California’s push for a 32-hour workweek explained, and how to prepare

Summary:

• California is considering a 32-hour workweek bill for businesses with over 500 staff

• 4 day weeks have been tested in Japan and Iceland with great success

• Employers could suffer higher overtime and hiring costs as a result of the bill

• Prepare for a 32-hour workweek by reassessing your workforce management

Californian workers may want to hold off on posting their apartments on Craigslist and hightailing it in UHauls to Austin – a select group of them might be due for a shorter workweek in the near future.

A new bill is currently working its way through the Californian legislature proposing a 32-hour workweek for businesses with over 500 employees. AB 2932 requires that “work in excess of 32 hours be compensated atthe rate of no less than 1 1/2 times the employee’s regular rate of pay.” In addition, all work going beyond 12 hours a day or seven days a week is paid at double an employee’s regular rate of pay.

The bill also prohibits employers from reducing an employee’s regular rate of pay as a consequence of the change in workweek hours. 

Backed by four Democrat cosponsors, the groundbreaking bill would reportedly affect nearly 2,600 Californian businesses. Central to the idealogy behind the bill is that people will work less time while earning the same compensation that came with a traditional 40-hour workweek, all while increasing job satisfaction and productivity. 

While burnt out US workers everywhere are most likely salivating at this legislative development, many businesses owners may have their misgivings – and rightfully so. With a colorful history engulfed in debate over the past few years, the proposed 32-hour workweek in the US deserves to be unpacked a little. 

What’s the upside? 

In light of the “Great Reshuffle” and the persisting labor shortage, it is evident that workers share a growing sentiment of burnout and distaste for the current employment landscape. People are prioritizing pursuits beyond their careers and opting for more and more remote work in the days since the pandemic.

Questions still remain on how to address this national grudge against the traditional 9 to 5, and the 32-hour workweek is just the latest attempt at a solution. Working fewer hours in a week is obviously an attractive prospect and would most likely help return people to the workforce at first glance. 

The 32-hour workweek is nothing new, however. Backed by 4 Day Week Global, workweeks under 40 hours have been pushed in the countries all across the world for years, partially implemented at times with great success. 

Microsoft Japan tested a 4-day workweek for a month in 2019. They saw a rise in productivity, with sales per employee increasing by 40%. They also experienced cost savings with 23.1% less electricity used and 58.7% fewer pages printed. Honestly, I’m surprised that a Microsoft office even printed paper to begin with – well done I guess. 

In Iceland, two combined trials saw 1% of the country’s entire workforce try a four-day workweek from 2015 to 2019. Participating public service and local government organizations had their employees work about 35-36 hours a week. As a result, work-life balance was significantly improved and now 86% of Icelandic people work shorter weeks.

Icelandic workers in the trial also became more productive, eliminating unnecessary weekly meetings and reducing time spent on necessary ones. 

Okay, so it’s looking like three-day weekends in the Cali sun are coming soon to a cubical farm near you, right? 

Not so fast. 

What’s the downside? 

Chief among the concerns for a 32-hour workweek would be the financial burden on employers. The California Chamber of Commerce says that AB 2932 could be a” job killer” and could make hiring and talent acquisition more expensive. 

There is also the issue of who the bill is really benefitting. Only businesses with over 500 employees would be impacted. That means, with businesses totaling around 1.6 million statewide, only 0.2% of Californian businesses would actually get a 32-hour workweek. 

The 32-hour week may only be realistically utilized by white-collar office workers as well, not by frontline people in blue-collar industries as touted by the politicians sponsoring AB 2932. As such, the bill (and the 32-hour workweek more generally) is seen as out of touch and catering to the controlling upper class who can afford to take an extra day off. 

Restaurant workers and emergency responders don’t have this luxury as they face constant and unpredictable demand, on top of a crippling labor shortage. This of course leads to issues in overtime. 

Remember those trials in Iceland I mentioned earlier? Well, among emergency responders, overtime increased with reduced workweek hours. While in other industries, a shorter workweek tends not to lead to any change in overtime, it would be naive to think all industries would benefit the same way from a three-day weekend. 

With the 32-hour workweek bill in California, overtime hours could become a major issue for some businesses, especially if expanded to include smaller businesses on the frontline. Employers will not want to deal with the new 32-hour overtime cut-off as it will most likely raise their labor costs as workers learn to adjust their productivity to fit all work within a four-day window. 

An expensive learning curve to say the least.

Preparing for 32-hour workweeks 

If 32-hour workweeks are indeed about to become the norm in the US, employers will need to adapt. Reassessing workforce management practices is step one. It’s also step two, three, and four. Maybe even five. Managerial areas like scheduling, time tracking, and payroll will all have to become more efficient. Here are the three areas to focus on:

Control labor costs

32-hour workweeks will bring all kinds of labor cost troubles, particularly with overtime. Managers should have their scheduling and time tracking synced so that they receive alerts when employees reach or are approaching overtime. Scheduling software should also help managers avoid overtime and prioritize regular hours. 

Timekeeping systems will need to operate with pinpoint accuracy to mitigate time theft and overspending on wages. Things like geo-fencing, photo identification, and a live time clock feed prove tremendously useful in this area.

Cut back on administrative time

We all spend too much time crunching numbers, sitting in meetings, and managing logistics. With 32-hour workweeks, this needs to change. 

Just as Iceland did, businesses will have to eliminate unnecessary meetings and make important ones more efficient. Meetings are a major time waster for many businesses and will only hinder productivity during a shorter workweek. They need to be faster. 

Scheduling should also be faster – even as fast as a single click. Wasting time on manually filling out rudimentary spreadsheet schedules is an artifact of the 40-hour workweek era. Nobody has time for that. 

Timesheets should also flow much faster into payroll. This can be achieved by auto-approving correct timesheets and flagging those with discrepancies. Approving time and correcting errors shouldn’t last ages; it needs to be done in the blink of an eye so payroll can do its job and businesses can keep things moving. 

Increase productivity

Employers should use demand data, labor forecasting, and employee preference metrics to quickly build out shifts to maximize productivity, lower wage costs, and keep people under 32 hours a week. Blindly scheduling employees for shifts without seeing these metrics right in front of you increases the risk of placing employees where they aren’t needed or where they aren’t as productive. 

Managers should also work to save time and money when replacing open shifts last minute. Use a simple shift replacement tool via mobile app to help fill open shifts with the most cost-effective employees, while also letting employees quickly swap shifts between themselves.

It remains to be seen whether or not California passes the 32-hour workweek bill. If it does, one can only assume more states will follow. In the meantime, please continue to drag yourself out of bed on Fridays and push the Sisyphean boulder up the hill. 

Shorter workweeks are on the horizon. Your workforce management needs to adjust. Reach out to us to find out more about how to increase productivity and reduce wasted time.