Effective April 1, 2023, there are new notice and recordkeeping requirements for retail employers with at least 300 employees globally and with employees working in the City of Los Angeles. In addition, certain scheduling changes will require compensation.
Covered Employers and Employees
The Los Angeles Fair Work Week Ordinance (the Ordinance) covers employers identified as retail businesses in the North American Industry Classification System (NAICS) within the retail trade categories that directly, indirectly, or through an agency employ at least 300 employees globally. Employees are covered if they are entitled to California state minimum wage compensation and work at least two hours within the City of Los Angeles boundaries regardless of where the employer is located.
Work Schedule Requirements
Under the Ordinance, before hiring an employee, employers must provide each new employee with a written good-faith estimate of the employee’s work schedule. If the employee’s actual work hours substantially deviate from the good-faith estimate, the employer must document a legitimate business reason that was unknown at the time the schedule estimate was provided to justify the change.
The Ordinance also provides that employees have the right to request a preference for certain hours and locations of work and employers must notify the employee in writing regarding any reasons for denying their preference request.
Employers must also provide employees with written work schedules at least 14 calendar days before the start of their work period and provide written notice for any employer-initiated changes in the work schedule. Employees have a right to decline any hours, shifts, or work locations not included in the work schedule. If, however, the employee consents to work the schedule change, it must be documented in writing.
In addition, under the Ordinance, employees should not be scheduled to work a shift that starts less than 10 hours from the employee’s last shift without written consent, and a premium of time and a half must be paid for each shift that is not separated by at least 10 hours.
Predictability Pay
The Ordinance provides that employees are entitled to “Predictability Pay” as compensation for changes made by an employer to the employee’s work schedule in addition to any wages earned for work performed by the employee.
If an employee agrees to change their work schedule and that change does not reduce the total time the employee was scheduled to work or does increase the time by more than 15 minutes, the employer must pay one additional hour of pay at the employee’s regular rate of pay.
If an employee’s schedule is reduced by at least 15 minutes, employers must compensate the employee at one-half of the employee’s regular rate of pay for the time the employee does not work.
Employers are not required to provide Predictability Pay under certain circumstances, including when an employee initiates a schedule change, if an employee voluntarily agrees to cover the schedule of another employee, or if hours are reduced as a result of the employee’s violations of employer policies and procedures.
Offer Work to Current Employees First
Under the Ordinance, before hiring a new employee or using a contractor, employers must first offer work to current employees if they are qualified to do the work and the work does not result in a premium rate. Employers are not subject to Predictability Pay requirements if a current employee’s schedule changes as a result of accepting the additional hours that the employer is obligated to offer them.
Recordkeeping and Retention
The Ordinance also includes recordkeeping and retention requirements. Work schedules for all employees, written offers for additional work, work schedule changes, and good-faith hours estimates, as well as any other records required by the Ordinance, must be maintained for a period of three years.
Employer Next Steps
It is imperative that employers train managers and any staff responsible for distributing schedules or supervising employee time to comply with the new scheduling requirements. Failure to provide timely notice of schedules, making significant deviations from hours estimates, contacting employees regarding last-minute schedule changes, or failure to secure written consent from employees for schedule changes are all violations of the Ordinance and in some instances could result in additional pay obligations due to the employee.
Employers should update any internal policies and provide training to managers and the human resources department on the new obligations under the Ordinance. Employers should prepare to provide schedules in accordance with the timing requirements of the new Ordinance. Policies should be implemented to ensure proper documentation and notification of any changes in schedules. Recordkeeping procedures should be updated to incorporate retention requirements. Compensation practices should adequately account for calculation of any potential predictability pay obligations. Employers should also note that retaliation as a result of an employee’s exercise of their rights under the Ordinance is prohibited.
Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.
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