The four-day workweek is gaining traction as companies seek more ways to enhance business productivity, improve employee satisfaction, and attract top talent. Across various industries, companies are exploring the feasibility of condensing work hours, without reducing employee pay. However, before implementing a four-day workweek, employers should carefully consider the legal implications to ensure continued compliance with wage and hour laws, overtime calculations, employee benefits, and workplace policies.

Understanding these legal complexities is essential to avoid federal and state regulatory violations and potential employee disputes. This article outlines the key legal considerations for implementing a four-day workweek and offers best practices for ensuring compliance.

Legal Considerations for Employers Adopting a Four-Day Workweek

A. Compliance with Wage and Hour Laws

One of the most critical legal factors in transitioning to a four-day workweek is maintaining compliance with the Fair Labor Standards Act (FLSA) and state-specific wage laws, as may be applicable to your business. The FLSA sets federal requirements for minimum wage, overtime pay, and employee classifications, which must be carefully evaluated when restructuring work schedules.

1. Exempt vs. Non-Exempt Employees

• Exempt Employees: These workers are typically salaried employees and not eligible for overtime pay under the FLSA, provided they meet the salary and duties tests. A four-day workweek generally will have little impact on exempt employees as long as their weekly salary remains the same and they continue to meet the minimum salary threshold.
• Non-Exempt Employees: These workers are paid on an hourly basis and must be compensated for overtime when working more than 40 hours in a workweek. Employers must be cautious when structuring schedules to avoid unintended overtime liabilities.

2. State-Specific Wage Laws

Employers must also consider state wage and hour laws, which may impose stricter requirements than federal law.

• Virginia: The Commonwealth follows FLSA guidelines but has additional laws governing wage transparency and payment frequency that are applicable to many Virginia employers.
• Other States: If employees work in a state such as California, which mandates overtime pay for work exceeding eight hours per day, businesses must adjust their pay and overtime policies to meet this and other applicable state-level requirements.

B. Overtime Calculations and Pay Adjustments

1. Non-Exempt Employees: The 4×10 Hour Schedule

A standard four-day workweek often involves employees working four 10-hour days (4×10 schedule) instead of the traditional five 8-hour days (5×8 schedule). Under FLSA rules:

• Overtime pay only applies after 40 hours per week (not the number of hours worked in a day) in most states.
• However, some states, like California, require daily overtime for work exceeding 8 hours per day, meaning a 4×10 work schedule could result in a mandatory two hours of overtime pay per day for non-exempt employees.

2. Exempt Employees: Salary Basis Concerns

Exempt employees must be paid on a salary basis, which means that employers cannot reduce the weekly salary of exempt employees if they still perform their full-time job duties, even with reduced workdays. In addition, ensuring that these employees meet the FLSA salary level threshold ($684 per week / $35,568 per year) is crucial to maintaining their exempt status.

C. Impact on Employee Benefits and Leave Policies

A four-day workweek may affect employee health benefits, paid time off (PTO), and leave policies, requiring employers to update benefit structures to ensure compliance.

1. Health Insurance and Retirement Contributions

• Under the Affordable Care Act (ACA), employees working at least 30 hours per week are considered full-time for health coverage purposes.
• Employers should verify whether condensed schedules impact benefit eligibility, particularly for part-time employees or those near the 30-hour threshold.

2. Paid Time Off (PTO) and Holiday Pay

Employers must determine how to handle PTO and holidays when shifting to a four-day schedule:

• Will PTO be based on hours worked or days worked?
• If a company observes Monday holidays, will employees working Tuesday-Friday receive an alternate day off?
• How will sick leave be calculated for employees working longer shifts?

D. Employee Classification and Contractual Considerations

1. Revising Employment Agreements

If work schedules are modified, employment contracts and policies must reflect these changes. Employers should:

• Clearly outline work hours, breaks, and expectations in updated or amended agreements.
• Ensure remote and hybrid workers understand how the four-day workweek affects employer telecommuting policies.

2. Union & Collective Bargaining Agreements

For unionized workplaces, any changes to work schedules must be negotiated as part of collective bargaining agreements. Employers should engage in discussions with labor representatives before implementing any policy changes.

E. Workplace Culture and Legal Risks

1. Discrimination and Equity Concerns

Employers must ensure that four-day workweek policies are applied consistently across the workforce, without regard to characteristics protected by federal, state, or local laws, to avoid potential claims of discrimination or favoritism.

• Non-Exempt vs. Exempt Workers: If only certain groups benefit from the policy, morale and legal challenges may arise.
• Industry-Specific Considerations: Some jobs may not be suited for a four-day workweek, leading to potential equity concerns.

2. Voluntary vs. Mandatory Implementation

Employers must decide whether to make a four-day workweek optional or mandatory. Mandating the policy without employee input could lead to legal challenges, especially if workers struggle with childcare, transportation, or work-life balance.

Best Practices for Implementing a Four-Day Workweek Legally

To minimize legal risks and ensure a smooth transition, employers should:

• Conduct a legal audit before implementing a four-day schedule.
• Consult legal counsel to ensure compliance with wage laws and benefits regulations.
• Pilot the program with a small department before rolling it out company-wide.
• Update employment contracts and handbooks to reflect new policies.
• Gather employee feedback and make adjustments to ensure fairness and compliance.

Conclusion

The four-day workweek presents exciting opportunities for businesses and employees alike, offering benefits such as higher productivity, better work-life balance, and increased retention. However, without careful legal planning, employers may face compliance risks, wage law violations, and disputes over benefits eligibility.

If you have questions about adopting a four-day workweek, please contact Doug Taylor at (703) 525-4000 or rdougtaylor@beankinney.com.

This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.