Over the past ten years, several jurisdictions have enacted “fair work week” ordinances, including Chicago, San Francisco, and New York City. Not to be outdone, the City of Los Angeles recently passed the Los Angeles Fair Work Week Ordinance (the “Ordinance”), which imposes several requirements on retail employers related to scheduling and hiring employees. The Ordinance will go into effect on April 1, 2023 with an initial grace period of 180 days. Full enforcement of the ordinance, including fines and penalties, will begin on September 28, 2023.
1. Who Is Covered By The Ordinance?
The Ordinance applies to employers with 300 or more employees globally, and identified as a retail business in the North American Industry Classification System (NAICS). The NAICS is the standard used by Federal statistical agencies in classifying business establishments. The Ordinance is expressly limited to businesses within the retail trade categories and subcategories 44 through 45. The NAICS website (naics.com) includes a detailed breakdown of these categories.
In addition, for the Ordinance to apply, the employer must exercise control over the wages, hours or working conditions of the employee. Workers employed through temporary services, staffing agencies, subsidiaries and certain franchises count toward the 300 global employee threshold.
An employee is covered by the Ordinance in any particular work week when they perform at least two hours of work within the geographic boundaries of the City of Los Angeles for a covered employer and is entitled to earn the state minimum wage. Thus, the Ordinance covered employers based outside of the City of Los Angeles would need to meet the requirements of the Ordinance for employees that perform at least two hours of work within the city in a particular work week.
2. Employer Requirements
The Ordinance imposes several requirements on covered employers. The key requirements are summarized below.
a. Good Faith Work Schedule Estimates
Under the Ordinance, covered employers are required to provide all employees with a good faith estimate of their future work schedules. For new employees, the estimate must be provided before hiring. For current employees, the estimate must be provided within ten days of an employee’s request. If an employee’s actual work hours substantially deviate from the estimate, employers must have a documented, legitimate, business reason that was unknown at the time of the estimate, to substantiate the deviation.
b. Right To Request Changes To Work Schedules
Covered employers must engage with employees on their preferences for certain times, hours, or locations for their work schedule. Employers may accept or decline requests, but the reason for a denial must be provided to employees in writing.
c. Right To Request Changes To Work Schedules
Covered employers must provide employees advance notice of their work schedules at least 14 days before the start of a work period, by posting the schedule in an accessible location or by electronically sending the schedule. If the employer makes changes to an employee’s work schedule with less than 14 days’ notice, the employer must provide the employee with written notice of those changes. Employees have the right to decline certain changes to their work schedule that are made with less than 14 days’ notice. If an employee voluntarily consents to the changes, the consent must be in writing.
d. Offer Additional Work Hours To Current Employees
Covered employers must offer work to current employees before hiring a new employee or using a contractor, temporary service or staffing agency to perform the work if at least one employee is qualified to do the work and additional work hours would not result in the payment of overtime. The employer needs to make the offer for additional work hours to each employee either in writing or by posting the offer in in the workplace. Employers must make the offer 72 hours prior to hiring any new employee unless all employees provide written confirmation that they are not interested. Employees have 48 hours to accept the offer of additional hours in writing.
e. Provide Predictability Pay
The Ordinance calls for the payment of “Predictability Pay” for certain employer-initiated changes to work schedules made with less than 14 days’ notice from the start of the work period, as set forth in the chart below.
|Increase in hours that exceeds 15 minutes
|One hour at the employee’s regular rate of pay
|Change to the date, time, or location (but no change in hours)
|One hour at the employee’s regular rate of pay for each change
|Reduction of hours by at least 15 minutes
|Hours not worked at one-half the employee’s regular rate of pay
|On-call shift, when the employer does not call the employee to perform work
|Hours not worked at one-half the employee’s regular rate of pay
Certain conditions may exempt employers from having to provide Predictability Pay, including employee initiated schedule changes, employee acceptance of a schedule change due to an absence of another scheduled employee, reduced hours as a result of an employee’s violation of law or an employer’s policies and procedures, and the additional hours requiring the payment of overtime.
f. Rest Between Shifts
Employers must obtain an employee’s written consent before scheduling any shift that starts less than ten hours after the employee’s last shift and must pay employees time and a half for the shift following the insufficient time period.
g. Retention Of Documents
Employers must retain all records required by the Ordinance for at least three years. These records include:
• Work schedules
• Copies of written offers and responses for additional work hours
• Written correspondence about work schedule changes
• Good faith estimates of work schedules, and
• Any other records that may be required to comply with the ordinance
Covered employers must post the Office of Wage Standard notice regarding the Ordinance. As of the date of publication for this article, the Office of Wage Standard website (wagesla.lacity.org) states that posters will be made available soon.
3. Administrative Penalties And Fines For Violations
Employers who violate the Ordinance may have to pay restitution and penalties to each employee whose rights have been violated. Employers may also be liable to the City for a penalty of up to $50 per day that Predictability Pay is unlawfully withheld and additional administrative fines for other violations of the ordinance.
Each and every day that a violation exists constitutes a separate and distinct violation. Any subsequent violation of the same provision by the same employer within three years may result in a 50 percent increase in the maximum administrative fine allowed.
4. Civil Enforcement
Employees may be entitled to restitution and additional penalties for any violations of the Ordinance. An employee may file a complaint with the Office of Wage Standards so long as the following takes place:
(1) The employee provides written notice to the employer of the Ordinance violations. The notice should name the provisions of the Ordinance alleged to have been violated and provide facts to support the alleged violations; and
(2) The employer does not take action to cure the named violations within 15 calendar days from receipt of the written notice
The Los Angeles Fair Work Week Ordinance is a complicated and onerous regulation. The above is only a summary of the Ordinance’s requirements. Employers that may be subject to the Ordinance are advised to consult with qualified counsel to determine whether they are covered and how to comply with the new regulation. Additionally employers in other industries (and those outside of Los Angeles) that are not subject to the Ordinance are advised to pay attention as it is increasingly likely that similar scheduling requirements may impact employers in other cities and industries.
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About The Author
Ryan J. Krueger is a Partner with Sheppard, Mullin, Richter & Hampton LLP in the firm’s Los Angeles office. He specializes in labor and employment matters on behalf of employers, including wage and hour violations, employment discrimination, wrongful termination and sexual harassment. Mr. Krueger has experience in all aspects of employment litigation, including brief writing and oral argument, taking and defending depositions, and negotiating settlements. He has also second chaired multiple trials and arbitrations, and argued before the California Court of Appeal. Mr. Krueger also regularly counsels employers regarding California and federal employment law issues.
Ryan is a co-author of the California’s Private Attorneys General Act (PAGA) Litigation and Compliance Manual, a contributing author to the Employer’s Guide to COVID-19 and Emerging Workplace Issues and the ALERT Newsletter. He is a co-speaker at the Castle Publications’ Seminars as well as the Labor Law Update for Sheppard Mullin.
He received his J.D. from the University of California, Los Angeles and his B.A. from the University of Wisconsin, with distinction. During law school, Mr. Krueger served as extern to the Honorable Morton Denlow, U.S. District Court for the Northern District of Illinois. He is admitted to practice in all California state courts, along with the United States District Court for the Central District of California and the Ninth Circuit Court of Appeals.