On December 6, 2018, Philadelphia’s City Council passed the Philadelphia Fair Workweek Ordinance by a 14-3 vote. Mayor Jim Kenney signed the Ordinance into law shortly thereafter, and the Ordinance was scheduled to take effect on January 1, 2020. Due to a delay in the finalization of the Ordinance’s regulations, the effective date of the Ordinance was postponed to April 1, 2020. 

The Ordinance amends Title 9 of the Philadelphia Code by adding a new chapter requiring covered employers to provide certain employees with “Fair Workweek Employment Standards,” including but not limited to reasonable notice of schedules, rest time between shifts, and opportunities for additional hours.

Predictive Scheduling Legislation on the Rise

Beginning with San Francisco in 2015, cities across the country have passed predictive scheduling legislation in an effort to provide minimum wage employees with more reliable schedules. Such cities include Seattle, New York City, and Chicago. In 2017, Oregon became the first state to enact such a law. Alternatively, Georgia, Tennessee, Arkansas, and Iowa have each passed legislation preventing the local governments in those states from enacting predictive scheduling laws. 

Which Employers are Covered?

Under the Philadelphia Ordinance, a “Covered Employer” is defined as an employer in the retail, hospitality, or food service industry that employs 250 or more employees and has 30 or more locations worldwide, regardless of where those employees perform work. This definition includes chain establishments or franchises that employ more than 250 employees in aggregate. Importantly, the number of employees for coverage purposes includes all full-time, part-time, and temporary workers.

Employers affected by the Ordinance will include Dunkin Donuts, Target, McDonald’s, Wawa, Wendy’s, and other similarly situated restaurant, hotel, and retail chains.

Which Employees are Covered?

Under the Ordinance, covered “Employees” are defined as all non-exempt, full-time, part-time, seasonal, and temporary employees whose job duties require that they provide retail trade services, food services or hospitality services at a covered employer in Philadelphia. 

More specifically, the Ordinance’s regulations provide that the following types of employees are covered under the Ordinance: 

1. Employees who are entitled to overtime pay under State or Federal law;

2. Employees who perform work involving the direct provision of retail, food or hospitality services to the public, including floor managers who directly oversee such services;

3. Employees engaged in completing sales, such as a delivery driver; 

4. Persons involved in security at a retail, food, or hospitality location, whose work involves at least occasional customer contact; 

5. Persons involved in maintenance at a retail, food, or hospitality location whose work involves at least occasional responses to customer requests;

6. Pharmacy and/or medical staff at a retail, food, or hospitality location; and

7. Hotel, restaurant or other retail front desk or front-of-house employees who greet or provide service to customers.

Under the Ordinance’s regulations, administrative and professional hourly employees such as those in human resources, payroll, and receptionist positions are not covered.  

Good Faith Estimates

At the time of hire, a covered employer must provide each employee with a written, good faith estimate of what the employee’s work schedule will entail. This good faith estimate must contain: (1) the average number of hours the employee can expect to work each week over a typical 90-day period; (2) whether the employee can expect to work any on-call shifts; (3) which days of the week the employee can typically expect to work; and (4) a range of hours within those days that the employee can expect to work (e.g., 11 a.m. to 9 p.m.). 

The Ordinance’s regulations provide that a covered employer must revise the good faith estimate when there is a “significant change” to an employee’s work schedule due to changes in the employee’s availability or to the employer’s business needs. The following scenarios qualify as significant changes to an employee’s work schedule:

• Six workweeks out of twelve consecutive workweeks in which the number of actual hours worked differed by 20% or more from the good faith estimate, and the differences were not due to documented employee-initiated changes; or

• Six workweeks out of twelve consecutive workweeks in which the days of work differ from the good faith estimate at least once per week, and the differences were not due to documented employee-initiated changes; or

• Six workweeks out of twelve consecutive workweeks in which the start or end times of at least one shift per week differ from the good faith estimate by at least one hour, or, if shifts have been identified, start and end times of shifts differ by at least one hour from the range by which the shift was identified; and the differences are not due to documented Employee-initiated changes.

