Workplace legislation is the latest trend. And I believe that legislation is one of the great gifts of freedom to individuals, but laws have a tendency to have their flaws.
Case in point, Ontario. Ontario is facing a long-standing policy problem involving Ontario’s public sector unions.
As recently as 1996, the Ontario government had long ignored the Working Time Act of 1987, which states:
“Employees should not spend more than 48 hours per week working ordinary work hours (including lunch breaks).”
And more recently, Ontario’s government passed the Bill 115 bill in 2012 requiring teachers to give the province 90 minutes of unpaid “training” per week, without saying what training. As a result, hundreds of thousands of Ontarians feel compelled to work a greater portion of their workweek beyond the 48 hours that was instituted.
Ontario is in an era of rapidly falling median wages. So what Ontario Governor Doug Ford is trying to do is to lower the threshold of time employees have to work to end their paid workweek.
California is pursuing a similar policy, pushing back the threshold to four hours. Similar laws are also taking effect in the U.K. and New York.
Lawyers have observed that these laws provide a great opportunity for employers to sue employees for compensation. It is also likely that one of the unintended consequences of these laws will be to undermine flexibility in the workplace – usually speaking about flexibility to have employees only come in on a scheduled basis.
In a 2014 paper titled “Do Time Outside Work Laws Actually Reduce Wages?” Robert Haverstick and Michael Dinwiddie had found that employers might use time off as a bargaining chip to draw out an employee’s time off.
We are not alone in our view that these laws will ultimately punish those employees who do not have the authority to waive their time off. In a 2018 paper called “Why European Work Laws’ Limits On Leave Are Unfair,” University of Toronto Professor John Busbee showed that the provinces whose laws require that workers spend less than 48 hours outside of their workweek may face increased rates of unemployment and structural unemployment.
Part of the explanation is that the laws are a reflection of unions’ desire to maximize work-time for unionized employees. So why should we tolerate something that will not only harm employees but also might result in more unionization?
This is not the case in other parts of the world.
In the U.K., for example, the U.K. government has a policy of protecting 40 hours per week. And not only is this policy often used to negotiate enhanced benefits and reduced working hours, but it gives workers more leverage over employer’s negotiations. If unions can get their members to work less than 40 hours a week, it is much easier for them to seek a more negotiated maximum period. By increasing the bargaining power, the U.K. government has a desire to reduce the threshold.
Again, in the U.S., we can look at the experience of California’s AB 930, which allows public employees to “clock out” after work hours.
As it stands, a worker can call in for a mandatory two-hour cooling off period after 35 hours without a pay cut and get a two-hour “free lunch break” after a 36-hour work week, as long as they work the minimum number of hours required by the law. The minimum is 35 hours per week – 40 hours per week after 40 hours of actual work.
The law does not require a work-free day for a 40-hour work week.
Should employers be concerned about state legislation, or is this just one more aspect of the threat to people’s freedom to choose a job based on their needs and preferences?
Joel Berstad is chief economist of the Competitive Enterprise Institute.