There are two types of four-day workweeks in California: alternative workweeks and reduced-hour workweeks.
Alternative Workweeks
When there is no reduction in the overall number of hours the employee works in a week (or in the employee’s workload), this is called an “alternative workweek schedule.”
An example of an alternative workweek would be employees working four 10-hour days per week (a “4/10 schedule”). Employees working this schedule would still be entitled to overtime after 40 hours in a week, but no daily overtime would be due unless employees worked more than 10 hours in a day.
According to articles this month in both Time and Newsweek, a number of private companies and public agencies have been experimenting with alternative workweeks as a means of cutting costs for both workers and employers.
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In Utah, for example, most state employees have been working a 4/10 schedule for the past year or so. The results have been impressive: The state’s nearly 17,000 employees have saved an estimated $6 million on gas, and the state has realized a 13 percent reduction in energy costs as a result of Friday closures. Private sector employers are now following suit, finding that employees are taking fewer sick days, and are working more productively even though they’re working longer days.
In California, employees must vote in favor of an alternative workweek in a secret-ballot election. CEA Online subscribers can access our exclusive article about how to conduct an alternative workweek election for nonexempt employees in California. Exempt employees’ can also be switched to a four-day workweek, with no reduction in salary if the exempt employees’ workloads are not reduced.
Reduced-Hour Workweeks
The other type of four-day workweek happens where there is a reduction of hours in the regular workweek. For nonexempt employees, this means that the employees are simply paid for fewer hours per week.
For exempt employees, until now, the DLSE has maintained the position that if an exempt employee’s salary is reduced in proportion to a reduction in hours, the employee’s exempt status will be lost.
Reversing this position, the Labor Commissioner (who heads the California Division of Labor Standards Enforcement) has just published an opinion letter that states that consistent with federal policy, California law does not prohibit employers from reducing an exempt employee’s salary in connection with a bona fide reduction in the regular workweek. The Labor Commissioner notes that a workweek reduction is only bona fide if it’s related to an effort to avoid layoffs or reduce costs in response to economic difficulty.
Note that exempt employees still must be paid at least twice the minimum wage on a monthly basis in order for the exemption to be maintained. A salary reduction for exempt employees would still not be appropriate if an employer is simply changing to an alternative workweek schedule (such as a 4/10 schedule) for both exempt and nonexempt employees, since employees would be expected to work longer days on the four days per week they do work, so there’s not a bona fide reduction in the workweek.
The Labor Commissioner’s opinion letter can be accessed here, and we’ll have more about this new development in an upcoming issue of California Employer Advisor.