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Los Angeles Retail Employers: New Fair Workweek Obligations Take Effect April 1. Are They Fair?
Thursday, March 30, 2023

The city of Los Angeles’s recently passed Fair Workweek Ordinance (the Ordinance) takes effect April 1, 2023. The ordinance aims to ensure Los Angeles retail employees have more predictable work schedules by requiring employers to provide advance notice of those schedules, imposing constraints on how employers can schedule their employees, and holding employers financially responsible (in the form of additional compensation to employees) for changing an employee’s schedule on short notice.

Unlike some other fair workweek legislation (applying not only to retailers but also to employers in hospitality and food services industries), the Ordinance is comparatively limited in that it applies only to employers with 300 or more employees globally that identify as retail businesses or establishments pursuant to the North American Industry Classification System. Guidance from the city’s Office of Wage Standards indicates that an employer’s contingent workers, as well as employees of subsidiaries and certain franchises, are included in determining whether the 300-employee count is met. The Ordinance covers non-exempt employees who work at least two hours in the city of Los Angeles on a given workweek.

Under the Ordinance, employers must:

  1. provide – before hiring – a good faith estimate of the incoming employee’s work schedule, including the number of hours, days, and times (including on-call shifts) the employer will require them to work or be on-call;

  2. notify new hires of their rights (which can be achieved by providing a copy of the city’s poster); and

  3. provide a good faith work schedule estimate to any current employee who requests it, within 10 days of the request.

While these good faith estimates do not constitute binding contractual offers, employers must have a documented and legitimate business reason that was not known at the time the estimate was provided in order to substantially deviate from it.

In addition to the various business and staffing constraints and parameters that already factor into how an employer creates work schedules, employers must, starting April 1, incorporate the following considerations into scheduling:

  • Employers are required to consider an employee’s request to work (or not work) certain hours, times, or locations, and a written explanation must be provided to an employee whose request is denied;

  • Employers cannot schedule employees for shifts that provide less than 10 hours rest before their next shift (“clopening” shifts) without an employee’s written consent, and must pay employees time and a half if they work a non-conforming shift; and

  • Employers cannot require an employee to get coverage for a full or partial shift that they are unable to work “for reasons protected by law.”

Taking into account the above considerations, employers must provide employees with a written notice of their work schedule at least 14 days before the start of the work period covered by the schedule. Those schedules can either be (1) posted in conspicuous locations where employee notices are commonly presented, (2) transmitted to employees electronically, or (3) transmitted via another method that will provide notice to all employees. While not addressed in the Ordinance, employers that require employees to view their schedule electronically will need to evaluate whether this may trigger reimbursement obligations under California Labor Code § 2802.

If an employer needs to make any change to the published schedule, they must provide written notice to the affected employee(s), who then has the right to either accept or decline the proposed changes. If they approve, their consent must be in writing. Moreover, these subsequent modifications, even if voluntarily agreed to by the employee, will result in employers owing “Predictability Pay”:

  • If the change results in a loss of time to the employee or does not result in additional time worked that exceeds 15 minutes, the employer must pay the employee one hour of pay at the employee’s regular rate of pay for each such change to the date, time, or location of scheduled work.

  • If the schedule change results in a shorter shift for the employee by at least 15 minutes, the employer must pay the employee an additional one half of the employee’s regular rate of pay for each such scheduling change.

The Ordinance does not indicate whether the required “regular rate of pay” for Predictability Pay is intended to be equal to the employee’s usual hourly rate or the regular rate of pay used to calculate overtime, meal and rest premiums, and paid sick leave.

There are a number of exceptions where Predictability Pay is not due, such as:

  • if the employee initiates the schedule change

  • if the employee accepts a schedule change initiated by an absence of another employee or an unanticipated customer need, provided the employer communicates that such acceptance is voluntary and the employee has a right to decline

  • if the employee’s hours were reduced due to a violation of company policy or the law

  • if the employer’s operations are compromised by law or by force majeure

  • if the extra hours of work will trigger an overtime payment for the employee

Because the Ordinance allows employees to decline any schedule change, even those exempt from Predictability Pay, employers may not be able to fully staff a shift and therefore be unable to open or continue to operate. The Ordinance and current guidance do not provide options for employers facing these circumstances. For example, if four out of six employees scheduled to work on a particular day call out sick, and every employee declines the schedule change that would have resulted in them coming to work that day, that employer would presumably need to either close their operations for the day or pay meal and rest premiums and potentially overtime to the two employees who do report to work, in order to enable the store to serve its customers.

The Ordinance also impacts employer hiring practices by requiring them to first offer additional work to current employees before bringing on a new employee or temporary workers, or using a staffing agency. This work must only be offered to employees the employer reasonably determines are qualified to do the work in question and for whom the additional work would not trigger overtime premiums. These offers must be made in writing and at least 72 hours in advance of any new hiring. Upon receipt of the offer, an employee will then have 48 hours to accept the offer and will not be entitled to Predictability Pay if the additional hours result in a change to their prior schedule.

The Ordinance also imposes numerous recordkeeping obligations—requiring employers to keep all of the following documents for a period of three years:

  • Work schedules for all covered employees

  • Copies of all written offers to covered employees for additional work hours as well as all written responses from employees to those offers

  • All written correspondence between employers and employees regarding work schedule changes, including requests, approvals, and denials

  • Good faith estimates of hours provided to new and existing employees

  • Any other records the administrative agency may deem necessary to demonstrate compliance

Importantly, the Ordinance also contains a broad anti-retaliation provision that prohibits employers from discharging, reducing compensation of, or otherwise discriminating against any employee for opposing any of the practices prohibited by the Ordinance or seeking to enforce their rights under the Ordinance.

The Fair Workweek Ordinance will impact Los Angeles employers in the retail industry, particularly as some businesses continue to face staffing shortages or the need to reduce their workforce. Given the complicated nature of the Ordinance, and its interplay with other provisions of California law, affected employers should consult with California employment law counsel to navigate these challenges.

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