Regarding an employee’s actual schedule in a given week, the Ordinance requires employers to provide each employee with advanced written notice of their schedule, subject to the following specifications: (1) the work schedule must be posted no later than 10 days before the first day of any new schedule, (2) written notice of the work schedule must be provided in a conspicuous and accessible location where employee notices are commonly posted – this includes posting the schedule in an electronic format if that is a customary method of notice in the workplace, and (3) the posted work schedule must include all employees’ shifts at that worksite, whether or not they are scheduled to work or be on-call that week. To comply with the Ordinance’s regulations, the posted names of the employees must include at least each employee’s first initial and full last name. 

At any point during their employment, an employee has the right to make work schedule requests. These requests include but are not limited to: (1) requests not to be scheduled for work shifts during certain days or times or at certain locations; (2) requests not to work on-call shifts; (3) requests for certain hours, days, or locations of work; and (4) requests for more or fewer work hours. After receiving these requests, employers are “encouraged” by the Ordinance to engage in an interactive process with the employee. Ultimately, however, the employer may grant or deny the requests for any reason that is not unlawful.

Schedule Changes and Predictability Pay  

Under the Ordinance, an employee may decline to work any hours or additional shifts not included in the initial posted work schedule. If the employee consents to work additional hours, his or her consent must be recorded via written communication, and that consent cannot be a general or long-term statement of availability, but must instead relate to a specific shift.

For each employer-initiated change to the posted work schedule that occurs after the required 10-day advance notice, the employer must pay “predictability pay” to the employee whose schedule has been altered.  Employers must pay one hour of predictability pay when they add time to a work shift or change the date/time/location of a work shift, with no loss of hours. Where hours are subtracted from an employee’s shift, or a shift is cancelled in its entirety, employers must pay the effected employee no less than one-half times the employee’s regular rate of pay for each scheduled hour the employee does not work as a result of their schedule change. 

Calculation of Predictability Pay 

Predictability pay is a payment calculated by reference to an employee’s regular rate of pay. Under the Ordinance’s regulations, an employee’s regular rate of pay is calculated different ways for “Tipped Employees” – employees who regularly receive more than $50 per month in tips – and employees who do not regularly receive more than $50 in tips per month.  

Tipped Employees

If a Tipped Employee is paid $7.25/hour or more by their employer, their regular rate of pay is considered the hourly wage paid to the employee. If a Tipped Employee is paid less than $7.25/hour by their employer, their regular rate of pay will be considered the numerical average of the Standard Occupational Classification hourly wages for “Bartenders,” “Waiters & Waitresses,” and “Dining Room & Cafeteria Attendants & Bartender Helpers.” This average will be published by Philadelphia’s Office of Benefits and Wage Compliance each year. Through June 30, 2020, the rate is $11.62.  

Non-Tipped Employees

For employees who are not considered “Tipped Employees,” their Predictability Pay is based on their Regular Rate of Pay, as defined under 34 Pa. Code § 231.43.

Predictability Pay Examples

The following are two examples that illustrates the application of predictability pay in real-life scenarios. 

1. A posted work schedule indicates that Erica, a cashier, is scheduled to work an afternoon shift on Wednesday. On Monday, Erica learns that the shift was cancelled. The shift was scheduled for 8 hours and Erica’s regular rate of pay is $12 an hour.

Erica’s Predictability Pay is calculated as follows:

8 (hours) x $12 (regular rate of pay) = $96.

96 ÷ 2 (1/2 of what Erica would have earned, had she worked as scheduled) = $48. 

Erica’s Predictability Pay = $48. 

2. Melissa works as a bar-back and her regular rate of pay is $8.50/hour. The posted work schedule indicates that she is scheduled for the Friday afternoon shift. On Friday afternoon, the workplace is busy and Melissa is asked to stay two additional hours and she accepts. Melissa is owed predictability pay because of the increase in her hours that occurred after the work schedule was posted. Because Melissa’s regular rate of pay is higher than $7.25, her predictability pay is based on her regular hourly wage of $8.50/hour. Melissa must be paid the equivalent of one hour at her regular rate of pay ($8.50) in predictability pay for the addition to her schedule. She will also be paid $8.50 for each additional hour worked (2). She will therefore earn a total of $25.50 for her schedule change. 

