Los Angeles retail businesses must now comply with a new ordinance that promotes predictable work hours for employees. On April 1, 2023, the Los Angeles Fair Work Week Ordinance went into effect, which applies to retail businesses that have at least 300 employees worldwide, including franchisee employees, and covers employees who qualify for minimum wage and perform at least two hours of work in a workweek in Los Angeles.

Retail employers in Los Angeles must take note of the scheduling, payment, and notice requirements that the Ordinance now requires to address the fluctuating work schedules of employees. Under the Ordinance, employers must follow set provisions to provide employees with predictive scheduling. These provisions include:

• Good Faith Estimate: Retail employers are required 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. If an employee’s actual hours “substantially deviate” from the good faith estimate, the employer is required to possess a documented, legitimate business reason, unknown at the time the good faith schedule estimate was provided.

• Work Scheduling Requirements: Employees have a “right to request a preference for certain hours, times, or locations of work.” Employers do not have to accept the requests, as long as they notify the employee in writing with a reason for the denial. An employer must provide an employee with written notice of the employees’ work schedule at least 14 calendar days before the start of the work period. Additionally, an employer must first offer available work to an employee if (1) the employee is qualified to do the work; and (2) the employer has determined that the additional work hours would not result in a payment of a premium rate, before the employer can hire a new employee or use a contractor, temporary service or staffing agency to perform the work.

• Predictability Pay for Work Scheduling Changes: Employers must compensate employees for changes in the employees’ work schedules (predictable pay). Employers must compensate an additional hour of pay at the employee’s regulate rate for each change to an employee’s date, time or location of work from the posted work schedule that (1) does not result in a loss of time to the employee or (2) does not result in more than 15 minutes of additional work time. Moreover, employers are 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 the posted schedule by at least 15 minutes.

• Work Shifts: An employer may not require an employee to find coverage for a work shift if the employee is unable to work for reasons protected by law. Additionally, an employer must not schedule an employee to work a shift that starts less than 10 hours from the employee’s last shift without the employee’s written consent. Otherwise, an employer will be required to pay an employee a premium of time and a half for each shift not separated by at least 10 hours.

Predictability Pay for Work Scheduling Changes Not Required in Certain Circumstances

Predictability pay will not be required if (1) an employee requested the change; (2) an employee agrees to cover for an absent employee (though the employer must inform the employee that acceptance is voluntary and that the employee has a right to decline); (3) the extra hours were offered prior to the hiring of new employees or the use of contractors or temporary workers; (4) an employee has hours reduced due to a violation of the law or the employer’s lawful policies; (5) the employer’s operations are compromised by “force majeure”; or (6) the extra hours will result in overtime premium pay.

Records and Notice

Employers are required to retain work schedules for all employees, copies of written offers to employees for additional work hours and the written responses from employees, written correspondence with employees regarding work schedule changes, a good faith estimate of hours provided to new and existing employees, and any other records that demonstrates compliance of current and former employees for at least three years.

Employers are required to post the city's forthcoming notice informing employees of their rights in various languages, including any language spoken by at least 5% of the employees at the worksite.

Penalties for Violations

There are penalties that retail employers will face should they not comply with the requirements of the Ordinance. An employer will have 15 days from the receipt of 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. Penalties accrue daily (up to $50 per day to the city and up to $120 per day to each employee whose rights were violated) and will be paid to both the city and the employees. The city may also impose an administrative fine payable to the city for violations. The City and employees may enforce their rights by filing a civil action.

Next Steps for Employers

In anticipation of the effective date, the City of Los Angeles Office of Wage Standards previously published an FAQ to provide employers with guidance to comply with the Ordinance. Retail employers in Los Angeles need to review their scheduling, training, documentation and staffing procedures in light of the Ordinance, as routine schedule changes could trigger predictability pay. Given the complicated nature of the Ordinance, employers should contact counsel to help protect against potential litigation risks of non-compliance.