Maryland Legislature Proposes 4-Day Work Week Subsidy

Author: Robert S. Teachout, XpertHR Legal Editor

February 6, 2023

Maryland employers could receive a significant tax credit if they allow employees to reduce their work to four days per week without any reduction in pay. A proposed law would establish a first-of-its-kind pilot program in the Maryland Department of Labor (MDOL) to study the effect of a reduced work week by private and public employers.

Under the bill proposed in the General Assembly, qualified employees who participate in the pilot program would agree to transition their workforce, or a division of their workforce, from a five-day to a four-day work week. Employers also must agree not to reduce the pay or benefits of employees who participate in the program. The employer would then receive a tax credit in exchange for allowing the MDOL to research the impact of the change through employee surveys, interviews and other information gathering.

A recent study by 4 Day Week Global, a nonprofit organization, in collaboration with researchers at Boston College, University College Dublin and Cambridge University, inspired the legislation. The study followed 33 companies over a six-month pilot program in which employees had a four-day week and were instructed "to work 80% of their regularly scheduled hours in return for 100% of their pay and a pledge to deliver 100% of their standard output."

The organization declared the pilot program a resounding success, stating that participating companies were extremely pleased with their performance, productivity and overall experience. None of the employers who provided information to the study plan to go back to their former work schedule, with almost all saying they plan to continue with the four-day work week (only two were uncertain at the time the study was published). The study found:

  • 63% of businesses found it easier to attract and retain talent with a 4-day week.
  • 78% of employees with 4-day weeks are happier and less stressed.
  • 97% of employees said they wanted to continue with a four-day week.
  • Participating employers' average revenues rose 8% during the trial, a 38% increase over the same period last year.

In an interview with NewsNation, the bill's sponsor Maryland State Delegate Vaughn Stewart said, "I really think that this idea, while it may sound radical or utopian, is something that offers a real win-win possibility for both employers and employees."

Maryland is not the alone in exploring the benefits of a reduced work week. A bill is working its way through the California legislature. It would require businesses with more than 500 employees to pay overtime after 32 hours of work. The California bill also would prohibit employers from reducing an employee's regular rate of pay because of the reduced hourly workweek requirement; nonexempt employees would need to be paid the same amount for 32 hours of work as they are being paid for 40 hours.

At the federal level, last month, the "Thirty-Two Hour Workweek Act" (HR4728) was introduced in Congress. The bill seeks to incentivize employers to provide a shorter work week by mandating overtime when employees work more than 32 hours in a week.