Exceptions to Predictability Pay 

Not all changes to an employee’s schedule require the payment of predictability pay. The Ordinance provides that the following situations do not require such payment: (1) a written request is made by an employee to change his or her schedule; (2) an employee volunteers to work additional hours due to another employee’s inability to work scheduled hours, in response to a mass written communication offering the hours that makes it clear that accepting additional hours is voluntary; (3) voluntary shift trades or coverage arrangements between employees; (4) emergency conditions including threats to the employees or the employer’s property, failure of a public utility, the shutdown of public transportation, or severe weather posing a safety hazard; (5) changes are made to the posted work schedule within 24 hours after it is initially posted; (6) disciplinary suspensions due to documented incidents; (7) schedule changes due to changes in a ticketed event or hotel banquet that occur after the schedule is posted and are due to circumstances outside the employer’s control; or (8) a reduction of hours that is due to termination of employment.

Predictability Pay Exception Examples

As noted above, covered employers are not required to pay predictability pay when adding or subtracting hours and/or shifts based on voluntary changes requested by an employee. This exemption includes: voluntary additions or subtractions of hours that are initiated by an employee, the use of sick leave, vacation leave, or other leave policies offered by the employer. 

1. On Thursday morning, Rachel calls out because of a flat tire. On Rachel’s next shift, she provides written confirmation that the reduction of hours was voluntary. Rachel’s employer does not owe her predictability pay for the shift she is missing, because the change was employee initiated. The manager decides not to fill the shift. Nothing else is required by the Ordinance.

2. On a slow weekday night, the manager announces to employees that they will take volunteers if anyone wants to be cut early. Rebecca and Sarah both volunteer to go home early and agree to record in writing that the reduction of hours is voluntary. The employer does not owe Rebecca or Sarah any predictability pay for the reduction of hours because the reduction was voluntary. 

3. Same as above but no one volunteers. The manager cuts two employees chosen randomly, Steve and Amanda. The employer owes Steve and Amanda predictability pay.

Effect of COVID-19 on Predictability Pay

In response to the current COVID-19 health emergency, Philadelphia’s Office of Benefits and Wage Compliance will not be enforcing the Ordinance’s predictability pay requirements until further notice.

Right to Rest Between Work Shifts

Under the Ordinance, employees may decline, without penalty, to work shifts that would start less than nine hours after the end of a prior day’s shift, or within nine hours after the end of a shift that spanned two days. Employees can agree to work such shifts, but they must consent in writing to work each such shift or for multiple shifts, and can revoke their consent at any time. Even if an employee consents, the employee must be paid $40 for each such shift that he or she works. 

Existing Employees’ Right of First Refusal 

The Ordinance requires that covered employers offer additional hours and shifts to existing employees before hiring new employees to work those hours. An employer must notify each employee by written communication of its policy for offering and distributing work shifts at the time of the employee’s hire and within 24 hours of any change in the policy, and must post the notice in an accessible location in the workplace. The notice must state: (1) where employees can access written notices of available work shifts; (2) the process by which employees may notify the employer of their desire to work the available work shifts; and (3) the criteria for distribution of work shifts among qualified and interested employees.

When new shifts become available, covered employers must provide written notice of available work shifts for at least 72 hours, unless a shorter period is necessary for the work to be timely performed. In such a case, the employer may offer an existing employee the opportunity to work the shift temporarily during the 72-hour period. When providing employees with written notice of available shifts, such notice must be written in English and any other language that is the primary language of at least 5% of the employer’s existing employees. Further, if a covered employer receives a request for a specific language from an existing employee, the employer must honor that request.

In addition to being in writing, the notice must be posted in a conspicuous location in the workplace where notices to employees are customarily posted. Notice must also be shared electronically if scheduling information is customarily made available to employees in electronic format. The employer may provide the notice concurrently at the location where the shifts described in the notice will be worked, locations other than the location where the work is to be performed, and to external candidates.

