Over the past few years, one of the biggest trends in employment law has been the proliferation of local ordinances imposing workplace standards beyond those mandated by state and federal laws. While many state governments have moved to preempt such regulations, California’s legislature has openly encouraged them, particularly in the wage and hour context. Unsurprisingly, California cities have passed a flurry of new workplace ordinances in recent years. Three new developments are worth noting for employers with employees working or living in the San Francisco Bay Area.
Emeryville Implements a “Soft Launch” of its “Fair Workweek Ordinance”
Last fall, Emeryville (a small city nestled between Berkeley and Oakland) became the third U.S. city (after San Francisco and Seattle) to enact a so-called “predictive scheduling” ordinance, which it named the Fair Workweek Ordinance (the “FWO”). The FWO became effective on July 1, 2017. Like similar ordinances that have sprung up around the country, the FWO regulates the amount of notice that employers must provide to covered employees about scheduled shifts and scheduling changes. (We recently reported the impacts of other predictive scheduling laws here.) It also imposes significant restrictions on the type of shifts employers can require covered employees to work and limits the circumstances under which employers can hire new employees when additional work hours become available. Covered employers are encouraged to carefully review the FWO’s numerous provisions and update their policies and practices accordingly.
Does Emeryville’s Fair Work Ordinance Apply to Your Company?
The FWO applies to any employee covered by California’s minimum wage law who performs at least two hours of work within the geographic boundaries of the City of Emeryville in a calendar week for either of the following:
- A “Retail Firm” with 56 or more total employees throughout the world; or
- A “Fast Food Firm” that has 56 or more employees globally and 20 or more employees in the City of Emeryville.
As used in the FWO, a “Firm” refers to any business organization or entity consisting of one or more establishments under common ownership control. “Retail Firms” include any Firm with establishments that sell or rent merchandise, such as department stores, furniture stores, electronic stores, bicycle shops, hardware stores, etc. Under the FWO, “Fast Food Firms” encompass “Firms” that own or control restaurants where patrons order and purchase food or beverages before eating and which can be consumed on or off premises. However, Fast Food Firms do not include restaurants where alcoholic beverages can be served with meals or any restaurant where food or beverages are ordered at table and paid for after consumption.
What if Your Company Doesn’t Comply with the Fair Work Ordinance?
With respect to government enforcement actions, the City of Emeryville has implemented a “soft launch” of the FWO through December 31, 2017. During this period, the City will investigate complaints of violations and educate employers about their duties under the FWO, but it will not assess penalties or fines. However, the “soft launch” does not mean that employers are immune from liability. While the City will not be assessing penalties until 2018, the FWO still allows any covered employee “claiming harm” from an alleged violation of the ordinance to bring a civil action for wages, reinstatement, injunctive relief, and/or civil penalties. The FWO’s primary substantive provisions are summarized below.
Advance Notice of Work Schedules Are Required
Under the FWO, employers must provide covered employees with a written, good-faith estimate of their “work schedule” at or prior to the commencement of employment. This must include information about the employee’s estimated shifts and the start and end times during a typical calendar week. Employers must also provide covered employees with at least two weeks’ advance notice of their actual work schedules by conspicuously posting work schedules at the workplace on a biweekly basis. New employees may receive their schedule prior to or on their first day of work. Employers may electronically transmit work schedules instead, so long as employees have access to the electronic schedule at the workplace.
Scheduling Changes May Require “Predictability Pay” as Penalty
The FWO specifically requires employers to provide notice of employer-initiated changes to previously scheduled shifts through an in-person conversation, a telephone call, or an “electronic communication” to the employee. In addition, it aims to disincentivize scheduling changes with less than two weeks’ notice by giving employees a general right to decline previously unscheduled hours and by requiring employers to pay a penalty designated as “predictability pay” when they fail to provide employees with timely notice of a scheduling change. The penalties are similar to the penalties that California employers are required to pay when they fail to provide employees with meal and rest periods. If, for example, an employer provides less than 14 days’ notice of a shift being added, canceled, moved, reduced, or lengthened, the employer must provide an employee with one additional hour of pay at his or her regular rate of pay per affected shift. If less than 24 hours’ notice are provided, employers could be required to pay as much as four hours of additional wages per affected shift.
However, not all scheduling changes require penalty payments. Penalty payments are not required if the changes result from mutually agreed-upon shift swaps or coverage among employees or situations where operations cannot begin or continue due to threats to employees, public utility failures such as power outages, acts of nature, or other limited situations outside of the employer’s control.
