California law currently defines the “workweek,” by operation of its overtime rules, as 40 hours per week. Assembly Bill (“AB”) 2932 as proposed to the California Legislature, would cut the standard “workweek” to 32 hours per week for non-exempt employees of employers with more than 500 employees. As written, the bill provides for overtime pay for work performed beyond 32 hours in a week.
To potentially alleviate wage loss to employees affected by a reduced workweek, AB 2932 provides, “the compensation rate of pay at 32 hours shall reflect the previous compensation 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.” This would effectively require employers to increase the hourly rate of pay for hourly-paid non-exempt employees, so that they end up earning the same amount of pay for 32 hours worked as they did for 40.
If passed, this bill will affect approximately 2,500 large employers in California. Proponents of AB 2932 believe shorter workweeks could lead to happier and more productive employees with a better work-life balance. However, the California Chamber of Commerce argues that AB 2932 would discourage job growth and reduce opportunities for employment due to the impact it will have on labor costs in California. Others have expressed concerns about potential negative effects on customer and client service, the overall well-being of employees who may be expected to complete 40 hours of work in fewer weekly working hours, and the potential impact on employees’ accrual of sick leave and other paid time off. As currently drafted, the bill does not address sick leave and PTO accrual, leaving questions as to whether accrual rates would also be adjusted to match a 40 hour workweek.
If passed, this bill could drastically alter the California workplace for large employers. Stokes Wagner will continue to monitor any developments to AB 2932 and will provide updates as this bill makes its way through the California Legislature.
