As employees return to the office after two years of remote work due to the pandemic, efforts to reduce the work time during the workweek have gained steam. California legislation is on the frontline of this change, with a new bill that reduces the standard workweek to 32 hours – without any reduction in employee pay. This provides a mandated three-day weekend all year round. Sounds nice? Here’s what you need to know about this new bill.
Assembly Bill 2932
Short workweeks may become a reality for employees in California due to Assembly Bill 2932 (AB2932). On March 24, 2022, AB 2932, which seeks to amend California’s overtime pay law, was proposed. AB 2932 redefines a “workweek” for California employers with more than 500 employees. If the bill passes, it requires employers to limit the workweek to 4 days, or 32 hours. Employers will need to compensate employees who work in excess of 32 hours per week at 1.5 times the employee’s regular rate of pay. Although the bill changes the hours per week an employee works, it continues to define a standard workday as eight hours of labor.
Keep in mind that for employers with less than 500 employees, the bill’s language remains the same, and will continue to define a “workweek” as a 5-day, 40-hour, week. This means that overtime wages will still be provided to employees who work more than 40 hours a week.
How Will Businesses Be Affected by AB 2932?
As mentioned, employers with more than 500 employees will be affected by this law. Although the majority of California employers will not be impacted, there will be significant changes for the employers it does impact.
Benefits of a 32-Hour Workweek
Those who advocate the 32-hour workweek believe that the AB2932 will benefit both employers and employees alike. This is because AB2932 promotes a better employee work-life balance and health benefits. It reduces healthcare premiums for employers and lowers operational costs for businesses. A 32-hour workweek also offers a solution to growing issues in the labor market that the pandemic may have heightened, such as stress, burnout, and retention.
Additionally, a 32-hour workweek appeals to those who work in a competitive labor market and helps retain working parents or other employees who benefit from a flexible work schedule. Furthermore, a shorter workweek not only provides employees with increased flexibility but also benefits employers due to lower overhead costs like office supplies and electricity usage.
Disadvantages of a 32-Hour Workweek
While AB2932 may seem beneficial to many workers, it’s not exactly the case for employers. For many employers, it can be too costly to compensate overtime wages for a 32-hour workweek. This is due to the fact that with current legislation, employers are required to pay overtime wages for any employee who works over 40 hours per week. If AB2932 passes, employers would be required to compensate employees the same amount of pay for fewer hours worked. A shorter workweek could also have a negative impact on customer service, as businesses will have to address issues of staffing and productivity as they pivot to a 4–day workweek.
Not to mention, a 32-hour workweek may not be feasible for hourly employees in all industries especially if fewer hours in the workday mean less time to complete job duties. Instead of providing relief, for many employees, it may actually lead to more stress by packing 5 days of work into 4. And if employers are unable to or do not want to pay overtime wages for hours in excess of 32 hours per week, it can lead to increased wage and hour claims and confusion on how to manage part-time hourly employees.
What Does This Mean For Your Business?
Currently, AB2932, as drafted, would only apply to companies with 500 or more employees. However, if this becomes successful, it will likely only be a matter of time before a 32-day workweek becomes the requirement for all California employers. The ultimate question, for now, is whether the bill will pass. The legislature has until August 31, 2022 to pass AB2932, and if it passes, Governor Newsom has until September 30, 2022 to sign or veto the bill.
Although this bill is still in its proposal phase, if your business has 500 or more employees, now is a good time to reassess and evaluate the current policies you have in place. Take this time to take a closer look at your policies and practices to minimize the possibility of violations and to immediately resolve any issues. We recommend employers consult with their legal counsel to better navigate this new landscape. If you need any assistance, contact Hackler Flynn & Associates.
DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.
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