Forget $15 an hour, this legislation is worse
Earlier this year, San Francisco sent shockwaves through the business community when it enacted the “Retail Workers Bill of Rights,” two ordinances that significantly burden retail employers operating in San Francisco by requiring large retailers to provide “predictability pay” to any employee who does not receive sufficient notice of scheduling changes.
Just a few months into his first term in the California legislature, Assemblyman David Chiu, who helped introduce the Retail Workers Bill of Rights during his term as President of the San Francisco Board of Supervisors, has launched an effort to extend the regulations throughout California by way of Assembly Bill 357 (“AB 357”), which its sponsors have dubbed the “Fair Scheduling Act of 2015.”
While narrower than the San Francisco ordinance, AB 357 proposes significant new burdens for the operation of so-called “food and general retail establishments,” which AB 357 currently defines as a “retail sales establishment” that has “a physical location with in-person sales” in California, at least 500 or more California employees, at least 10 other such retail sales establishments in the United States, and maintains two or more of the following:
A standardized array of merchandise
A standardized façade
A standardized decor and color scheme
Uniform apparel
Standardized signage
A trademark or a service mark
Importantly, retail establishments whose primary activity is “the provision of customer service” and who only sell merchandise as a secondary or incidental activity to customer service are not considered “food and general retail establishments.” AB 357 also excludes online retailers that lack a physical location with in-person sales in California and franchises that do not independently meet the definition of a “food and general retail establishment.”
Like its San Francisco counterpart, AB 357 seeks to provide those employed by large retailers with “predictability and dignity in how they are scheduled to work.” It does so by requiring food and general retail establishments to provide their non-exempt employees with at least two weeks’ notice of their work schedules. Under AB 357, any covered employer that fails to provide an employee with sufficient notice of a change to his or her schedule must provide the employee with compensation for each affected shift. The amount of compensation required for insufficient notice of schedule changes varies with the amount of notice provided and the length of the affected shift.
For example, AB 357 currently states that a covered employer must provide a non-exempt employee with one hour of pay at the employee’s “regular hourly rate” if the employee receives less than seven days’ notice but at least 24 hours’ notice of a scheduling change. However, a covered employer must provide four hours of pay if less than 24 hours’ notice is provided for a schedule change affecting a shift exceeding four hours.
AB 357 also would require covered employers to compensate an employee who is required to remain available for an “on call” shift but who is not actually called into work, unless the on-call time constitutes “hours worked” under California law and the affected employee is actually compensated for that time.
AB 357 states that employers shall not be required to compensate employees for scheduling changes in seven limited circumstances, such as changes resulting from a previously scheduled employee’s unexpected inability to work due to illness, vacation, or PTO; an employee’s failure to report to work; the termination of a previously-scheduled employee; an “act of God”; or an employee’s decision to trade shifts with another employee or to request a change to his or her schedule. Notwithstanding these exceptions, significant risks remain. As some opponents have noted already, AB 357 is ambiguous with respect to its requirement that covered employers pay a penalty if they “require” an employee to work a previously unscheduled shift.
Moreover, although AB 357 only requires employees to compensate employees for schedule changes with less than seven days’ notice, it states that employers must provide non-exempt employees with two weeks’ notice of their schedules. The failure to do so would be actionable under the Private Attorneys General Act of 2004 (“PAGA”), which authorizes individuals to act as agents of the state to recover civil penalties on behalf of themselves and other aggrieved employees for violations of the California Labor Code.
At this point, AB 357 does not describe the form or substance of the notice employers must provide. Whether AB 357 will actually become part of California law remains unclear. On April 22, the bill narrowly passed in the Assembly Committee on Labor and Employment, with one Northern California Democrat joining two Republican Assembly members in voting against the bill. The bill still has a long way to go, however, and has been aggressively opposed by the California Chamber of Commerce, which has already labeled AB 357 as a “job killer” due to its “unfair, one-size fits all, two-week notice scheduling mandate.”
Nevertheless, California’s heavily Democrat, union-friendly legislature is typically keen on expanding worker protections and benefits, as evidenced by recent laws broadening the definition of protected whistleblower activity, increasing the minimum wage, and mandating a minimum number of paid sick days. Given the current climate surrounding the debate on the minimum wage, passage of AB 357 would not be surprising.
One hopes, however, that if AB 357 progresses through the California legislature, it will be amended so as to strike an appropriate balance between providing more scheduling stability for non-exempt employees and the constantly fluctuating economic and regulatory demands faced by large California retailers, which must already comply with some of the strictest and most complicated wage and hour laws in the United States. Also, not to be forgotten is the fact that at 6.5 percent, only five states in the country have higher rates of unemployment than the so-called “Golden State.”
Anthony J. Oncidi and Keith A. Goodwin are lawyers with the firm of Proskauer Rose LLP.