Making Up for Lost Time

To avoid financial penalties from predictable shift laws, more organizations are adopting worker-friendly time and attendance policies.

By Michelle V. Rafter

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ap Inc. was an early supporter of predictable schedules for hourly workers in its stores. In 2015, the San Francisco-based retailer started posting employees’ shifts at least 10 days in advance. It also stopped assigning on-call shifts, a practice that low-wage workers and their supporters claim makes income less reliable and things like child care harder to plan.

That was well before July 2017, when Seattle passed a citywide secure scheduling ordinance requiring that large employers in service industries like retail offer more predictable schedules. However, in the first 10 months the law was in effect, one of the 11 employers that the city investigated based on employee complaints was none other than the global clothing giant.

In February, Gap agreed to pay $20,186.24 in back wages to 268 employees at several of its Seattle stores to settle the complaint, according to city records. As part of the settlement order, Gap also agreed to put local store managers through mandatory training and to allow city inspectors to visit its stores to check shift-scheduling record keeping. In exchange, the city didn’t charge Gap with a violation and dropped further investigation.

The clothing retailer’s situation highlights the plight that service-industry employers could find themselves in as a growing number of cities and states pass laws to make hourly workers’ schedules more reliable and schedule changes less frequent.

Predictable scheduling laws passed in the past few years cover an estimated 1.8 million workers and 1,000 employers in at least four cities and one state, according to a July research report from the Economic Policy Institute, an independent nonprofit think tank. In addition, New Hampshire and Vermont have passed laws that give workers the right to request scheduling accommodations, according to the EPI report.

Making Up for Lost Time

To avoid financial penalties from predictable shift laws, more organizations are adopting worker-friendly time and attendance policies.

By Michelle V. Rafter

G

ap Inc. was an early supporter of predictable schedules for hourly workers in its stores. In 2015, the San Francisco-based retailer started posting employees’ shifts at least 10 days in advance. It also stopped assigning on-call shifts, a practice that low-wage workers and their supporters claim makes income less reliable and things like child care harder to plan.

That was well before July 2017, when Seattle passed a citywide secure scheduling ordinance requiring that large employers in service industries like retail offer more predictable schedules. However, in the first 10 months the law was in effect, one of the 11 employers that the city investigated based on employee complaints was none other than the global clothing giant.

In February, Gap agreed to pay $20,186.24 in back wages to 268 employees at several of its Seattle stores to settle the complaint, according to city records. As part of the settlement order, Gap also agreed to put local store managers through mandatory training and to allow city inspectors to visit its stores to check shift-scheduling record keeping. In exchange, the city didn’t charge Gap with a violation and dropped further investigation.

The clothing retailer’s situation highlights the plight that service-industry employers could find themselves in as a growing number of cities and states pass laws to make hourly workers’ schedules more reliable and schedule changes less frequent.

Predictable scheduling laws passed in the past few years cover an estimated 1.8 million workers and 1,000 employers in at least four cities and one state, according to a July research report from the Economic Policy Institute, an independent nonprofit think tank. In addition, New Hampshire and Vermont have passed laws that give workers the right to request scheduling accommodations, according to the EPI report.

Gap isn’t the only major U.S. employer forced to pay back wages or penalties after failing to comply with newer city or state requirements. Since early 2017, government agencies have collected at least $108,000 from multiple employers for running afoul of the laws.

Whether companies and their human resources departments are compelled to adopt predictable schedules because of the laws or decide to make the switch on their own to gain a competitive edge in a tight labor market, they may find that it’s one thing to embrace the policy in theory and quite another to implement it.

in addition to paying back wages, laws may direct employers that fail to comply to also pay fines and in some cases damages.

“There’s a gap in communication between corporate and HR and the managers on the ground carrying out the policies,” said Karina Bull, policy manager for Seattle’s Office of Labor Standards.

As the laws become more widespread, it remains to be seen whether they will spur employers to change how they create schedules, an often arduous undertaking that for many still relies on spreadsheets or pencil and paper. Currently only 45 percent of employers use any type of electronic labor scheduling system, making it one of the least used workforce management applications, according to the 2018-19 Sierra-Cedar’s annual “HR Systems Survey.”

