If you’re in the hospitality business, then you’re already familiar with the constant challenge of managing employee shifts and schedules. Unfortunately, this challenge is likely to become more burdensome if the Chicago Fair Workweek Ordinance goes into effect in July 2018. The general intent of the proposed Ordinance is to give employees more predictability in work hours, and to compensate them for the lack thereof. If it’s passed, Chicago will join New York, Seattle and San Francisco as cities that have made employees’ “fair scheduling rights” law.
This article sets out the key requirements of the proposed Ordinance and the legal penalties for non-compliance. It will help you line up your internal processes to meet Ordinance requirements, including budgeting for additional employee compensation mandated under its provisions.
The Ordinance will require Chicago employers – including those in the hospitality business – to provide notice in writing to current employees for the following:
- 14 days of notice of work schedules (if less than 14 days’ notice is given on unscheduled hours, the employee has the right to decline)
- Notice of availability of additional hours before hiring new staff to take on those hours
You can use e-mail or an internal website to provide such written notice, or post it in a conspicuous place at the workplace. Note also that you don’t have to meet any of these requirements if it’s your employee who requests scheduling changes.
The Ordinance also requires that additional compensation be provided to employees for changes to their shifts (known as “predictability pay” under the Ordinance). Predictability pay is in addition to regular pay the employee receives for working a shift, and must be paid when an employer adds or subtracts hours from a scheduled shift, moves a shift to another time or date, or cancels a shift. How much predictability pay is required depends on the notice given by the employer as regards these changes:
- One hour of pay if changes are made with less than 14 days’ notice but more than 24 hours’ notice;
- Four hours or the number of hours in the shift, whichever is less, when the number of hours are canceled or reduced with less than 24 hours’ notice; or
- One hour of pay for all other changes, including when a real time request is made to the employee to extend the shift
There is also a provision for compensation that relates to the “Right to Rest”: employees can decline to work a shift that takes place less than 11 hours from their last shift, and if they do agree to take that shift, they are to be paid 1.5 times their hourly wage.
Do these requirements apply to all your employees? It depends on whether they are “Covered Employees” under the Ordinance. Covered Employees include anyone you hire in any particular two-week period who works for at least two hours in any of your Chicago locations. That said, an employee who is “salaried” (i.e. earning a salary of more than $50,000 per year or $962 per week) and whose pay is not subject to changes in scheduling or variations in hours worked is not a Covered Employee under the Ordinance.
One interesting aspect of the Ordinance is that if your employees mutually agree to swap work shifts or coverage, its compensation requirements won’t apply. But the requirement of giving employees’ the requisite notice for scheduling remains.
Does the Ordinance exempt your business from its compensation requirements in some circumstances? It does, but only in very specific situations:
- Operations cannot take place due to threats to the business, employees or the property;
- Public utilities fail to supply water, electricity, or gas, of if there is a failure in the public utilities or sewer system; or
- Acts of nature or any cause outside your control
The penalties for non-compliance with the Ordinance -- to be enforced by the Chicago Department of Business Affairs and Consumer Protection – would include the following:
- Administrative Fines
- For retaliation against an employee who makes a complaint - $1,000 for each violation
- For failure to provide notice of work schedule and its changes, or predictability pay, or to offer additional hours before hiring new staff, or Right to Rest, or to allow the City to access payroll records -- $500
- Ineligibility for City Transactions
- The City may act under the Municipal Code and render the business ineligible for City Transactions
Note also that if a business fails to make payment of Predictability Pay, there will be an additional civil penalty of $500 to the affected employee. Repeat violations within a one-year period could also result in a $500 penalty. In addition, if the City has to take action against an employer to enforce Ordinance requirements, then reimbursement of its administrative costs and legal fees will also be sought against the employer.
The proposed Ordinance was introduced at the City Council on June 28th, 2017. It’s hard to predict how likely it’s to become law in 2018. Business groups have voiced their concerns as to the burden of additional costs and administrative compliance (which includes retention of records for five years). If what’s happened in San Francisco is any indication of the erosion of businesses’ profits and productivity, some businesses may even cut back on temporary or part-time hires. For you and your team, whether the Ordinance does in fact become law, it’s best to start thinking about how to prepare for it should it come into effect.
You can review the full ordinance here.
. . . . .