- Offering incentives. A new bill proposes to give a tax credit to businesses in Massachusetts that join a pilot program to explore the possible benefits of a shorter workweek.
- Tracking the trend. Currently at least six states, including Pennsylvania, are considering legislation to make four-day workweeks more common.
- What it could mean. There may be some companies that will be tempted to reduce the salary of their workers if they choose to go to a four-day workweek.
Is the four-day workweek coming to a state near you?
A bill before a Massachusetts legislative committee proposes to give a tax credit to businesses in the state that join a pilot program to explore the possible benefits of a shorter workweek.
“Research indicates that four-day workweek models have the potential to reduce burnout and boost performance among workers without affecting employer productivity," bill sponsor Rep. Josh Cutler said in a statement. "There has not been a meaningful reduction in working hours since the 40-hour workweek became the standard 84 years ago (with the Fair Labor Standards Act).”
Currently at least six states, including Pennsylvania, are considering legislation to make four-day workweeks more common, according to CBS News.
Wen Fan, an associate professor of sociology at Boston College, testified to the legislature that she helped conduct an international study that showed "overwhelmingly positive" results for both businesses and employees. The trial involved dozens of companies in the United Kingdom where employees worked a 32-hour week instead of 40.
“Employees reported that they were more productive, they thought they were performing a better job with a shift to a four-day work week," Fan testified. "Interestingly, about 15% of employees said that no amount of money would be high enough to convince them to go back to a five-day schedule.”
‘A Meaningful Reduction’
According to the bill, a four-day workweek would mean that "employees receive a meaningful reduction in actual work hours without any reduction in overall pay."
If enacted, the two-year “Massachusetts Smart Workweek Pilot” program would not be mandatory. Employees at participating in-state businesses would be allowed to opt out of the program. At the end of the pilot, there would be a report on the economic impact of a four-day workweek, as well as how it affects quality of life for employees.
While the general thrust of the bill is the same as those in other states, the Massachusetts bill would leaves a lot for the state agencies running the program to define and decide, said Stephen T. Melnick, Shareholder at Littler.
“For instance, the bill only requires that participating employees ‘receive a meaningful reduction in actual work hours,’ without defining what ‘a meaningful reduction’ means,” he said. “Likewise, the amount of the tax credit that would be given to employers is undefined in the bill, and left for the agencies to determine.”
The Massachusetts bill is also different from the bill proposed in Pennsylvania in one very meaningful way, said Lulu Seikaly, Senior Employment Counsel at Payscale.
“If passed, the bill in Pennsylvania would require all employers with more than 500 employees to move to a four-day workweek (no more than 32 hours a week) without reducing pay,” she said.
Compensation Implications
What are the compensation implications from this type of legislation if organizations were to participate in a four-day workweek?
The Massachusetts plan appears to be geared towards salaried employees, who get paid the same amount regardless of how many hours are worked in a week, Melnick said. “It is difficult to see how this could be implemented for employees who are paid on an hourly basis, unless their hourly rate increases as well.”
Likewise, it probably wouldn’t work for employees who receive commissions or similar types of incentive pay, he added, because it would be unreasonable to expect an employer to pay a salesperson the same amount if they are making fewer sales.
There may be some companies that will be tempted to reduce the salary of their workers if they choose to go to a four-day workweek, Seikaly said. There are also some companies that may increase the number of hours worked across four days to equal a 40-hour (or more) workweek to justify maintaining salaries of their workforce.
These tactics are not the intention of these laws, she said.
“The intention of these laws is to not punish the employees salary-wise for working a shorter workweek,” Seikaly said. “Instead it is intended to provide employees more of work-life balance so they can be more productive at work.”
Earlier this year, a bill was proposed in the U.S. House of Representatives to incentivize employers to move toward a four-day workweek, Seikaly pointed out
“Whether or not this passes, it is important to note this major move from our federal legislature,” she said. “They are understanding that this is the direction the workplace is moving, and they are expecting employers to change with the times.”
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