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Labor & Employment Alert >> Effective July 3: San Francisco Ordinances Impose Significant Employment Obligations on Retail Industry

July 1, 2015

San Francisco recently passed a set of ordinances – the “Retail Workers Bill of Rights” – that may drastically change the employment practices of certain large retail employers through significant obligations and penalties. The ordinances are set to go into effect on July 3rd and will require that covered employers change several of their standard employment procedures.

Employers Affected
The ordinances affect employers identified as “formula retail establishments” that employ at least 20 employees within the City of San Francisco and operate at least 20 retail sales establishments worldwide. Retail sales establishments are those that generally maintain certain standardized features, including a standardized array of merchandize, facade, décor and color scheme; uniform apparel; standardized signage and a trademark or a service-mark. “Retail sales” include a list of establishments such as bars, restaurants, clothing stores, hotels, gyms, pet day care centers, etc.

What These Ordinances Mean

Additional Hours for Part-time Employees:

Employers must offer – in writing – any additional work to existing part-time employees before hiring any new employees, contractors, or a temporary services or staffing agency. This requirement is contingent upon the part-time employees being qualified to do the additional work, as well as the additional work being of the same nature as work the employees have performed for the employer in the past. An employer may divide these additional work hours amongst part-time employees at its discretion and is only required to offer each part-time employee the number of hours necessary to give them 35 hours of work per week. There are additional obligations on covered employers upon a change in control.

Scheduling Security and Equal Treatment for Part-time Employees:

Employers must provide each new employee upon hire with a written good faith estimate of that employee’s expected minimum hours per month. Additionally, employers must consider any employee’s request to modify those hours, but they are not required to agree to the request.

An employer must also provide its employees at least two weeks’ notice of their work schedules, and must provide notice of any change to an employee’s work schedule through an in-person conversation, telephone call, email, text message, or other electronic communication.

Furthermore, an employer must provide compensation for changing an employee’s schedule with limited notice. For any change that occurs with less than seven days’ but more than 24 hours’ notice, the employer must pay the employee one hour of pay. For changes with less than 24 hours’ notice, the employer must pay two hours of pay for each shift of four hours or less, and four hours of pay for each shift of more than four hours.

On-call shifts must be compensated as well, regardless of whether an employee is required to actually report for work. Employers must pay two hours of pay for each on-call shift of four hours or less and four hours of pay for each on-call shift of more than four hours.

Finally, the ordinance mandates equal treatment for part-time workers. Part-time workers must be paid the same starting hourly wage as full-time workers who hold equivalent jobs, must be provided the same access to paid and unpaid time off, and must be afforded the same eligibility and consideration for promotions. A part-time employee’s access to time off, though, may be prorated based on the number of hours he or she works, and an employer may condition promotion on reasons other than the part-time status of the employee, such as amount of work experience.

When and How These Ordinances Will Be Enforced

The San Francisco Office of Labor Standards Enforcement will begin to enforce these ordinances on July 3rd, 2015. Should it find a violation, it may order the employer to provide “appropriate relief” to anyone affected by the employer’s failure to comply. Moreover, an employer may be required to pay $50 to each employee whose rights were violated for each day that the violation occurred or continued. There are also fines for specific violations, such as a $500 fine for the failure to make a required offer of additional hours in writing.

Health Care Implications

While the ordinance does not directly impose an obligation on employers to provide health care benefits to these workers, the Affordable Care Act (ACA) implications must be assessed, as more employees may move into full-time designations, requiring an offer of affordable coverage to them (or an ACA tax may be imposed). Employers must also still comply with the San Francisco Health Care Security Ordinance, which requires employers to make certain health care expenditures on behalf of covered employees.

Bottom Line

The Retail Workers Bill of Rights only affects a small number of employers, but for those that it does affect, it may radically change their employment practices and expose them to significant penalties. Any affected employer should consult with counsel and promptly ensure that their San Francisco managers understand and comply with the new requirements.

Author(s)

GREGG BROCHIN
Partner
212.468.4950
gbrochin@dglaw.com
Labor & Employment

ALAN HAHN
Partner/Co-Chair
212.468.4832
ahahn@dglaw.com
Benefits & Compensation