Assembly Bill 2932, a new bill proposed by California Assembly Members Evan Low and Cristina Garcia, would amend Section 510 of the California Labor Code to change the workweek from the standard 40-hour workweek to a 32-hour workweek for companies with more than 500 employees.
Presently, California employees are entitled to overtime pay for any time worked after 8 hours in a day or 40 hours in a week. Overtime is paid at one and one-half times the employee’s “regular rate of pay.” California is one of only a few states with the 8-hour daily overtime threshold. The majority of states all comply with the Fair Labor Standards Act (“FLSA”), which only requires overtime after 40 hours in a week. If passed, AB 2932 would make California the only state in the entire country to also lower its 40-hour weekly overtime threshold to 32 hours (although just for employers with at least 500 employees), further cementing its status as the most anti-employer jurisdiction in the country.
In addition, AB 2932 adds the following provision: “The compensation rate of pay at 32 hours shall reflect the previous compensation rate of 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.” It is presently unclear whether this provision would prohibit employers covered by AB 2932 from reducing salaried non-exempt employees’ salaries based on their shorter workweeks, or whether it would 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 as they did for 40.
All in all, AB 2932 (if passed) would create significant burdens for employers with more than 500 employees by exacerbating staffing shortages, raising labor costs, and generating more lawsuits from plaintiff’s lawyers. The limited workweek could also negatively impact employees by reducing the number of hours available for workers as employers limit hours to avoid increased labor costs.
As of now, it is still unclear whether AB 2932 has a realistic chance of being enacted into law. However, if passed, the law would mark the first change to the definition of the standard 40-hour workweek in the United States since 1926. We will continue to monitor any developments and updates.