Some retailers in San Francisco will need to set work schedules two weeks in advance or face stiff penalties under a new law that goes into effect in 2015.  San Francisco’s recently enacted Retail Workers Bill of Rights will impose new requirements on retailers within San Francisco. The new rules for scheduling and retention of employees who work at “Formula Retail Establishments” go into effect in July 2015. As many as 35,000 workers might be affected.  Retailers need to begin evaluating their shift and scheduling practices in San Francisco, and may need to implement changes to their staffing and scheduling policies.

What is the Retail Workers Bill of Rights?

The San Francisco Board of Supervisors unanimously passed two closely related ordinances that constitute what has been called the Retail Workers Bill of Rights on November 25, 2014.  These ordinances became law on December 5, 2014, when Mayor Ed Lee declined to veto the legislation.  The first ordinance, “Hours and Retention Protections for Formula Retail Employees,” establishes two distinct rights for employees.  The first requires covered employers to offer additional work hours (up to 35 hours per week) to current part-time employees before hiring new part-time employees.  The second right applies to retail establishments during ownership changes.  If a covered retail establishment changes ownership, the new owner must retain most existing employees for at least ninety days.

The second ordinance, “Fair Scheduling and Treatment of Formula Retail Employees,” creates three additional rights.  The first requires employers to post schedules at least two weeks in advance.  If an employer makes changes within two weeks of the scheduled work shift, each affected employee must be paid one hour of wages at the regular rate of pay.  For changes made with less than 24 hours’ notice, employees must receive two to four hours of additional wages, depending on the length of the shift.  The ordinance also requires employers to pay employees between two and four hours of additional wages when an employee is required to be “on-call” for a specified shift but the shift is cancelled with less than 24 hours’ notice.

The final provision requires employers to provide part-time employees with the same starting hourly wage that full-time employees receive.  Employers can offer different hourly rates of pay to part-time and full-time employees but only on the basis of something other than part-time status, such as seniority or merit.  Similarly, part-time employees must have equal access to both paid and unpaid leave, but accrual of leave can be prorated to reflect hours worked.  Finally, part-time employees must have the same eligibility for promotion as full-time employees, but promotion eligibility may be contingent on full-time availability or total amount of work experience.  

Which Stores Must Comply with the Retail Workers Bill of Rights?

The two ordinances apply to “Formula Retail Establishments” with 20 or more employees in San Francisco, regardless of whether the employees work at the same store or location.  “Formula Retail Establishments,” for the purposes of these rules, are stores that are parts of chains with 20 or more locations worldwide, and with two or more of certain characteristics, such as uniform signs or merchandise.  While the ordinances borrow the basic definition of a “Formula Retail Establishment” from section 703.3 of the San Francisco Planning Code, there are two crucial differences: the Planning Code’s definition requires only 11 stores and only counts locations in the United States.  Thus, retailers who are not normally subject to the San Francisco Planning Code rules for formula retailers—which impose geographic limitations on where formula retailers can open stores, including outright bans in certain zoning districts and special permitting procedures in other districts—may be covered by these ordinances.

Some of the provisions of the two ordinances also apply to “Property Services Contractors.”  The term “Property Service Contractors” is defined as “any contractor or subcontractor of an Employer that provides janitorial and/or security services to the Employer at a Formula Retail Establishment.”  Companies that engage a “Property Service Contractor” may want to consider a due diligence check of their contracted vendor’s compliance efforts with these ordinances.

What’s Next for Retailers?

Because the ordinances passed through mayoral inaction they become enforceable in early July 2015.  The San Francisco Office of Labor Standards Enforcement and the San Francisco City Attorney will each have enforcement powers, and retailers may be subject to administrative fines, civil penalties and liability.  In some instances, retailers could be obligated to reimburse the city for attorney’s fees.  

Retailers should recognize that these new rules also appear to create record-keeping and administrative requirements that are unique to San Francisco.  Employers should contact their legal counsel to determine whether they are subject to the ordinances and, if so, how to implement policies and practices that comply with the new rules.

© 2014 Perkins Coie LLP