Potential insurance implications of a four-day workweek

We’ve been hearing a lot more these days about the idea of the four-day workweek. For example, from January to June 2022, Scotland conducted a trial experiment running a 100-80-100 model. The trial “succeeded,” according to Scottish authorities, and several businesses elected to continue using the model.

In the United States, the Thirty-Two Hour Workweek Act was reintroduced by Rep. Mark Takano

in the United States House of Representatives in January 2023, after not passing in 2021. The bill proposes a reduction in the standard workweek to 32 hours, or four eight-hour workdays, with no reduction in pay or benefits for employees.

According to Digital.com, 22% of business owners surveyed in 2022 said they would strongly consider changing to a four-day workweek, and 13% surveyed said they are at least somewhat considering the move.

The idea of a four-day workweek has gained traction, with some saying it could help increase work productivity, reduce burnout and potentially improve work-life balance. While this may seem like a win-win situation for both employees and employers in the future, small business owners may want to consider the possible insurance implications if such a change were implemented.

When it comes to insurance, it can provide coverage for a wide range of risks associated with property damage, liability claims and other potential losses that can occur while running a business. Small business owners depend on insurance to help them protect their assets and operations from unforeseen events that can cause financial losses. However, changing the work schedule from a five-day to a four-day workweek could potentially affect the risks associated with small business operations, and thus insurance coverage.

For businesses that employ an in-person model, one type of significant change that a four-day workweek could bring is an increase in foot traffic. For example, if a retail store that previously operated five days a week decides to close on Wednesdays, the remaining four days will likely see a higher volume of customers. This increase in foot traffic can raise the risk of losses, theft and property damage, such as shoplifting. Conversely, having an increased period where a retail shop is closed could lead to a rise in vandalism. Therefore, small business owners should review their property insurance policies to ensure that they have the coverage they want for these new risks. This may involve increasing the policy limits, adding endorsements or riders to the policy, or purchasing additional policies to cover specific risks.

Liability insurance is another critical aspect to consider when transitioning to a four-day workweek. With fewer workdays, the liability risks associated with the business may change. For instance, a restaurant that previously operated five days a week may now have longer hours and higher customer volume on the remaining four days. This increased activity can raise the risk of accidents, such as food poisoning, slip-and-fall accidents or alcohol-related incidents.

As a result, small business owners should review their liability insurance policies to ensure that they have the coverage they want for these new risks. This may involve increasing the policy limits, adding coverage for new activities or services or purchasing additional policies to cover specific risks.

In addition to property and liability insurance, small business owners should also review their workers’ compensation policies when implementing a four-day workweek. With fewer workdays, some employees may be working longer hours, which can increase the risk of work-related injuries or illnesses. Therefore, it is crucial to ensure that the workers’ compensation policy provides coverage for potential risks associated with the new schedule.

Small business owners should also communicate the changes in their work schedule to their insurance agent or provider. This will enable the insurance provider to assess the new risks associated with the four-day workweek.

Transitioning to a four-day workweek can offer numerous benefits to small business owners, such as improved employee productivity and reduced burnout. However, it is essential to consider the implications of this change on the business’s insurance coverage.

Small business owners should review their insurance policies with their agents or provider, assess the new risks associated with the four-day workweek, and make any necessary changes to ensure that they have the coverage they want for their operations. By taking proactive measures, small business owners can help mitigate potential losses and help protect their assets from unforeseen events.

Jack White is the Head of Commercial Sales & Marketing for Farmers Insurance.

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Related:

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How statistics can help small businesses plan for the future