On December 5, 2014, the city and county of San Francisco enacted two ordinances, collectively known as the “Retail Workers Bill of Rights” (“RWBR”). The ordinances are aimed at giving chain store employees more predictable work schedules and the opportunity to work more hours.

The RWBR will go into effect on July 3, 2015, and its supporters predict that it will affect more than 40,000 workers at 1,250 retail establishments in San Francisco. Although the law is the first of its kind in the nation, other cities – including Santa Clara, New York City and Washington, D.C. – are considering similar measures. These developments reflect workers’ rights advocates’ increased focus on part-time employment and, in particular, on large retailers’ use of “just in time” labor cost software that generates and modifies employee schedules on short notice based on sales history, real-time sales data and variables such as weather patterns. Accordingly, the San Francisco law is potentially of interest not only to those currently affected employers, but also to businesses operating elsewhere.

Coverage

The RWBR applies to “Formula Retail Establishments” with at least 20 retail locations worldwide and at least 20 employees in San Francisco. A “Formula Retail Establishment” is a business that is standardized in at least two of the following categories: merchandize; façade; décor and color scheme; employee attire; signage; or trademark or service mark. This definition encompasses diverse businesses, including retail stores, restaurants and bars, certain financial institutions, movie theaters and beauty salons. Moreover, key provisions of the law apply to “Property Services Contractors,” defined as “any contractor or subcontractor of an Employer that provides janitorial and/or security services to the Employer . . . .”

Initial Estimate of Minimum Hours

The law requires that, before a new employee begins work, the employer must provide a “good faith” but non-binding written estimate of the employee’s minimum number of scheduled shifts per month (excluding on-call shifts), and the days and hours of those shifts.

Advance Notice of Work Schedule and “Predictability Pay”

Covered employers must give employees at least two weeks’ advance notice of their work schedules, including on-call shifts. If the employer changes or cancels an employee’s scheduled shift upon less than seven days’ notice, it must pay the employee for one additional hour. For shift changes made with 24 or less hours’ notice, employees must receive two to four hours of pay, depending on the length of the scheduled shift.

If an employee is required to be on-call for a shift, but then is not called into work, the employee is entitled to between two and four hours of predictability pay, again depending on the length of the scheduled shift. If the employer gives at least 24 hours’ notice that the on-call shift has been moved or cancelled, no predictability pay is due.

The advance notice and predictability pay provisions do not apply when the employer cannot operate its business for various reasons beyond its control, including threats to employees or property, failure of public utilities, and earthquakes and other public emergencies. In addition, the provisions do not apply when the employee is required to work overtime or substitute for an unexpectedly absent co-worker.

Equal Treatment for Part-Time Employees

Part-time employees – defined as employees working less than 35 hours a week – must receive the same starting hourly wage paid to new full-time employees holding the same jobs. Part-timers are also entitled to the same access to employer-provided time off, pro-rated to account for their part-time schedules. They are also eligible for the same promotions, although the employer may condition eligibility on the employee’s availability for full-time work or factors unrelated to the employee’s part-time status, such as the amount and nature of previous work experience.

Additional Hours for Part-Timers

Covered employers must offer any additional hours of work to current part-time employees before hiring new employees, contractors or temporary workers. Such offers must be in writing, and are required only if (1) the part-time employee is qualified for the job, and (2) the work is “the same or similar” to work already being performed by the employee. The employer need not offer any part-time employee more than 35 hours in a work week, and may divide the additional work hours among its part-time employees.

Retention After Sale of Business

When a business is sold, the successor employer must retain existing employees (excluding managerial, supervisory and confidential employees) for 90 days. If the new employer needs fewer employees to run its business, it may lay off workers based on seniority or pursuant to a collective bargaining agreement. During the 90-day period, the new employer may not terminate retained employees without “cause” (a very high standard that means more than simply poor work performance).

Notice of Rights, Record Retention, Enforcement and Anti-Retaliation

The RWBR requires employers to post a notice of employee rights, to be developed by the San Francisco Office of Labor Standards Enforcement. That agency is also responsible for enforcing the law, and may seek civil penalties, payment of wages, injunctive relief including reinstatement, and attorney fees. Employers must retain records showing compliance with the law for at least three years. The law also prohibits retaliation against employees who exercise their rights under the RWBR.

Practical Tips

Covered employers should consult with counsel to ensure that scheduling and payroll procedures and practices comply with the new law. Employers who use “just in time” scheduling software may need to consult with software providers about needed modifications, and/or train managers how to override such systems when necessary to avoid predictability pay. Employers must also revise policies relating to hiring, employer-provided time off and promotions to ensure that current part-time employees are treated equally, and are offered any available additional hours before new employees are hired. Offer letters or new hire materials should include the required initial estimate of minimum shifts for the new employee. Employers that contract with janitorial or security services must ensure that new contracts require the service to comply with the RWBR. Finally, covered employers should modify their record retention policies to preserve necessary documentation of their compliance with the law.