Employers Must Offer Work to Existing Part-Time Employees
In an effort to provide covered employees with higher hours of work, the FWO requires employers to offer available work to part-time employees scheduled to work less than 35 hours in the applicable calendar week before hiring new workers or employees. Employers must make these offers for additional hours in writing or by posting the offer in a conspicuous location in the workplace.
Covered Employees Receive a New “Right to Rest”
Further complicating scheduling practices, the FWO also targets so-called “clopening” schedules that require an employee to work an “opening” shift immediately after a “closing” shift. To prevent employees from being required to work clopening shifts, the FWO gives covered employees an unqualified right to decline work hours that occur within 11 hours of:
- The end of the previous day’s shift; or
- The end of a shift that spanned two days (such as an overnight shift ending at 6:00 a.m.).
Although the FWO permits employees to voluntarily work these types of shifts, it requires employees to accept clopening shifts in writing and requires an employer to pay the employee an overtime rate for all hours worked within 11 hours of the end of their previous shift. Thus, an employee who agrees to work a 9:00 a.m. to 5:00 p.m. shift the day after working a 3:00 p.m. to 11:00 p.m. shift will be entitled to an overtime wage for the employee’s first hour of work (i.e., from 9:00 a.m. to 10:00 a.m.).
Posting and Recordkeeping
Like many local ordinances, the FWO requires employers to post City-approved notices and to distribute notices of rights under the FWO to all current employees and new hires. Draft regulations being contemplated by the City after a public comment period also require employers to maintain records demonstrating compliance with the FWO for three years, including spreadsheets used to calculate coverage under the FWO, calculations of regular rates of pay, copies of posted work schedules, and postings of additional hours of work available to part-time employees.
FOLLOWING A NATIONAL TREND, SAN FRANCISCO BANS INQUIRIES INTO SALARY HISTORY
Across the bay from Emeryville, San Francisco recently joined the growing movement to ban inquiries into job applicants’ prior salary and to limit the conditions under which salary history information may be used.
Inquiries into salary history have long been viewed with skepticism by the Equal Employment Opportunity Commission. Nevertheless, questions about prior salary are common during the hiring process, because the answers may give employers insight about the perceived “market rate” for the position and higher salary expectations help weed out certain applicants. In recent years, however, several critics have argued that salary history inquiries may perpetuate race and gender pay disparities. Based on such arguments and studies, a growing number of state and municipal governments have initiated efforts to prohibit inquiries into job applicants’ prior salary or to limit the circumstances under which employers may use salary history information, including Massachusetts, Delaware, Oregon, Philadelphia, and New York City.
On July 1, 2018, San Francisco’s Parity in Pay Ordinance (the “PPO”) will go into effect. The PPO generally prohibits employers who are required to be registered to do business in the City of San Francisco from engaging in the following acts with respect to their San Francisco employees and job applicants:
- Directly or indirectly inquiring into an applicant’s salary history.
- Using an applicant’s salary history as a factor in determining whether to extend an offer of employment to an applicant.
- Relying upon an applicant’s salary history in determining what salary to offer the applicant.
- Releasing a current or former employee’s salary history to a prospective employer without the current or former employee’s written authorization (unless release is required by law or the salary is publicly available or subject to a collective bargaining agreement).
Notwithstanding those general rules, however, the PPO does permit employers to “consider” an applicant’s prior compensation when determining a proposed salary for an applicant if the applicant discloses his or her prior salary “voluntarily and without prompting.” The ordinance also authorizes employers to engage in discussions with the applicants about “expectations with respect to [s]alary.”
The PPO will be enforced by San Francisco’s Office of Labor Standard Enforcement (“OLSE”), which will also develop required notices for covered employers to post at workplaces. The OLSE will issue warnings and notices to correct violations of the PPO in 2018, and will issue determinations and penalties for violations beginning in 2019. The OLSE will also be authorized to refer noncompliance to the City Attorney, who may then initiate a civil action to obtain “such legal or equitable relief as may be appropriate to remedy the violation.”
While limited to San Francisco employers, the PPO may be a harbinger of things to come for all California employers. Under last year’s amendments to California’s Equal Pay Act, California employers may inquire into salary history, but may not rely on salary history to justify disparities in pay between employees of different races, ethnicities, or sexes. In May, the California State Assembly passed a bill proposing to prohibit salary history inquiries statewide by a wide a margin. The bill is expected to come up for a vote in the California State Senate soon. Although Governor Brown vetoed a similar bill passed by the California State Legislature in 2015, California democrats now have the legislative supermajority needed to override a veto, should they wish to do so.
