NYC Predictable Scheduling Law To Have Wide-Ranging Effects on Retail and Fast Food Employers

Q.  I heard there is a new law in New York City that covers retail and fast food establishments. What do I need to know?

A.  Effective November 26, 2017, retail and fast food employers will be subject to strict new laws that govern scheduling. The law is meant to provide retail and fast food employees with more predictability around scheduling by requiring employers to provide schedules a certain amount of time in advance, and prohibiting on-call shifts, among other provisions. Retail employers are simply prohibited from violating the law, while the law provides that fast food employers are required to pay employees premiums of varying amounts for some violations.

Retail

In the retail context, the law covers any retail business with 20 or more employees that is engaged in the sale of consumer goods. Consumer goods are defined as products primarily for personal, household, or family purposes, such as appliances, clothing, electronics, groceries, and household items.

Employers are required to provide employees with a written work schedule at least 72 hours before the first shift on the work schedule. In addition, employers will be prohibited from: (1) scheduling an employee for an on-call shift; (2) canceling a regular shift within 72 hours of the scheduled start of the shift; (3) requiring an employee to work with fewer than 72 hours’ notice, unless the employee consents in writing; and (4) requiring an employee to contact his/her employer to confirm whether to report for a regular shift fewer than 72 hours before the start of a shift.

The law permits employees to trade shifts. Moreover, employers may change schedules with fewer than 72 hours’ notice in the case of certain emergencies.

Fast Food

In the fast food context, the law will cover any fast food establishment whose primary purpose is serving food or drink, where patrons order and pay before eating, and that is part of a chain that has 30 or more establishments nationally.

Unlike in the case of retail establishments, fast food employers may make changes to work schedules. But it will cost them money to do so.

Employers are required to provide employees with at least 14 days’ notice of their schedules. If employers make changes to the work schedule with less than 14 days’ notice where additional hours or shifts are added, or the date, start time, or end time is changed with no loss of hours, the employer must pay the employee $10 for each such change.  If the employer makes changes to the work schedule with less than 14 days’ notice where hours are subtracted from a shift or a shift is cancelled, the cost to the employer rises to $45 for each such change.

If changes are made with less than 7 days’ notice but with no loss in hours, the employer must pay the employee $15 for each change. If changes are made with less than 7 days’ notice and the change results in lost hours or a shift is cancelled, the employer must pay the employee $75 per change.

Like in retail, fast food establishments may make changes in the case of certain emergencies. In addition, the employer may make changes without penalty if  the employee requests the change in writing, or if employees voluntarily trade shifts subject to an existing employer policy.

Fast food employers will also be prohibited from requiring employees to work consecutive shifts that involve both the closing and opening of a restaurant. Employers must provide a minimum of 11 hours of time off between shifts when the first shift ends on the previous calendar day or spans two calendar days.  The law provides an exception if the employee requests or consents to work such hours in writing, but even in such a scenario, the employer must pay a premium of $100 for each such shift.

Finally, the law requires fast food employers to offer shifts to current employees before hiring additional employees. The law establishes a specific procedure for offering the shifts, which involves posting a notice with detailed information about the shifts.  Employers are required to offer hours to current employees until the point at which the employer would be required to pay overtime, or until all current employees have rejected available hours, whichever comes first.

Recommended Action for Compliance

As is clear from the description above, the law is extremely onerous for retail and fast food employers, and particularly so for fast food employers. Given the high premiums employers must pay for violations of the new law, it is essential for employers to begin preparing for the law significantly in advance.  Employers should conduct a detailed review of their scheduling procedures and systems, and revise them to make scheduling more predictable (and in line with the upcoming law).  Given the unpredictable nature of the fast food industry, particularly in New York City, it will be nearly impossible for employers to avoid paying any premiums under the law.  However, with advance preparation, employers can certainly take steps to minimize the premiums that will be paid.

We expect that many employers will take the potential premiums into account when setting hourly pay rates for those employees who are paid above the minimum wage. Employers who would otherwise pay a higher hourly rate may decide to pay a lower rate to account for the potential premium payments.