“Scheduling is one of those applications that is seen as a utilitarian tool like payroll, but can have a major impact on peoples’ lives and work environments,” said Stacey Harris, Sierra-Cedar vice president of research and analytics.

Part of the lag could be attributable to scheduling not having a clear owner within a company. Depending on an organization’s orientation, the function could be run by HR, IT, finance or a combination of all three, said Lisa Disselkamp, a longtime workforce management consultant and managing director at Deloitte who advised the Obama administration on labor-scheduling issues.

Regulations are prompting organizations to take more action, including making modifications to ensure they’re compliant, Disselkamp said.

Adopting better scheduling systems can pay for itself by eliminating costs associated with absenteeism, high turnover and a disengaged workforce, Disselkamp said. More efficient scheduling also provides top-line benefits in the form of additional revenue, especially at companies that have not reviewed labor standards and scheduling in a year or two, she said.

Aside from that, treating employees better by giving them better schedules can improve a company’s public image, Disselkamp said. “It becomes a brand issue. People don’t want to shop at places where they don’t think companies are treating their employees well, especially retail.”

Making Schedules Work for Workers

The past few years have witnessed an uptick in city and state laws meant to make work more equitable for low-wage earners and other workers, including laws enacting higher minimum wages, paid sick leave and paid family leave.

Predictable schedule laws are the latest manifestation of that trend. The laws generally require larger employers in retail, fast-food, hospitality and other service industries to give hourly workers some amount of advance notice of shifts and shift changes — typically seven to 14 days. Depending on the jurisdiction, the laws may direct employers to offer additional hours to existing part-time employees before hiring new help or guarantee new employees the minimum hours they were promised when they were hired. Some laws also direct employers to pay employees extra for last-minute schedule changes. In addition to paying back wages, laws may direct employers that fail to comply to also pay fines and in some cases damages.

Anecdotal evidence shows that the laws are already starting to help low-wage earners. “Getting the hours I need means I can count on my paycheck. I always have enough money to buy groceries and save whatever’s left,” said Aubrie, a Starbucks barista, in a statement issued last summer by the activist group Working Washington about Seattle’s new law.

In New York, where a Fair Workweek law took effect in November 2017, “Workers have told us that just having the law in place meant employers’ attitudes changed and that they are already benefiting from it without any enforcement,” said New York City Department of Consumer Affairs Commissioner Lorelei Salas.

Academic researchers studying the impact of laws in Seattle and elsewhere expect to release some of the first data-backed findings later this year or in early 2019. “The real question is going to be whether these laws in general will be enforced and complied with,” said Kristen Harknett, an associate professor of sociology at University of California at San Francisco, and a collaborator on the Shift Project at University of California at Berkeley, which studies service-industry employment. “It’s not small task. Compared to minimum wage, this is much more complicated.”

Some cities have already begun bringing the hammer down on employers that failed to bring their scheduling practices in line with new laws. Since Seattle’s Secure Scheduling ordinance took effect in July 2017, the city has received 200 worker inquiries — not all of which became formal complaints — and investigated 13. By mid-July, the city’s labor standards office had collected close to $100,000 in back wages for 500 affected employees from Gap, Red Robin, Tesla, California Pizza Kitchen, and a Seattle location of pub chain Elephant & Castle. As of mid-September, another 18 investigations were active or pending.

Bull, the Seattle OLS policy manager, would not discuss complaints against specific employers, including Gap. A Gap spokesperson also declined to comment on the investigation, but said there are occasions when store teams go through a period of transition as they get up to speed on new regulations and compliance practices.

Gap “is fully committed to complying with all applicable laws and standards,” spokesperson Lauren Wilkinson said. “We hold our employees accountable for doing what’s right. We’re continually working to make meaningful improvements that benefit our employees and balance the needs of our business and customers.”

Laws Spreading to More Cities, States

Seattle is not the only area investigating complaints. Since New York City’s Fair Workweek ordinance took effect, the city’s consumer affairs department has followed up on more than 115 complaints that led to 69 investigations, and collected $6,175 in payments for workers and $2,000 in fines.