SAN FRANCISCO ENACTS NEW RULES FOR ACCOMMODATING LACTATING EMPLOYEES
San Francisco also recently chose to raise the bar for accommodating lactating employees in the workplace. California law currently requires every employer to provide employees desiring to express breast milk for their infant child with a reasonable amount of break time to do so and to make reasonable efforts to provide a room or other location close to an employee’s work area (other than a toilet stall) for an employee to express breast milk in private. Similar accommodation requirements are imposed under federal law.
Beginning January 1, 2018, all companies whose employees work within the geographic boundaries of the City of San Francisco will also need to comply with additional requirements imposed by San Francisco’s newly-enacted Lactation in the Workplace Ordinance (“LWO”) with respect to their San Francisco employees.
Additional Requirements for Lactation Locations
Expanding on state and federal laws that require the provision of a private room or location to express breast milk, the LWO requires employers to provide employees desiring to express breast milk for their child during the workday with a “lactation location” that:
- Is safe, clean, and free of “toxic or hazardous materials”;
- Contains a surface, such as a table or a shelf, to place a breast pump and other personal items;
- Provides a place to sit; and
- Has access to electricity.
The ordinance also requires employers to provide covered employees with access to a refrigerator where they can store breast milk and to a sink with running water within “close proximity” to their work area. The ordinance does not, however, require accommodations that impose “undue hardship,” such as building a room, undertaking a construction project, or removing restaurant seating or retail floor space.
Written Policy Required for Lactation Accommodations
On or before January 1, 2018, employers covered by the LWO must also develop and implement a lactation accommodation policy. The policy must:
- State that employees have the right to request lactation accommodations;
- Specify the means for employees to request lactation accommodations;
- Require the employer to respond to a request for accommodation within five business days;
- Require the employer and employee to engage in an “interactive process” to determine appropriate lactation break period(s) and an appropriate lactation location;
- State that that the employer will provide a written response identifying the basis for the employer’s denial of any request for lactation accommodation or decision not to provide a lactation location that fully complies with the LWO; and
- Expressly prohibit retaliation against any employee who exercises rights conferred by the LWO.
Covered employers must distribute their lactation accommodation policy to all new hires in San Francisco upon hiring and must offer a copy of the policy to any covered employee who inquiries about or requests pregnancy or parental leave. Employers who provide employee handbooks or who make written policies available to employees through other means (such as an online web portal) must include the lactation accommodation policy in the employee handbook and/or set of available policies.
To assist employers with compliance, the City’s Department of Public Health and the City’s Office of Labor Standards Enforcement (the “OLSE”) have been tasked with creating and distributing “best practices” guidance, examples of permissible lactation locations, and model lactation policies and lactation accommodation request forms.
The LWO also imposes new recordkeeping requirements on covered employers. Specifically, it requires covered employers to maintain records of a request for lactation accommodation for a period of three years from the date of the request. These records must include the name of the employee requesting the accommodation, the date of the request, and a description of how the employer resolved the request. Failing to maintain records or refusing to allow the OLSE to inspect records at a mutually-agreeable time after appropriate notice will result in a rebuttable presumption of a violation of the ordinance.
The LWO will be enforced by the OLSE. The ordinance authorizes the OLSE to begin issuing warnings and notices to correct violations beginning in 2018. Starting January 1, 2019, the OLSE will be empowered to issue determinations and order “appropriate relief,” including administrative penalties.
With Emeryville’s FWO now in its “soft launch” phase and San Francisco’s PPO and LWO coming next year, employers in the San Francisco Bay Area should immediately determine whether they are covered by those laws and, if so, should review and revise their policies as needed. On a broader level, the “soft launch” of the FWO and the enactment of the PPO and the LWO serve as an important reminder of the fact that legal compliance requires a multi-jurisdictional analysis. State laws—particularly in California—often impose employment standards well beyond those required under federal law, and those standards are constantly changing. As exemplified by Emeryville’s FWO, San Francisco’s PPO and LWO, and the innumerable paid sick leave laws sprouting up around the country, municipal governments are now taking the same approach, and they are sometimes imposing financial penalties that rival those under state and federal law. For that reason, employers must be diligent about keeping abreast of federal, state, and local legislative activities in areas where they employ workers.