Los Angeles' Fair Work Week Ordinance Will Impact Retail Employers Beginning in April 2023

The City of Los Angeles recently joined a growing number of cities and states across the country that have adopted ordinances designed to provide retail employees with increased predictability regarding work schedules. The Fair Work Week Ordinance (FWWO) was passed by the Los Angeles City Council on November 22, 2022, and, if signed by the mayor, will take effect on April 1, 2023. It will impact large retail employers doing business in the City of Los Angeles, which includes the downtown area, the San Fernando Valley, and San Pedro, while excluding the cities of Beverly Hills, Santa Monica, and other incorporated cities, and will impose multiple new requirements regarding scheduling and predictability pay.

Who Will Be Impacted?

The FWWO defines an employer as: 1) establishments primarily engaged in retailing merchandise and rendering services incidental to the sale of merchandise (i.e., retail businesses in the North American Industry Classification System (NAICS) with the retail trade categories and subcategories 44 through 45); and 2) having at least 300 employees globally (including employees obtained through temporary services or staffing agencies, those in an employer's subsidiary, and certain franchise employees).

Additionally, the FWWO covers employees who: 1) perform at least two hours of work per week within the City of Los Angeles; and 2) are entitled to payment of minimum wage.

New Requirements

The new requirements imposed by the FWWO on retail employers operating in Los Angeles are significant and include the following:

1. Good Faith Work Schedule Estimates. Employers will be required to provide new employees upon hire with written good faith estimates of the employee's work schedule and notification of the employee's rights under FWWO. In addition, upon request, employers will be required to provide current employees with a written good faith estimate of the employee's work schedule within ten days of the request. The good faith work estimates for new and existing employees will not be binding. However, if an employee's actual work hours deviate substantially (note: "substantially" is not defined in the ordinance) from the estimate, the employer must provide a documented, legitimate business reason to substantiate the deviation, which was unknown at the time the employer provided the good faith work schedule estimate.
2. Employee's Right to Request Changes to Work Schedule. Employees will have the right to request a preference for certain hours, times, or locations of work. Employers will be able to accept or decline the request, provided that the employer notify the employee in writing of the reason for the denial.
3. 14-Day Advance Written Notice of Work Schedule. Employers will be required to provide employees with written notice of the employee's work schedule at least 14 calendar days before the start of the work period by either posting the schedule in a conspicuous location or transmitting the schedule by electronic means or another manner reasonably calculated to provide notice to each employee. If the employer makes any subsequent changes to the work schedule, written notice will need to be provided to the employee, and the employee will have the right to decline any changes not included in the original work schedule. However, if the employee voluntarily agrees to the change, such consent will need to be in writing.
4. Additional Work Hours Must be Offered to Current Employees Before Hiring New Workers. The FWWO will require employers to offer additional work hours to current employees before hiring any new employees or using a contractor, temporary service, or staffing agency to perform the work, if 1) one or more of the current employees is qualified to do the work, and 2) the additional work would not result in overtime pay to the current employee. Employers will be required to provide written notice of the additional work to its current employees either in writing or by posting the offer in a conspicuous location in the workplace at least 72 hours before hiring a new worker (unless the employer receives written confirmation from all employees that they are not interested, in which case, the employer may immediately fill the position with a new hire). Upon receipt of the offer, an employee has 48 hours to accept the offer of additional work in writing. Current employees who accept additional hours will not be entitled to predictability pay (described below) for those additional hours if it results in a schedule change from the work schedule.
5. Predictability Pay for Work Schedule Changes. The FWWO will require employers to pay employees "predictability pay" for the following:
   • When an employee agrees to a work schedule change that is made with less than 14 days of advance notice, an employer shall compensate the employee with one hour of pay at the employee's regular rate for each change to a scheduled date, time, or location that 1) does not result in a loss of time to the employee; or 2) does result in additional work time that exceeds 15 minutes.
   • An employer shall compensate an employee at one-half of the employee's regular rate of pay for the time the employee does not work if the employer reduces the employee's work time in the work schedule by at least 15 minutes.
   • However, predictability pay will not be required if: 1) an employee requests a schedule change; 2) an employee accepts a schedule change initiated by the employer due to an absence of another scheduled employee; 3) an employee accepts additional work hours offered by the employer; 4) an employee'shours are reduced due to the employee's violation of a law or the employer's policies and procedures; 5) the employer's operations are compromised by law or a force majeure; or 6) the extra hours worked require the payment of overtime wages.
6. Coverage for Missing Work Shift. Employers will not be able to require employees to find coverage for a shift if the employee is unable to work for reasons protected by law.
7. Rest Between Shifts. Employers will not be able to schedule employees to work a shift that starts less than ten hours from the employee's last shift without written consent from the employee. Additionally, employers will be required to pay employees time and a half for each shift not separated by at least ten hours.
8. Record Retention and Inspection. Employers must retain records required by the FWWO for both current and former employees for three years. The required records include: 1) work schedules; 2) written offers to employees of additional hours and responses; 3) written correspondence between employer and employee regarding schedule changes; 4) good faith work schedule estimates provided to employees; and 5) any other documents that demonstrate compliance with the FWWO. If requested, employers will be required to provide timely access to these records to the City's Office of Wage Standards (OWS) of the Bureau of Contract Administration within the Department of Public Works.
9. Notice Posting Requirements. Employers will be required to post a notice published each year by the OWS notifying employees of their rights under the FWWO.
10. Penalties. The FWWO provides a 180-day grace period after the effective date of the ordinance (which is expected to be April 1, 2023) for any violations. Additionally, employees will be required to provide written notice of any FWWO violations to an employer and allow for a 15-day cure period, prior to filing a complaint with the OWS or a civil action. If a complaint is filed, it will be investigated by the OWS, and a notice of correction may be issued. Restitution and penalties, up to $500 per violation per employee, may be assessed payable to the employee. In addition, administrative penalties of up to $50 per day for the unlawful withholding of predictability pay and administrative fines for violations of the provisions of FWWO, up to $1,000 per violation per day, may be assessed, and payable to the City. Employers who receive a notice of correction will be entitled to an appeal. Employees will also be able to enforce the FWWO through a private civil action.

Next Steps for Los Angeles Retail Employers

Retail employers operating in Los Angeles who are subject to the terms of the FWWO are advised to carefully review their current scheduling and payment practices, train managers and schedule makers regarding the details of the FWWO, and consult with counsel to implement the required changes to ensure compliance by April 2023.

As always, the DWT Employment Services Group is available to advise and assist with this process. Additionally, DWT will continue to monitor these issues and provide updates as changes occur.