A bill proposed in the California State Legislature, AB-2932, would mandate a four-day workweek for employers with more than 500 employees in the state. If passed, the proposal would amend Section 510 of the Labor Code to redefine a “workweek” from 40 hours to 32 hours. Here are the other important details:
- AB-2932 would require employers to pay workers their regular 40-hour-per-week rate despite the reduction to a 32-hour workweek;
- Reduce the weekly threshold for payment of overtime (1.5 times) compensation from 40 hours per week to 32 hours;
- Eight-hour workday and single-day overtime rules remain the same;
- Impact on exempt employees still under discussion; and
- Does not apply to workers with collective bargaining agreements.
Legislators in the support of the bill believe it will lead to happier and more productive workers and make California employers more attractive to labor during a time of great disruption in the labor market from the so-called “great resignation.” Opponents caution that such a proposal would result in a prohibitive increase in labor costs that would be impossible for employers to comply with, resulting in stunted job growth in the state. Regardless, support for a switch to the four-day workweek is growing, and businesses of all sizes should begin to consider how they may be impacted and best practices to mitigate any potential violations of law.
- Wage Costs
As a general (yet very important) matter, employers subject to this bill, if enacted, would experience a substantial increase in wage costs (an estimated 12%). Businesses will need to find creative solutions to address this expensive problem.
- Day-to-Day Function
Employers must consider and plan for the impact of a shortened workweek on the day-to-day aspects of the company, particularly regarding operational consistency and customer experience. Employers should prioritize communication and training with employees to address the differences imposed by a four-day workweek.
- HR, Benefits, and Payroll
Review and update all payroll, benefits, and HR processes and policies to comply with the new wage and hour laws accompanying the reduced workweek. From overtime compensation to the rate of vacation day accrual, many of these items are based on a forty-hour workweek and will need to be updated.
The four-day workweek is gaining consideration in other states and among private employers across the nation. While AB-2932 is still in the committee review stage, it represents the latest step.
In the ever-changing landscape of California labor law, the advice of an experienced attorney can help you take proactive steps to protect your business. Contact us to help you protect your business by emailing us at info@mnklawyers.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.
