A controversial new measure in San Francisco will impose new regulatory burdens on retailers there. But its supporters say it-and similar measures being debated elsewhere-are good for employees and for business.
By Andrew R. McIlvaine
A new set of ordinances that restrict San Francisco retailers in how they manage the scheduling and staffing of their establishments is about to go into effect-and experts say retailers in other parts of the United States had better be paying attention.
The ordinances, known collectively as the Retail Workers Bill of Rights, will affect roughly 40,000 employees at stores, restaurants, movie theaters and hotels classified as "formula retail"-those with 20 or more employees in San Francisco and 20 or more global locations. Businesses covered by the law will be required to, among other things, notify workers of their schedules at least two weeks in advance, offer more hours to their existing part-time workers before hiring new ones or using contingent labor and provide extra compensation to "on-call" workers whose shifts are canceled within 24 hours or less.
Similar measures are under consideration in at least 10 states, including California, Minnesota, Maryland, New York and Oregon as well as municipalities such as Washington and Milwaukee, says labor and employment attorney Lisa Schmid, of Nilan Johnson Lewis in Minneapolis. On the federal level, a similar bill co-sponsored by Sen. Elizabeth Warren (D.-Mass.) is expected to be introduced next month.
"Other areas are likely to follow this path eventually-the list of states and municipalities considering measures like this will only grow," she says.
The trend is being driven partly by backlash against so-called "just-in-time" scheduling, an increasingly common practice-enabled by sophisticated software algorithms-in which workers' schedules are altered or reduced to correlate with sudden fluctuations in customer traffic, says Schmid.
Although the intent is to ensure stores save money and improve customer service by having the right number of employees at the right times, the effect on many employees has been negative, says labor and employment attorney Gail Gottehrer of Axinn Veltrop & Harkrider in Hartford, Conn.
"Technology has made it easier to be more precise; unfortunately, that kind of efficiency has been hard on workers and has had difficult consequences for them," she says.
"We hear a lot about workers not getting their schedules until one or two days before their shifts, employees being placed 'on call' and not knowing whether or not they'll have to work until the last minute, in which case they have to put their whole day on hold, arrange for child care and so on and yet end up not actually receiving any work or pay," says Liz Ben-Ishai, senior policy analyst at CLASP, a Washington-based organization that advocates for low-income workers and is an active proponent of the legislation.
In many instances, workers are sent home from their shifts if business is slow or if their hours will be unexpectedly reduced, she says. The net effect is wide fluctuations in pay and work schedules from week to week, which can make it impossible to attend school, hold down another part-time job or care for a family member, she says.
Providing workers with work schedules well in advance is not only good for the employees, but good for retail establishments as well, says Ben-Ishai.
"We work with a lot of employers who've found that giving employees advance notice for schedules is good for business," she says, adding that these companies have experienced lower turnover and better retention of their best employees.
Indeed, companies that require their employees to work erratic work schedules often pay a price in terms of increased absenteeism, high turnover and poor customer service, says Ed Soule, an associate professor of ethics at Georgetown University's McDonough School of Business. Soule was the co-author of a report published last year documenting the experience of Alta Gracia, an apparel firm in the Dominican Republic that enjoyed virtually zero turnover among its employees after committing to pay them a living wage.
"Erratic scheduling is a serious problem if you're on the receiving end of it," says Soule, whose career prior to academia included serving as the CFO of financial-services firm Edward Jones. "If you want to foster a culture in which the default position of most people is that they're going to show up on time, sober and ready to work hard-and to care about the work they do-then your employment practices would take into account the employees' point of view."
Regardless of its ultimate effect, however, the Retail Workers Bill of Rights-and legislation similar to it-will impose a significant compliance burden on employers, at least initially.
"One of the greatest challenges is the ambiguity of the ordinances," says Punam Sarad, a shareholder at Jackson Lewis whose clients include retailers in San Francisco.
Sarad recently convened a meeting of retailers in San Francisco to discuss the ordinances. The meeting was attended by three representatives of the city agency that will be writing and enforcing the regulations who "took copious notes" while the retailers expressed their concerns, she says.
Employee onboarding is a big concern, says Sarad.
"The legislation, as written, requires employers to provide new employees with a 'good faith estimate' of the number of shifts they'll be working for each month-the difficulty there is that the retail environment is very fluid, and retailers are concerned that it could limit their ability to respond to business changes," she says.
The provisions that regulate how stores can disburse extra hours among employees and when they can hire new employees versus giving their existing ones extra hours are also unclear, says Sarad.
To ensure compliance in the event similar ordinances are passed elsewhere, Gottehrer suggests that retailers with locations in multiple jurisdictions consolidate their scheduling function to ensure accuracy and consistency. Managers should also be properly trained to ensure that scheduling decisions are based on business reasons, and that these are clearly articulated to employees who may have questions about their schedules, she says.
"All of these statutes talk about ensuring that no one is retaliated against for requesting certain schedules, so you need to train on that-even a stray comment made by a supervisor could be seen by an employee as retaliatory," says Gottehrer. "Retaliation claims have a way of taking on a life of their own."
Similar laws being proposed in Illinois, Michigan and New York require store managers to have "interactive conversations" with employees who request schedule changes, she says. Managers will need to be trained on documenting these conversations, and retailers should also encourage open-door policies to ensure employees with concerns about scheduling and other issues go to HR first, instead of a lawyer, she says.
Neil Trautwein, vice president of the Washington-based National Retail Federation, acknowledges that just-in-time staffing has come under criticism, but adds that the practice is still "evolving" and that stores are making changes on their own to minimize disruption to their employees' lives.
"We think legislation [in this area] is premature," he says. "We think self-adjustment is a better way to evolve," he adds, pointing to companies such as Wal-Mart and Starbucks, which have adjusted their scheduling practices in the face of criticism. Imposing new requirements on employers may backfire by causing them to cut back on staffing levels, he adds.
However, the increased stability such legislation could bring to employees' lives-and the possible concurrent effect on customer service-should not be overlooked either, says Soule.
"If you sat down with employees and said 'Let's come up with a set of practices that will increase the chance you'll be a wonderful ambassador for the company,' the result would probably look a lot like the Retail Workers Bill of Rights," he says.
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