The notice must contain the following information: (1) available work shifts or days and times the employee must be available to work; (2) the length of time the employer anticipates requiring coverage of the additional hours; (3) a description of the position and its required qualifications; (4) the process by which the employees may notify the employer of their desire to work the offered hours; and (5) if the notice is being posted for less than 72 hours, the notice must contain that information.

Hierarchy of Employees

A covered employer must distribute shifts to one or more employees who have accepted the shifts and who, to a reasonable employer acting in good faith, are qualified to perform the work, provided that: (1) a covered employer must first offer the shifts to employees who regularly work at the location where the shifts are available, and (2) if no such employee accepts the shifts, and it is a regular practice of the employer to schedule employees across multiple locations, the employer must then offer the shifts to employees who work at other locations. If it is not the employer’s regular practice to schedule across locations, then offering the shifts to employees at a different location is optional.

A covered employer may only hire a new employee directly (or through a subcontractor, temporary service or staffing agency) when one of the following three circumstances are present: 

• (1) No employee accepts the offer of available work shifts within 24 hours of the end of the 72-hour posting period; or 

• (2) the employer receives written confirmation from eligible employees that they are not interested in accepting the available work shifts; or 

• (3) existing employees have accepted only a subset of the available shifts, in which case the existing employees must be awarded that subset of work shifts, and external applicants may be offered the remaining shifts. 

A decision to hire new employees from an external applicant pool or subcontractors rather than allocating the work to existing employees violates the Ordinance when the circumstances indicate a lack of good faith or an unreasonable exercise of judgment. 

External Hire Examples

1. An employer posts an opportunity for additional hours with a notice that states the position requires experience as a bartender. The only existing employee who expresses a desire for the hours is Stefan, who works in a server position but has two years of bartending experience at previous jobs. The manager rejects Stefan as unqualified and hires a new employee, Maria, who has two years of bartending experience at a previous job. This action appears to violate the requirement to determine qualifications reasonably and in good faith because Maria and Stefan have similar qualifications – two years of bartending experience at a previous job. 

2. An employer posts an opportunity for additional hours with a notice that states the position requires experience in both cashier and inventory. The only existing employee who expresses a desire for the hours is Remi, who works in a cashier position and has two full years of inventory experience in a previous job. The manager rejects Remi as unqualified and hires a new employee, Paul, with three years of inventory experience. Paul is assigned to work exclusively as a cashier. This action appears to violate the requirement to determine qualifications reasonably and in good faith, because inventory experience is not relevant to the position. 

3. An Employer posts an opportunity for additional hours with a notice that states that the position requires experience in both cashier and inventory. Two current employees express a desire to work the hours: Rudy regularly works in both cashier and inventory positions for this employer, while Stefan works in a cashier position but worked in inventory in a previous job. The Employer assigns all additional hours to Rudy. This assignment reflects a reasonable, good faith judgment regarding qualifications.

The Application of Predictability Pay

If an existing employee accepts the additional work hours , and those hours will be worked within the time period covered by an already posted work schedule, the employer will need to obtain the employee’s written consent to work such hours and the employer must pay the worker the applicable predictability pay unless one of the previously mentioned exceptions to the predictability pay requirement is applicable.

Importantly, a covered employer is not required to assign available shifts in such a way that would require the employer to pay overtime. 

Employer Records

Covered employers must keep records necessary to demonstrate compliance with the Ordinance, including but not limited to good faith estimates of work schedules and any modifications to those schedules, written consent for work shifts as required by the Ordinance, offers of work shifts to existing employees and responses to those offers, and payroll records that specify the amount of additional compensation paid to employees via predictability pay or for working without 9 hours of rest between shifts as discussed above. 

