(Source: by Catherine L. Hazany, Torence Shareholder and Zachary V. Zagger, New York Shareholder – Ogletree Deakins Law Firm – February 21, 2023)
Retail employers in Los Angeles will soon be required to provide employees with written, good faith estimates of their schedules, and offer extra hours to current employees before hiring new workers under a new ordinance that takes effect on April 1, 2023. The “Los Angeles Fair Work Week Ordinance” makes the city the latest jurisdiction to pass a predictable scheduling law – joining Seattle, San Francisco, New York City, Philadelphia, and Oregon, among others. Below is a summary of the Los Angeles ordinance’s key provisions.
Employers and Employees Affected
The Los Angeles ordinance applies to employers that are considered retail businesses and have at least 300 employees “globally,” including those employed through temporary service firms or staffing agencies, retail subsidiaries, and franchisees. Employees affected by the ordinance are defined as anyone working in the City of Los Angeles at least two hours or more per week for a retail employer, and who is entitled to be paid at least minimum wage, pursuant to Section 1197 of the California Labor Code and the Industrial Welfare Commission’s wage orders.
Good Faith Estimate
The ordinance will require retail employers to provide a “written good faith estimate” of an employee’s work schedule to each new employee and to any current employee within 10 days of a request, along with a notice of employee rights under the ordinance. The good faith estimate is not meant to constitute a “binding, contractual offer.” However, if employees’ actual hours “substantially deviate” from the good faith estimate, employers will be required to have a “documented, legitimate business reason,” unknown at the time the good faith schedule estimate was provided.
Under the ordinance, employees will have a “right to request a preference for certain hours, times, or locations of work.” Employers do not have to accept the requests so long as they notify the employee in writing with a reason for the denial.
Retail employers will be required to provide employees with “written notice” of their work schedules at least 14 calendar days in advance, by either posting the schedule in a “conspicuous and accessible location” where notices are “customarily posted,” by transmitting the schedule electronically, or “another manner reasonably calculated to provide actual notice.” If any changes are made to the schedule after it is posted, employers will be required to provide written notice to the employees. Under the ordinance, employees will have a right to decline any hours, shifts, or work locations not on the schedule. If the employees agree to work hours or shifts not included in the schedule, the “consent must be in writing.”
Additional Work Hours
Before hiring new workers, using contractors, or using temporary workers, retail employers will be required to “first offer the work to current employees” if one or more of the current employees are qualified to do the work “as reasonably determined by the employer.” If the additional hours offered to current employees would result in the payment of overtime, then employers are not required to offer the hours. Such offers of more work hours must be made to current employees either in writing, by posting in a “conspicuous location,” or posting where notices are “customarily posted.”
Further, the offers must be made 72 hours prior to hiring any new employee and current employees must be given 48 hours to accept. Employers may hire new workers or use contractors/temporary workers only after the 48-hour acceptance period, or at any time in the 72-hour prior notice period if they receive “written confirmation” from all the current employees that they do not accept the additional hours.
If more employees accept the additional hours than are available, the employer shall award the hours using a “fair and equitable distribution method.” Any employee that accepts additional hours is not entitled to predictability pay for those additional hours.
Employees who have their schedules altered under certain circumstances by the employer will be entitled to pay premiums. Employers must compensate employees for an additional hour of pay at their regular rate for each change to employees’ date, time, or location of work from the posted work schedule that does not result in a loss of time to the employee or does not result in more than 15 minutes of additional work time. Employers will be required to compensate employees for one-half of employees’ regular rate of pay for time not worked if the employer reduces the employees’ time from that on the posted schedule by at least 15 minutes. Notably, employees may be entitled to predictability pay when employers simply ask them to work more hours, voluntarily.
However, such “predictability pay” will not be required if an employee: (1) requested the change; (2) agrees to cover for an absent employee (though the employer must inform the employee that acceptance is voluntary); (3) accepts extra hours offered prior to the hiring of new employees or the use of contractors/temporary workers; or (4) has hours reduced due to a violation of the law or the “employer’s lawful policies and procedures,” such as a suspension. The predictability pay will further not be required if an “employer’s operations are compromised by force majeure” or the extra hours will result in overtime premium pay.
Rest Between Shift
Employers will not be allowed to schedule employee shifts that start less than ten hours from the employee’s previous shift without written consent and must pay employees “a premium of time and a half for each shift not separated by at least ten hours” (i.e., the second shift must be paid at 1.5 times their regular rate). This provision potentially comes into play when employees who are scheduled to work closing and then opening the next day, which the city refers to as “clopening” shifts.
Employers will not be allowed to force employees to find coverage for a shift or partial shift they must miss for “reasons protected by law.” Employers will also be prohibited from discharging, reducing compensation, discriminating against, or otherwise retaliating against employees who seek to enforce their rights under the ordinance. Additionally, the ordinance imposes requirements that employers retain records, for at least three years, of the work schedules and other records tied to the requirements of the ordinance. This includes good faith estimates of hours to new and existing employees, offers for additional work, schedule changes, requests, and approvals. All retail employers will additionally be required to post a notice from the city, informing employees of these rights.
Penalties for Violation
The ordinance provides that both the city and employees may seek penalties for alleged violations and may also enforce their rights by filing a civil action. Before filing a complaint with the city or a civil action, employees must first give employers written notice of a violation. Employers, will then have 15 days from the receipt of that notice to cure a violation. The ordinance allows the city to recover up to $500 per violation for each employee as a one-time penalty for each violation.
Both employees and the city will also be entitled to penalties for each employee whose rights were violated that accrue daily (up to $50 per day to the city and up to $120 per day for each employee whose rights were violated). In addition to penalties, the city may impose an administrative fine payable to the city for violations. Each and every day that a violation exists constitutes a separate and distinct violation.
If the city files an action to enforce the ordinance, it is entitled to “equitable, injunctive and/or restitutionary relief and reasonable attorneys’ fees.” However, employers will be granted a 180-day grace period for fair workweek violations – during this period, only written warnings will be issued.
The ordinance imposes strict scheduling notice requirements and staffing challenges accompanied by steep penalties for violations. Many schedule changes could trigger predictability pay, forcing payroll and retail operations to be well coordinated. Even minor scheduling changes by managers, such as asking an employee to work 15 more minutes after their scheduled shift, could trigger predictability pay. The ordinance may also make the hiring process more complicated since employers will be required to offer qualified employees additional hours before posting a position. As such, retail employers in Los Angeles may want to review their scheduling procedures, staffing procedures and policies in light of these upcoming requirements.