The city’s Fair Workweek law established different requirements for employers in retail and fast food because of those industries’ differing scheduling needs. To date, most complaints have been against fast-food employers, primarily for failing to give new employees an estimated number of hours they could expect to work, as stipulated by the law, according to Salas. Employers also have been fined for making schedule changes without notifying employees within the designated time period, she said.

But because the law is still so new, the city has focused on education rather than penalties. DCA has held 220 training events and had outreach teams walk door to door to hand out business background information and worker notices to post. “Our goal is to get employers to comply, not to fine people left, right and center,” Salas said.

San Francisco’s secure schedules law is part of a package of protections the city passed specific to retail workers. Since 2016 when it became the first city in the country to pass a predictable shift law, San Francisco has launched 11 investigations, all of which are ongoing, according to Patrick Mulligan, director of the city’s Office of Labor Standards Enforcement. He declined to share details about the investigations.

Oregon has investigated three complaints since becoming the first state to enact a predictable shift law, which took effect July 1. Employers under review include a Dollar Tree location in Warrenton for allegedly failing to post information about the new law; a Safeway grocery store location in Portland for an overtime pay dispute, and a Portland-area Domino’s pizza franchisee for allegedly failing to give enough advance notice of schedules, according to state records. As of mid-September, investigations by the state’s Bureau of Labor and Industry were ongoing.

Predictable Shift laws could lead more employers to automate or improve existing scheduling processes.

Cities that are considering adopting similar regulations include Philadelphia and Chicago. In Washington, legislators were expected to hold hearings on a statewide measure in mid-October. “They’re keeping a close watch on what’s happening in Seattle,” Harknett said.

Creating More Predictable Schedules

Predictable shift laws do not dictate how employers must create the schedules they are bound to offer, but could lead more of them to automate or improve the existing processes.

The scheduling systems that employers use to comply with the new laws are all over the map, according to city labor officials involved with training and enforcement. That includes bare-bones paper and pencil schedules, Excel spreadsheets and shift scheduling software that can be customized to comply with laws, or a combination of one or more of those, they said.

Larger employers are likelier to use electronic scheduling apps. Fifty-six percent of enterprises with more than 10,000 employees use some form of labor scheduling application, according to the 2018-19 Sierra-Cedar survey. That compares with 46 percent of midsized organizations with 2,500 to 10,000 employees, and 43 percent of organizations with 2,500 or fewer workers, according to the survey, which polled 1,636 global organizations representing 23.6 million workers.

Labor scheduling systems are the least used of any workforce management application with the exception of labor budgeting systems, according to the survey. For example, 90 percent of employers of all sizes use some kind of time and attendance system, twice as many as use a scheduling system.

Employers would be smart not to wait for cities to pass predictable shift laws to act, since they won’t get the employee-side recognition from doing the work but they’ll still have to do the work, said Clay Robinson, director of solution architecture at Shiftboard, a shift-scheduling software vendor.

The Seattle-based company has sold its shift-scheduling app to employers in and outside the city limits. Forward-thinking customers use it as a strategic advantage for attracting and retaining workers, Robinson said. “We had a customer that wasn’t inside the city who came to us after the city council approved the law and wanted to offer it to employees in order to be able to say they had taken care of it before they had to.”

Gap has continued to update its shift-scheduling management. After testing several options, last spring the company rolled out an app from Shyft that employees can use to swap shifts. The technology, which the company introduced to all its brands, “helps provide additional flexibility to our store employees while ensuring that our stores are staffed appropriately,” said C. David Ard, senior vice president and global head of people for Gap Inc.’s Gap brand, in a prepared statement.

Among other actions, Gap changed staffing levels to track traffic instead of projected sales. The company’s brands — which include Old Navy and Banana Republic — also are testing other scheduling systems based on store size and markets.

“There’s no question that store scheduling is an issue that challenges our entire industry,” Ard said. “As a company that seeks to attract and retain the best talent in the business, we recognize the importance of finding ways to enhance and improve the store experience for our employees and customers alike.”


Michelle V. Rafter is a Portland, Oregon, business reporter and Workforce contributing writer.