United States: San Francisco Enacts Broad Protections For Employees Of "Formula Retail" Establishments

On December 5, 2014, San Francisco enacted two ordinances, dubbed the "San Francisco Retail Workers' Bill of Rights," that will extend benefits to part-time retail and food service employees and require certain employers to make schedules more predictable for all employees.  The ordinances are believed to affect approximately 35,000 employees in San Francisco (approximately 5 to 6% of the City's total wage and salary employment) and are also believed to provide the broadest protections in the country in terms of rights for part-time workers and scheduling requirements.

The ordinances—the "Hours and Retention Protections for Formula Retail Employees," introduced in July, and the "Fair Scheduling and Treatment of Formula Retail Employees," introduced in September—will apply to so-called "formula retail" establishments that have 20 employees in San Francisco and 20 or more locations globally (prior to a recent amendment, the law would have applied to businesses with more than 11 workers).  The ordinances also apply to any contractor or subcontractor of formula retail employers who provide janitorial or security services to those employers in San Francisco. 

This legislation will go into effect on January 5, 2015.  The ordinance becomes operative 180 days after its effective date, meaning that that affected employers will want to be in full compliance by July 3, 2015.

San Francisco employers that meet the "formula retail" definition should be prepared to comply with the new law, which, among other things (and subject to a few exceptions):

  • Requires employers to provide employees before their start date with an initial estimate of their expected minimum number of scheduled shifts per month, and the days and hours of those shifts. 
  • Requires employers to post employee schedules 14 days in advance. 
  • Requires companies to pay employees for two to four hours (depending on the duration of their shift) at their regular rate of pay if they are required to be on-call or if their shift is canceled with less than 24 hours' notice.  The law would also require one hour of pay for each shift change made with less than seven days' notice but at least 24 hours' notice.
  • Requires employers to offer any extra work hours to current part-time employees before hiring new employees or relying on subcontractors or a staffing agency.  The employer is obligated to offer extra hours to a part-time employee if (1) the employer reasonably determines that the employee is qualified to perform the work, and (2) the work is the same or similar to the work the employee has performed previously.  The employer is required to offer only as many hours as the employee needs in order to reach 35 hours in a workweek.
  • Prohibits employers from discriminating against part-time employees with respect to their starting rate of pay, access to paid and unpaid time off, and access to promotions.
  • Requires that, if an employer's company is bought or sold, the new employer must retain for 90 days the employees who worked for the old employer for at least 90 days prior to the transfer (except for supervisory, managerial, or confidential employees).

This push to protect part-time employees in San Francisco comes at a time when states, cities, and Congress are all seeking to boost the minimum wage.  Among other minimum wage hikes coming out of the recent election, two in particular have impacts for Bay Area employers:

  • Voters in San Francisco approved a measure to increase the city's minimum wage to $15 over the next four years.  San Francisco, which already has the highest hourly wage of any U.S. city at $10.74, is now the second city to get a $15 minimum wage, after Seattle's city council approved a similar measure in June.  Seattle's increase to $15 will not be completed until 2021.

Just across the Bay, voters in Oakland passed a ballot initiative to raise the city's minimum wage to $12.25 starting in March 2015. Under the measure, Oakland's minimum wage will increase each year after 2015 based on cost of living increases.

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