Energy Expenses And Gas Prices Motivate Employers To Move To Four Day Workweek: What Are The Legal Issues?
Companies face increased energy cost as the nation’s average gasoline price reached $4.00 per gallon this week spurring a new round of cost cutting measures. Even in prior years, some employers have allowed employees to work alternate workweek schedules, such as four 10 hour days, for summer months. When this schedule is feasible from a production and service perspective, the benefits typically can be two-fold: reduced operational costs for the employer and longer weekends for employees.
As featured recently on the TODAY SHOW, many employers are considering changes to their workweeks as a means of cutting employee commuting expenses and reducing business operational costs. Changes in workweeks can raise legal issues for employers as follows:
- Overtime. Under the Fair Labor Standards Act and the Pennsylvania Minimum Wage Act, non-exempt employees must be paid for all hours worked in excess of 40 in a workweek. Nevertheless, employers in some industries may have a practice of paying 'daily overtime' for work in excess of 8 hours per day. This must be considered in assessing the value of any alternative workweek.
- Child Labor Limitations. State laws limit the number of hours that children may work in a day and week depending on the age of the child. Pennsylvania limits the hours of work in a day for children under the age of 18 who are covered by its child labor laws.
- Unemployment Compensation. Employees who quit because of a change in their hours or schedule generally are not eligible for unemployment compensation. A change from a day day workweek to a four day work week, without any loss of hours, is not likely to be viewed as a 'substantial change' that might provide necessitous and compelling reason for someone to quit their employment and receive benefits.
- Collective Bargaining. Absent a clear provisions in a CBA delegating such discretion to the employer, a change in the hours of work would be a mandatory subject of bargaining. As such, most unionized employers would be required to obtain the Union's assent prior to adopting a "four-10's" type work week. This may also require addressing and resolving contractual issues involving shift differentials, premium pay and daily overtime in the context of a side letter agreement.
We previously discussed telework as a strategy for addressing similar employee relations issues in our post "Legal Issues in Telecommuting: Gas Prices make Businesses Reconsider Policies."