of 40 hours per workweek. However, last July, U.S. Representative Mark Takano (D-CA) introduced H.R. 4728, which, like the California bill, seeks to lower the overtime threshold from 40 hours to 32 hours.
Although the fates of both AB 2932 and H.R. 4728 are uncertain, a number of companies, such as Kickstarter, Bolt, and Panasonic, have instituted permanent, seasonal, or pilot four-day workweeks. However, when reading about these types of programs, it’s important to keep in mind that instituting a four-day workweek and paying nonexempt employees overtime after 32 hours are not quite the same thing. In the former case, a company may say to its employees, both exempt and nonexempt alike, that it will now simply operate for only four days per week instead of five, so any lowered threshold for overtime may be rendered basically moot.
In any case, it will be interesting to see whether, as we attempt to exit the COVID-19 pandemic and deal with the fallout from the Great Resignation, the four-day workweek ends up being the new standard.
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