The Chicago City Council approved the “Chicago Fair Workweek Ordinance” on July 24, 2019. The Ordinance goes into effect on July 1, 2020. The Ordinance will require employers covered by the Ordinance to provide advanced notice of work schedules to their covered employees, and to pay additional wages if posted schedules are changed within a certain time period. The Ordinance also requires employers to offer additional hours to existing employees before hiring new employees.
The Ordinance was first proposed to the Chicago City Council in June 2017. Since then, and after intense lobbying by those representing both employers and employees, the Ordinance has been revised in several respects, resulting in an ordinance described as “a compromise between representatives from labor and business.”1
The purported goal of the Ordinance is to provide predictability, flexible schedules, and financial stability to Chicago hourly workers. The Ordinance borrows from similar ordinances adopted in other major cities such as New York, San Francisco and Seattle. While initially designed to address unpredictable schedules in the restaurant and retail industries, the Ordinance applies more broadly to building services, healthcare, hotel, manufacturing, restaurant, retail and warehouse employers.
Who is covered?
“Covered employees” are employees (as opposed to contractors), or temporary workers if the workers are on assignment with an employer for 420 hours in an 18-month period, who (a) perform the majority of their work within the City of Chicago; (b) perform the majority of their work in a “covered industry”; and (c) earn less than $50,000 a year, for salaried employees, or less than $26 an hour, for hourly employees. The minimum compensation requirement is scheduled to increase annually based on the increase in the Consumer Price Index.2
An “employer” is defined as an entity that employs 100 or more employees (or 250 or more employees if a non-profit corporation), 50 of whom are covered employees, and is primarily engaged in a covered industry.
“Covered industries” are: building services, healthcare, hotels, manufacturing, restaurants, retail, and warehouse services, as those terms are defined in the Ordinance. Notably, “restaurants” means businesses licensed to sell food in Chicago that have at least 30 locations and 250 employees globally, and also excludes business with no more than three locations in Chicago owned by a single employer and operating under a sole franchise. This definition was one of the mostly hotly debated pieces of the legislation, and has changed substantially since the June 2018 proposed ordinance. While the draft legislation exempted employers in only certain industries, the final ordinance has been modified to list specifically those industries that are covered.
Significantly, as with the June 2018 proposed Ordinance, the final Ordinance provides that the Ordinance’s requirements may be “waived in a bona fide collective bargaining agreement, but only if the waiver is set forth explicitly in such agreement in clear and unambiguous terms.”3
What does the ordinance require?
Advance Notice of Schedule:
- Pre-hire, an employer must provide the applicant with a good-faith estimate, in writing, of the covered employee’s projected days and hours of work for the first 90 days of employment, including the average number of hours per week, whether the employee can expect to work on-call shifts, and a subset of the days and times/shifts the employee can expect to work or will not be scheduled to work.
- If a covered employee requests a modification to the projected work schedule, an employer may choose to deny the request, but such denial must be provided to the covered employee in writing within three days of the request.
- An employer must post a notice of rights under the Ordinance in a visible area of the workplace and provide each new covered employee written notification of his or her rights upon hire.
- An employer must provide covered employees with written notice of work hours no later than 10 days before the first day of any new schedule (as of July 1, 2022, this notice must be provided 14 days before any new schedule) by posting the schedule in a conspicuous place at the workplace, or using the usual methods of communication (or both), and, by electronic means upon request.
- An employer may change a posted schedule up to the deadline (10 or 14 days in advance of the first day of the new schedule) without penalty.
- Covered employees who self-schedule or who work for a venue that regularly hosts ticketed events are not covered by these advance notice provisions.
- An employer must permit covered employees to decline previously unscheduled hours if they have not received the advance notice outlined above.
- If a covered employee’s schedule changed within the 10 (or 14) days, the employer must provide the employee with one additional hour of pay for each changed shift as “predictability pay.” This includes when the schedule change adds extra hours, changes the date or time of the scheduled work with no loss of hours, or cancels or subtracts hours from an on-call shift with less than 24 hours’ notice.