While the law provides for many exceptions based on consent (as well as request) from employees, consent is often an amorphous concept in the world of employment litigation. We strongly recommend obtaining written consent (rather than verbal consent) so there is a record.  It is unclear under the law whether employers must get written consent for each instance, or whether a blanket written consent suffices.  To balance administrative ease and risk management, we recommend having a blanket written consent form that each employee can fill out (with check boxes for the various kinds of consent), and then if possible, confirming each instance of consent via email or text.  It is a good idea to partner with an employment lawyer to ensure that your consent forms are in compliance.

-Jessica Rothenberg

Comp Time in Lieu of Overtime

Q.  An employee worked several hours of overtime last week. Can I offer him compensatory time off, to use in the future, rather than pay him overtime?

A.  Currently, unless you are a public-sector employer, the answer is no. Under the Fair Labor Standards Act, employees who are not exempt must be paid overtime pay (one and one-half times their regular pay rate) for all hours worked over 40 in a work week.

That may soon change, however.

Just yesterday, the House of Representatives passed a bill that would amend the Fair Labor Standards Act to allow certain employees to take paid time off rather than receive overtime pay when working more than 40 hours in a week.  Dubbed the Working Families Flexibility Act, the Bill would allow employees to accrue up to 160 hours of compensatory time in a year, at a rate of 1.5 hours for each hour of overtime worked.

The Bill contains some guidance on how to administer such a policy. The employer may provide compensatory time to employees in lieu of overtime pay only if the arrangement is agreed to through a collective bargaining agreement or  in a written agreement between the employer and employee.  The employee must be allowed to use the comp time within a reasonable period after the request, so long as the comp time does not “unduly disrupt the operations of the employer.”

To become eligible to participate in a comp time program, employees will have to have worked at least 1,000 hours of continuous employment in the 12-month period preceding the date of the agreement or receipt of comp time.

Any unused comp time would have to be paid back by the employer at the end of the year (or upon 30 days of notice by the employee in the case of accrued time in excess of 80 hours). Significantly, an employee who has accrued compensatory time off also must be paid for the unused comp time upon termination, regardless of whether the termination was voluntary or involuntary.  In this way, comp time would need to be handled differently from accrued vacation time, which is not necessarily subject to pay upon termination, depending on state law.

It remains to be seen whether this Bill will become actual law, or if it does, whether it will be modified to pass the Senate. If it does pass through the Senate, however, the President has pledged to sign it.

If this option becomes available to private-sector employees in the future, employers will have to take a hard look at their processes to determine whether offering comp time in lieu of overtime makes sense for their organization. While some employers may applaud this initiative as a cost-saving method and a way to provide flexibility to employees, others may see such a program as an administrative burden.

– Tracey E. Diamond

Philly Wage Ordinance on Hold . . . For Now

Q.  I understand that the Philadelphia Wage Ordinance was supposed to go into effect soon. Do I need to take action to comply now?

A.  As we blogged previously, the new Philadelphia Ordinance would make it unlawful for employers in Philadelphia to inquire about a prospective employee’s wage history or require disclosure of wage history as a condition of employment. Employers would only be permitted to rely on such information if the prospective employee knowingly and willingly disclosed his or her wage history to the employer.

The Ordinance provides that its requirements go into effect on May 23, 2017. On April 6, 2017, however, the Philadelphia Chamber of Commerce brought suit to challenge the Ordinance.  The Chamber filed a motion for a preliminary injunction on the grounds that the ordinance violates the free speech rights of businesses under the First Amendment and is unconstitutionally vague.

On April 19, 2017, the Court issued a temporary restraining order staying the enforcement of the Ordinance until the Court can consider and decide the Chamber’s motion for a preliminary injunction. Thus, at least for now, the Ordinance will not go into effect on its May 23rd effective date.

While the suit has halted the effective date of the Ordinance for the time being, we recommend that employers take steps now to prepare in case the Chamber’s suit is unsuccessful. The Philadelphia Ordinance is one of several initiatives across the country enacted to limit employers’ ability to obtain salary history as part of the interview process, and we expect this trend to continue.

If the Ordinance ultimately is upheld, employers who do business in Philadelphia will have to revise their employment applications to delete any questions inquiring about an applicant’s wage history. Recruiters, HR personnel and managers also may need to be trained about the new law so that these individuals know not to ask wage-based questions during the interview process.  In addition, employers may have to consider revising their Equal Employment Opportunity policies to add wage history to the list of protected categories.

-Tracey E. Diamond