The senator proposed a federal overtime rule mandate, but incentives can better spur employers to reshape the workweek.
Bernie Sanders, the Vermont senator, recently proposed new legislation that would change federal overtime rules. The new law, if passed, would need employers to pay a minimum 1.5 hours of overtime for each hour worked past 32 hours in a week. The requirement would phase in over a few years.
Say a company employs 100 people. Assuming 50 workweeks, that’s about $1,000 per week or $25 an hour.
Under Sanders’ proposal that employee would make $25 per hour for the first 32 hours and then be paid overtime of time and a half, or $37.50 for the additional eight hours to make it a 40-hour workweek. Which means that for a full week the employer is now paying $1,100 per week or $55,000 per year for 50 weeks.
You have to add in federal and state taxes that an employer pays – about 7% of wages, which adds $350 more per year. A small business that employs 25 people would then be paying an additional $133,750 more per year under Sanders’ proposal. If they had 50 workers it would be an added cost of $267,500 per year.
Of course, the business doesn’t have to pay for a 40-hour week.
Sanders wants a moratorium on AI development.
Which is why a 32-hour, or four-day, workweek isn’t a bad concept.
A four-day workweek can be accommodated by better scheduling.