United States: Countdown To July 3 For San Francisco Retailers To Modify Flexible Scheduling Practices

We have written before of the growing movement to suppress the flexible scheduling practices commonly employed in the retail industry. Retailers have long used factors such as projections of sales traffic, conversion rates, weather conditions and the like, to create and adjust staffing schedules. Like all businesses, retailers seek to enhance profits by controlling costs, including labor costs. To control wage costs, they have used these projections to create work schedules that minimize overtime and unnecessary coverage, while ensuring the presence of adequate staff to maintain optimal levels of customer service, security, product availability and appearance.

As a result, many retailers have utilized a largely part-time workforce which, given the shopping patterns and preferences of modern Americans, must be able to work evenings, Saturdays, Sundays, and holidays. As our earlier post noted, software now exists to measure and analyze many of the same factors that retailers have long considered to schedule workers. Proponents of measures to restrain flexible staffing have seized upon the use of software to analyze staffing needs as an example of bloodless corporate profit mongering at the expense of people and their families.

In keeping with its cutting edge reputation and penchant for social tinkering, especially on workplace matters, San Francisco was the first jurisdiction to impose controls on retail scheduling practices. Many retailers in San Francisco's lucrative market should be in their last stages of preparing to comply with the Retail Workers Bill of Rights – that city's first-in-the-nation law that controls the scheduling and hiring practices of what it calls "formula retail establishments" – or, what most people call chain stores.

The elements of the "formula" are: (1) satisfaction of two of the following six characteristics: (i) a standardized array of merchandise, (ii) a standard façade, (iii) a standardized decor and color scheme, (iv) uniform apparel, (v) standardized signage, and (vi) ownership of a trademark or service mark; (2) 20 or more employees in San Francisco; and (3) ownership of at least 20 such formula retail establishments anywhere in the world. An amendment is pending approval by the San Francisco Board of Supervisors to increase from 20 to 40 the number of establishments necessary for the retail store to be covered by the ordinance.

Retailers Nationwide are Paying Attention

Those San Francisco retail employers subject to the ordinance will find their ability to manage their labor costs significantly restrained beginning on the July 3 effective date – just in time for the Fourth of July holiday weekend. However, retail chains nationwide should have their eyes on how retail operations in San Francisco fare under the new staffing regime, as a version could be in store for them elsewhere if the Retail Action Project and its allies gain traction. As our post linked above noted, New York's pro-labor Attorney General launched an investigation in April of purported use of "on-call shifts" by a group of retailers that would fit the San Francisco formula, suggesting that he believed that flexible scheduling devices are unlawful.

Outline of Requirements of San Francisco Ordinance

The highlights of the San Francisco Retail Workers Bill of Rights ordinance are:

  • Equal treatment of part time and full time workers. Part-time workers must be treated the same as full timers in the same job classification with respect to (i) starting hourly wage, (ii) eligibility for paid time off and unpaid time off, and (iii) eligibility for promotions.
  • Scheduling

    • Before starting employment new employees must be given a written estimate of the minimum number of scheduled shifts per month he/she can anticipate, and the days and hours of those shifts (excluding on-call shifts).
    • Employee requests for modifications must be considered, but employer discretion prevails.
    • Employers must provide employees with work schedules two weeks in advance, at the workplace via posting or electronically.
    • Advance notice of schedule changes must be given by phone, text or other reasonable means.
    • Schedules must be retained for three years, and failure to do so will result in a presumption of non-compliance
  • Penalties for Schedule Changes – "predictability pay"

    • Schedule change between 7 days and 24 hours of the shift entitles employee to one (1) hour of additional pay.
    • Schedule change within 24 hours of start of the shift entitles employee to two (2) hours of additional pay, but four (4) hours pay must be given if the shift was four hours or more.
    • An On-Call employee notified not to come to work is entitled to same penalties as above: 2 or 4 hours depending on length of the shift.
    • Exceptions to the penalty exist for events outside employer's control, including failure of other employee to report to work or need to send other employee home.
  • Limitations imposed on making new hires. If a covered retailer has any employees working fewer than 35 hours per week, before hiring any newpart- orfull time employees, temporary employees or contractors, it must offer the work in writing to the existing part-time employees if

    • one or more existing part-timers is qualified to perform the work, and
    • the work is the same or similar to the part-timer's current work.

Written offers must be retained for three years.

  • Change in Ownership/Successor Obligations. If a retail establishment is sold, all employees having six months seniority or more must be retained for at least 90 days with the same terms and conditions of employment, with the following exceptions:

    • terminations for cause
    • reductions by seniority where the successor determines it needs fewer employees
  • Posting Requirement. A notice must be posted at each workplace informing employees of their rights under the ordinance (which is not available as of this writing).
  • The San Francisco Office of Labor Standards Enforcement has responsibility for enforcement and can order compliance, impose administrative fines, and require employers to pay lost wages and penalties to employees and reimburse the City's enforcement costs, as well as bring civil actions against employers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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