Employers must retain the above-mentioned records for a period of two years and must allow the Office of Benefits and Wage Compliance access to those records, with appropriate notice and at a mutually agreeable time, to monitor compliance with the requirements of the Ordinance. When an issue arises as to a Covered employer’s compliance with the Ordinance, if the employer does not maintain or retain adequate records documenting compliance, or does not allow the Office of Benefits and Wage Compliance reasonable access to those records within 30 days of the its request, it will be presumed that the employer has violated the Ordinance, absent clear and convincing evidence otherwise. 

Upon request by any employee, and in accordance with the rules of the Office of Benefits and Wage Compliance, a covered employer must provide such employee with work schedules for all employees at the location in writing for any previous week for the past two years, including the originally posted and modified versions of work schedules. 

Interference and Retaliation are Prohibited 

It is unlawful for an employer or any other person to interfere with, restrain, or deny the exercise of any right protected under the Ordinance. No person may take any adverse action against an employee that penalizes the employee for, or is reasonably likely to deter an employee from, exercising or attempting to exercise any right protected under this Ordinance. Taking an adverse action includes threatening, intimidating, disciplining, discharging, demoting, suspending or harassing an employee; assigning an employee to a lesser position in terms of job classification, job security, or other condition of employment; reducing the hours or pay of an employee or denying the employee additional hours; and discriminating against the employee, including actions or threats related to perceived immigration status or work authorization.

It is considered a rebuttable presumption of retaliation if the employer or any other person takes an adverse action against an employee within 90 calendar days of the employee’s exercise of rights protected under the Ordinance, unless the adverse action is due to disciplinary reasons for just cause. Notably, in the case of seasonal employment that ends before the close of the 90 calendar day period, the presumption also applies if the employer fails to rehire a former employee at the next opportunity for work in the same position.

Private Right of Action 

Philadelphia’s Office of Benefits and Wage Compliance, the City Solicitor, any person aggrieved by a violation of the Ordinance, or any entity a member of which has been aggrieved by a violation of the Ordinance, may bring a civil action in a court of competent jurisdiction against an employer violating the Ordinance.

Damages

Upon prevailing in an action brought pursuant to the Ordinance, an aggrieved person is entitled to recover the full amount of any unpaid compensation, including predictability pay, to which he or she would have been entitled under, any wages and benefits lost, presumed damages, other damages suffered as the result of the employer’s violation of the Ordinance, and an equal amount, up to a maximum of $2,000, as liquidated damages. Under the Ordinance, an aggrieved person is also entitled to an award of reasonable attorney’s fees and costs. An aggrieved person is also entitled to reinstatement in employment, back pay and injunctive relief.

With regard to presumed damages, the Office has fixed by regulation an amount of presumed damages to be awarded to an employee for the employer’s violations of the Ordinance:

• (1) For a written work schedule estimate that is incomplete or lacks a good faith basis, $200 per impacted employee. 

• (2) For an employer’s failure to provide a written work schedule as required by the Ordinance or to post the work schedule as required, $50 per impacted Employee for each pay period in which the violation occurs or continues. 

• (3) For an employer’s failure to promptly notify the employee of changes to the posted work schedule as required by the Ordinance, $25 per impacted employee for each pay period in which the violation occurs or continues. 

• (4) For an employer’s failure to obtain written consent for added work hours as required by the Ordinance, $100 per impacted employee for each pay period in which the violation occurs or continues. 

• (5) For an employer’s failure to provide written notice of available work hours as required by the Ordinance, $50 per impacted employee for each pay period in which the violation occurs or continues. 

• (6) For an employer’s failure to provide written notice of its policy for distributing work hours as required by the Ordinance, $50 per impacted employee for each pay period in which the violation occurs or continues. 

• (7) For an employer’s failure to award available work hours as required by the Ordinance, $1,000 per impacted employee for each pay period in which the violation occurs or continues.

Importantly, the Office reserves the right to impose triple damages for employers found to be repeat offenders. 

Conclusion

The Ordinance is an expansive piece of legislation that has far-reaching implications for the retail, hospitality, and food service employers that fall within its purview. An estimated 130,000 employees are expected to be impacted by the Ordinance’s requirements. As such, employers are encouraged to consult with legal counsel to ensure that the appropriate policies and procedures are in place to comply with the Ordinance.