Continuing its trend of enacting burdensome ordinances requiring employers with employees in San Francisco to comply with specialized wage and hour requirements, the San Francisco Board of Supervisors has now passed two ordinances aimed at providing wage and hour protections for employees of “formula retail establishments.”  These ordinances are collectively referred to as the Retail Workers’ Bill of Rights. These ordinances are effective January 4, 2015 but do not become operative until July 3, 2015.

The Retail Workers’ Bill of Rights applies to employers operating a Formula Retail Establishment with 20 or more employees in the city of San Francisco, including corporate officers and executives.  A “formula retail establishment” means a business located in San Francisco that falls under the San Francisco Planning Code’s definition of “formula retail use” (section 703.3) except that the business must have at least 20 retail sales establishments located worldwide.  Formula retail establishments are commonly referred to as “chain stores” and include, among other things, retail stores, chain restaurants, fast food restaurants, and bars.  Professional service establishments such as medical offices and/or salons/gyms are not considered formula retail establishments.

The Retail Workers’ Bill of Rights imposes five main requirements on employers:

  1. Advance Notice of Work Schedules and Changes:  Prior to the start of employment, an employer shall provide a new employee with a good faith written estimate of the employee’s expected minimum number of scheduled shifts per month, and the days and hours of those shifts (not including on-call shifts).  The employee may request a modification in the proposed schedule, which the employer is required to consider (but not required to accept) and respond to prior to the employee’s start of employment.  Post-hire, an employer is required to provide employees with at least two weeks’ notice of their work schedules, by doing one of the following at least every 14 days:  (1) posting the work schedule in a readily accessible location in the workplace; or (2) electronically transmitting the work schedule to employees.  The work schedule must include any on-call shifts.  If the employer thereafter changes an employee’s schedule, the employer must give the employee notice of the change, along with “predictability pay” of one hour of pay at the employee’s regular rate for a change with more than 24 hours’ notice but less than 7 days’ notice.  If the employer makes a change with less than 24 hours’ notice, the employer must pay the employee 2 hours of pay for each changed shift of four hours or less, and 4 hours of pay for each changed shift that is more than four hours.  Predictability pay does not apply to on-call shifts, which are separately addressed below.  Predictability pay is not required if the change is necessitated by certain acts beyond the employer’s control (electric outage, etc.) or if (a) another employee previously scheduled to work the shift is unable to work due to illness or use of PTO and did not give the employer at least 7 days’ notice of the absence; (b) another employee previously scheduled to work the shift fails to report to work and/or is fired or sent home as a disciplinary action; (c) the change results only from an employer request to an employee to work overtime; or (d) the employee requests and/or causes the change to his or her own schedule.
  2. Pay for On-Call Shifts:  For each on-call shift that an employee is required to be available but is not called in to work (with less than 24 hours’ notice that the shift has been cancelled or moved to another date or time), the employee must be paid 2 hours of pay (regular hourly rate) for each on-call shift of 4 hours or less, and 4 hours of pay for each on-call shift of more than 4 hours.  The same exceptions to the predictability pay requirements also apply to the on-call pay requirements.
  3. Equal Treatment for Part-Time Employees:  Employers are required to provide part-time employees (those working fewer than 35 hours per week) with the same starting hourly wage as that provided to full-time employees (those working 35 or more hours per week) holding comparable positions.  However, pay differentials are permissible if based on considerations other than the part-time status of the employee.  Employers are also required to provide part-time employees with the same access to paid and unpaid time off offered to full-time employees of the same job classification.  However, a part-time employee’s eligibility for paid or unpaid time off may be pro-rated based on the number of hours that the employee works.  Employers must also provide part-time employees with the same eligibility for promotions as full-time employees of the same job classification, though the employer may condition promotion on the employee’s availability for full-time work and/or on reasons other than the part-time status of the employee.  Finally, the new ordinances require that if an employer has a need for additional workers, before hiring new employees or using contractors or a temporary staffing agency to perform work, the employer must first offer the additional work to existing part-time employees if the existing employees are qualified to do the work and the work is the same or similar type of work the employee already performs.  The employer is only required to offer the part-time employee the number of hours required to give the employee 35 hours of work per week.
  4. Sale of Business:  If a covered retail establishment is sold, the successor is required to retain the seller’s non-managerial incumbent employees who have been employed for at least 90 days prior to the sale.  The successor employer must retain these incumbent employees for at least 90 days and under the same terms of employment already in place (rate of pay, job classification, and number of work hours).  If the successor employer determines that it needs fewer employees than were employed by the prior owner, the successor employer must retain incumbent employees based on seniority and/or the terms of any applicable collective bargaining agreement.  During the 90-day retention period, the successor employer may not discharge a retained employee without cause.
  5. Notice and Recordkeeping:  Covered employers will be required to post a notice of employees’ rights under these new ordinances.  The San Francisco Office of Labor Standards Enforcement (“OLSE”) will prepare and publish the required posters for employer use.  Employers are required to retain pertinent personnel records for three years and these records are subject to inspection by the OLSE.

The Retail Workers’ Bill of Rights provides for administrative investigation and enforcement by the OLSE.  Additionally, the City Attorney’s office may file civil actions against non-compliant employers.  Retail employers covered by these new ordinances should review them promptly and take action to ensure compliance before the operative date of the ordinances, which is July 3, 2015.  The text of the ordinances is available here and here