March 2023: Reminder: City of Los Angeles Retail Fair Workweek Ordinance Takes Effect April 1, 2023

Update Applicable to:
All employers in the city of Los Angeles, California.

What happened?
In our previous communication here, we notified you that the Los Angeles City Council voted to pass the proposed Fair Work Week Ordinance, which will place new onerous scheduling requirements on retailers by requiring employers to provide schedules two weeks in advance and penalizing employers who are unable to adhere to provided schedules.

What are the details?
Effective on April 1, 2023, the ordinance sets forth requirements for retail businesses in handling scheduling and providing work schedules to employees. Covered employees are anyone working in the City of Los Angeles for at least two hours per week for a covered employer and entitled to minimum wage as provided under the California labor code and wage orders unless the worker is a bona fide independent contractor.

Before the effective date, the City of Los Angeles Office of Wage Standards has published Frequently Asked Questions (FAQs) to assist with compliance with the ordinance.

Here are items to take note of from the FAQs:

Who is a Covered Employer?
Under the ordinance, a covered employer is a business that identifies as a retail business in the North American Industry Classification System (NAICS), has at least 300 employees globally, and exercises control over the wages, hours, or working conditions of any employee. The FAQs clarify that a retail business is any business whose principal NAICS code is within the retail trade categories and subcategories 44 through 45. Suppose a business has more than one unique line of business. In that case, the FAQs indicate the Office of Wage Standards will consider the NAICS code that corresponds with the business’s principal business activity, e.g., the activity in the business derives the most significant percentage of its total receipts.

What information is required for a good-faith estimate?
Covered employers must provide new hires and current employees with good-faith estimates of the employee’s work schedule. Pursuant to the FAQs, such estimates should include the following:

• The estimated number of hours that the employee will be expected to work each week and a notice of rights under the ordinance before hire.
• The days of the week the employee can expect to work, or the days of the week the employee will not be expected to work.
• The times or shifts the employee can expect to work, including start and end times, at least 14 days in advance.
• The locations where the employee is expected to work.
• Whether the employee can expect to work any on-call shifts.
• A written good-faith estimate of future schedules within 10 days of an employee’s request.

For shifts not separated by 10 hours, does premium pay to apply to all hours or only those not separated by at least 10 hours?
Under the ordinance, an employer shall not schedule an employee to work a shift that starts less than 10 hours from the employee’s last shift without written consent. Covered employers shall pay an employee a time and a half premium for each shift not separated by at least 10 hours.

If an employee agrees in writing to work shifts not separated by at least 10 hours, the employer must compensate the employee with premium pay for all hours in the second shift.

If an overtime premium is paid for a shift, then is Predictability Pay due?
Under the ordinance, employers shall provide predictability pay when a covered employee has agreed to a change in their work schedule after the advance notice requirements under the ordinance.

The employee is entitled to one additional hour of pay at their regular rate for each change to a scheduled date, time, or location that does not result in a loss of time to the employee or does not result in additional work time that exceeds 15 minutes. An employee is entitled to one-half of the employee’s regular pay rate for the time the employee does not work if the employer reduces the employee’s work time listed by at least 15 minutes.

However, for any hours the employer pays an overtime premium under California Labor Code section 510, the employer does not need to provide predictability pay.

The Office of Wage Standards will also publish rules and regulations and a required posting for the ordinance.

For more information, please see the links below:

Fair Work Week Ordinance

Los Angeles City Council Meetings

North American Industry Classification System (NAICS)

Wage Orders

Frequently Asked Questions

Article

What do employers need to do?
Employers should review the links provided above and should closely examine their scheduling practices and records retention procedures to ensure they are ready to comply with the new law, as well as make sure their payroll departments are aware of the potential need to handle predictability pay.