Four-Day Work Week Means Navigating Overtime Pay, Union Talks

The four-day work week that’s gaining steam in pilot programs and fledgling legislative proposals yields workplace benefits but also potential employment law pitfalls.

A few dozen companies testing out a reduced work schedule found benefits both for businesses and the employees in initial results of a study released last month. The companies in the pilot ranged from a restaurant chain to a climate nonprofit to an RV builder—and at the end, not one opted to return to a regular five-day work week.

Employment lawyers say they are hearing more serious interest from businesses considering some version of a four-day week, motivated partly by the need for creative ways to recruit and retain employees in a tight labor market.

“It is not an avalanche of requests, but some clients are beginning to think critically about this issue,” said Michael A. Pavlick, an employment lawyer with K&L Gates LLP in Pittsburgh. “It’s gone beyond, ‘Oh, maybe one day we’ll do this,’ to ‘This is a real possibility and let’s address what some of the issues might be.’”

Federal labor law doesn’t bar businesses from shortening their work week or from cramming the usual 40 hours into four days instead of five, so long as workers receive at least the minimum hourly wage and overtime pay of 1.5 times their regular rate for any hours worked beyond 40 per week.

A 2021 proposal in Congress that never advanced would have lowered that federal standard to make 32 hours a full work week and mandate overtime pay for additional hours worked.

But thanks to state law, overtime pay tops the list of concerns for companies considering a four-day schedule for hourly workers in California and a number of states with similar overtime laws.

Overtime Pitfalls

California requires overtime pay of at least 1.5 times a worker’s regular hourly rate for any work over eight hours per day, even if the weekly total doesn’t exceed the 40-hour threshold set by federal labor law.

A business switching to a schedule of four 10-hour days each week would owe their workers two hours per day of overtime pay. Similar to the California law, Alaska, Colorado, Minnesota, Nevada, and Oregon also require overtime pay based on hours worked in a single day under certain circumstances.

California gives employers the option to switch to an alternative schedule such as four 10-hour days per week without owing overtime pay. But getting state approval is a complicated process with a secret-ballot vote needing two-thirds approval by the employees who will be affected, said Todd Scherwin, an employment lawyer with Fisher Phillips LLP in Los Angeles.

“It would be so much easier to implement a ‘four 10'—a four-day work week—here if California was like most other states and didn’t have daily overtime,” he said.

“Lots of companies think they can implement a four 10 without having done that, and that’s when we get involved with litigation,” Scherwin said.

A state database shows California companies have asked to approve alternate work weeks for thousands of employees in total over the last 20 years, mostly in small groups of one to 10 workers ranging from office to health-care to manufacturing jobs.

Among the larger employee groups adopting alternate schedules under the state law, aerospace and defense contractor General Atomics switched hundreds of employees in San Diego to a biweekly 80-hour schedule, and cannabis business The Highest Craft in Lake Elsinore moved about 100 workers to four 10-hour days per week.

California state lawmakers also considered a bill this year that would have required large businesses to shift employees to a 32-hour work week without reducing their pay—a proposal that didn’t progress far in the legislature but drew plenty of public attention and consternation among businesses worrying how they would comply.

The growing interest in four-day work weeks is driven partly by the tight labor market and companies’ need to find novel ways to attract talent, but the movement is likely to have long-term staying power, said Juliet Schor, a Boston College economics and sociology professor who’s researched the topic.

“A recession will slow down momentum for the 4 day week, but it won’t kill this movement,” she said via email. “There are multiple motivations for companies to institute these schedules, and some of them will remain if labor demand slows.”

An employee works the lumber section at a Home Depot store in Alhambra, Calif., in May. A California business switching to a schedule of four 10-hour days each week would owe their workers two hours per day of overtime pay.

Photo by FREDERIC J. BROWN/AFP via Getty Images

Bargaining, Benefit Accruals

Arguably the companies facing the steepest challenge to launching a four-day work week are those with unionized work forces, as a change to those employees’ work schedules would be a mandatory subject of bargaining, Pavlick said.

“In a nonunion setting, it really is just going to be dotting your I’s and crossing your T’s,” he said. But with a unionized work force, the employer will have to go through negotiations that could be lengthy and contentious before making this kind of change.

On the other hand, labor unions tend to support the idea of a four-day week, especially if it reduces total work hours rather than just condensing the 40-hour week into four days, said Alex Soojung-Kim Pang, global programs and development manager at the 4 Day Week Global Foundation.

Unions “were the driving force behind” Iceland’s widespread trial and subsequent adoption of four-day work weeks, he noted. Agreements to reduce working hours now cover more than 80% of Iceland’s workers. Major US labor unions including the AFL-CIO also threw their support behind Rep. Mark Takano’s (D-Calif.) 2021 proposal to set 32 hours as the standard work week under federal labor law.

Employers looking to reduce work days or weekly hours also must consider the effects on accrual of paid time off or eligibility for job-protected leave under the federal Family and Medical Leave Act, which factors in the number of hours worked, Pavlick said.

Businesses also could open themselves up to claims of discrimination based on a disparate impact, he added, for example if switching to a schedule of four 10-hour days is viewed as creating a child-care problem for single parents. That could be seen as having a discriminatory effect on women within the company’s workforce, for instance, opening the company up to legal risk.

Reducing Total Hours

Some of the legal caveats around four-day work weeks, particularly the state law overtime problem, could potentially be addressed by reducing total work hours to a schedule along the lines of four eight-hour days while continuing to pay workers the same salary that they previously received.

It’s a scheduling structure that shorter-week advocates encourage, but might be hard for some businesses to swallow.

Employers are showing the most interest in four-day weeks for jobs in office settings, such as people doing creative, informational, finance, and administrative work, Pang and Pavlick said.

Despite the documented benefits, a true reduction in hours worked each week might not be viable for many businesses, particular those in a service industry where employees must be on duty to tend to customers during operating hours, Scherwin said. For those types of operations, cutting back to 32 hours a week would almost certainly mean needing to hire more workers, he added.

“What I’ve been hearing from clients who want to implement that, they’re having a tough enough time hiring enough people,” Scherwin said. “Looking to hire more people so they can have shorter work weeks, that’s a challenge.”