- If a covered employees’ hours were cancelled or reduced with less than 24 hours’ notice, a covered employee is entitled to pay in the amount of one-half times the covered employee’s regular rate of pay for hours that are not worked as a result of the change.
- Extra pay is not required in all instances of a schedule change within the 10-day window. For example, schedule changes required by failure of public utilities, acts of nature, or war, or agreed to or requested by the covered employee, will not trigger the requirement for extra compensation. Likewise, manufacturing employers that have a large order cancelled or delayed, healthcare employers dealing with an unexpected increase in the need for healthcare providers, and venues with canceled banquets or ticketed events, may also be exempted from the additional compensation requirements.
- An employer must offer existing covered employees more hours or shifts prior to hiring additional staff. An employer does not need to offer such hours to covered employees if the employee is not qualified to perform the work or if doing so would require the employee to be paid at a premium (e.g., overtime) rate. Employers should not discriminate in how they distribute extra hours, and should endeavor to first offer the hour to part-time employees or existing temporary or seasonal workers.
- Covered employees can decline to work scheduled hours occurring less than 10 hours following the end of a shift. If covered employees agree to work a shift beginning less than 10 hours after the end of a shift, they will be paid at a rate of 1.25 times their regular rate for the entire shift.
- Employers must maintain, for up to three years, records of each employee’s name, hours worked, pay rate, and other documentation necessary to demonstrate compliance with all aspects of the ordinance. Such documentation may include written agreements to modify schedules, written schedules, offers of hours of work to existing staff and responses to such offers. Employers must provide covered employees a copy of their records relating to this Ordinance upon reasonable request.
- Employers are prohibited from retaliating against an employee for exercising any right under the Ordinance, including reporting or testifying about any violation, or requesting changes to their working arrangement.
How will this be enforced?
Employers determined to have engaged in retaliation will be subject to a fine of $1,000. Employers that fail to comply with the Ordinance’s other requirements are subject to fines of $300-$500 for each “offense.” Each day a covered employee’s rights are affected counts as a separate offense.
Covered employees also have a private right of action for violation of the ordinance. Before proceeding to court, however, a covered employee must first file a charge with the Department of Business Affairs and Consumer Protection. A charge must be filed within two years of the alleged violation. The Department will conduct an investigation, including seeking information from the employer. Once the Department has closed an investigation, the covered employee may file a lawsuit. Prevailing employees can recover compensation for damages sustained (which is not limited to payment of the predictability pay), as well as costs, attorneys’ fees and expert witness fees.
How can employers prepare for the ordinance?
Unionized employers should consider negotiating a waiver of rights under the Ordinance into their collective bargaining agreements at the next opportunity.
Non-union employers should review whether they are covered by the Ordinance and, if so, begin taking steps to ensure compliance. The Ordinance does not go into effect until July 2020, so employers may consider using the next year to gradually put practices into effect that would make the transition go more smoothly at that time. For example, managers can begin creating and posting employee schedules further in advance. It may also be useful to begin tracking which events or occurrences typically make it difficult to prepare a schedule 10 days in advance, or result in the need to change schedules on short notice. Such information can help managers develop strategies for anticipating staffing needs or reacting to such events in ways that reduce the need to change schedules in the future.
Employers should also review their new-hire documentation and record-retention practices to ensure compliance with the Ordinance’s advance notice and record-keeping requirements. While the Ordinance specifically states that the good-faith projection of a covered employee’s days, hours, and shifts of work for the first 90 days of employment is not a contract, employers should ensure their new-hire paperwork explicitly disclaims the creation of any contractual obligations. Employers should also ensure that managers are trained on the Ordinance’s requirements for posting and making changes to schedules and on the ordinance’s non-discrimination and retaliation provisions.