32-Hour Workweek Bill is Punitive Attempt to Force CA Employers to Increase Wages and Pay Extra Overtime

Presented as a bill to allow California employees to work fewer hours each week, Assembly Bill 2932 by Assembly members Cristina Garcia (D-Bell Gardens) and Evan Low (D–Campbell), would require all businesses in the state with 500+ employees to redefine a full-time workweek to 32 hours instead of 40 hours.

There are several issues in the bill that demonstrate the authors are unfamiliar with how private sector businesses operate:

• Any hours worked by an employee over 32 hours would be considered overtime. The bill would require significant changes to overtime rules.
• The bill would require the employers to pay employees at the same rate of pay as their current 40 hour week, meaning employees will be getting a raise. AB 2932 prohibits an employer from reducing an employee’s regular rate of pay as a result of this reduced hourly workweek requirement.
• This is a backdoor minimum wage increase without having to vote on one.
• A.B. 2932 also exempts businesses that are already unionized.
• AB 2932 would significantly increase labor costs for employers.

Employers and employees for years have touted the benefits of 4-day work weeks, but not at reduced working hours; all previous proposals were for 4 days of work at 10 hours a day, equaling a 40-hour work week, giving employees a 3-day weekend.

For years California employers have wanted to be able to schedule flexible work shifts but labor unions have stood in the way. Federal law, and the vast majority of states, only require that overtime be paid for hours worked in excess of 40 per week. However, California requires that overtime be paid after eight hours work in one workday and after 40 hours work in one workweek.

California’s overtime laws are complex and largely appear to be driven by the political party in power.

Overtime was enacted many years ago, to compensate employees who were being “overworked” by employers, defined by the government as working employees beyond eight hours in one workday. Overtime law requires employers to pay employees overtime equaling one and one-half of employees’ hourly pay for working more than eight hours in one day, as well as more than 40 hours in one week. Double-time is paid after 12 hours in one day, and again on the seventh consecutive workday in one week.

In effect through 1997, the old daily overtime rules required only certain industries that had specific wage orders regulating them, to pay overtime daily. Manufacturing and clerical workers were subjected to the daily overtime laws, but construction, mining and logging were not, so they could instead opt to pay daily overtime or defer to the federal standard of paying overtime after 40 hours worked in a workweek.

In 1998, Republican Gov. Pete Wilson signed legislation relieving California’s employers from the state’s daily overtime laws, allowing employers to pay overtime after 40 hours in one week. Widely hailed as a pro-business move, Wilson’s goal was to give employers and employees more flexibility in production and work schedules. Labor union representatives were outraged, and claimed their members would lose income with the overtime change.

Almost immediately, Assemblyman Wally Knox, D-Los Angeles, authored AB60, written by organized labor, and referred to as labor’s reaction to Wilson’s elimination of daily overtime. In 1999, Democrat Gov. Gray Davis signed AB60, called the “Eight Hour Day Restoration and Workplace Flexibility Act of 1999,” dramatically changing the state’s overtime compensation laws. The act went into effect for most employers on January 1, 2000, however the list of exemptions was long, and included public employees.

The 1999 act’s most dramatic change was the restoration of the daily overtime requirement. Ironically, union employees covered by a collective bargaining agreement were not covered by AB60, nor were public employees.

The exemptions to California’s overtime laws are extensive. Overtime wage orders expressly exempt public employees. Under listed exemptions, the Department of Industrial Relations (DIR) Web site at one time said: “Employees directly employed by the State or any political subdivision thereof, including any city, county or special district,” exempting state employees from state law, but requiring private sector employers to comply.

Public employees are not the only employees exempted from the state’s overtime laws according to the DIR. The list of exempt jobs is long:

Unionized employees working under a collective bargaining agreement
Truck drivers
Computer software employees
Airline employees
Sales representatives
Taxi-cab drivers
Nurses and student nurses
Professional actors and film projector operators
Commercial fishing employees
Radio or television announcers and news editors
Sheepherders
Irrigators
Personal attendants
Babysitters

The Los Angeles Times reported on AB 2932, quoting Assemblywoman Garcia demonstrating her lack of understanding or even interest on the impact to California employers:

“Garcia said the idea was prompted in part by the exodus of employees during the COVID-19 pandemic, many of whom were seeking a better quality of life. More than 47 million Americans voluntarily quit their jobs in 2021, according to the U.S. Bureau of Labor Statistics.”

‘We’ve had a five-day workweek since the Industrial Revolution,’ Garcia said, ‘but we’ve had a lot of progress in society, and we’ve had a lot of advancements. I think the pandemic right now allows us the opportunity to rethink things, to reimagine things.'”

If the bill was really “prompted in part by the exodus of employees during the COVID-19 pandemic,” Garcia may want to ask a few employers in the state about how difficult it is right now to get employees to come back to work for employees still on unemployment or receiving various government stimulus checks. Or she could ask about the myriad policies and laws enacted which have caused such a great exodus of small, medium and large employers to Right-to-Work states.

The Society for Human Resource Management also weighed in on AB 2932, warning that the “bill would also create a significant logistical burden for human resource professionals, especially at companies with operations in multiple states. And it would undoubtedly be bad for business in California, exacerbating staffing shortages, raising labor costs and making life more difficult for scores of businesses struggling to recover from the worst days of the pandemic.”

The CalChamber included AB 2832 on its “job-Killer” list saying, “AB 2932 Significantly increases labor costs by imposing an overtime pay requirement after 32 hours and other requirements that are impossible to comply with, exposing employers to litigation under the Private Attorneys General Act (PAGA).”

Requiring employers to pay employees for a full 40 hours in the proposed reduced work week of 32 hours is wanton disregard of the important role employers play in the state’s economy, as well as their staffing and production needs, and is a sneaky, backdoor increase in wages and overtime. And convoluting California’s already byzantine overtime laws is only setting employers up for more lawsuits – or perhaps for more departures from this state.