"SF Takes Aim At Retailers' Reliance On Part-Time Labor"

Law360, October 8, 2014

By Jonathan Randles, Law 360 Reporter

Proposed legislation in San Francisco seeking to extend benefits for part-time retail and food service employees and make their schedules more predictable could eventually serve as a model for other cities, experts say, and force major changes in an industry that largely depends on seasonal and temporary labor.

The ordinances would impact so-called "formula retail" establishments, businesses like Target Corp. and Starbucks Corp. that have at least 11 or more stores nationwide. One proposal, introduced in July, seeks to get part-time employees more work hours; the other, introduced last week, would penalize businesses that give employees little notice of the hours they're expected to work.

The most recent ordinance, floated by San Francisco Supervisor David Chiu, would require employers to post employee schedules 14 days in advance and provide a "good faith estimate" on the hours and shifts for new employees. Businesses would have to pay employees for unexpected shift changes and unused call-time shifts. Currently, an estimated two-thirds of food service employees and approximately half of formula retail employees nationally receive their schedules a week or less in advance, according to the ordinance. 

Proponents say the proposals, the first of their kind, would benefit relatively low-paid retail workers who are often unable to take classes or hold a second job because of uncertainty over when they will be expected to work. "The majority of these retail store employees experience significant fluctuations in their work hours from week to week and month to month," the most recent ordinance states.

California — the Bay Area in particular — has consistently been at the forefront of labor law and other progressive movements. If one or both of the ordinances are enacted in some form, it's possible that the legislation could become a model for other cities and states, experts say.

The Golden State led the way in the 1970s with legislation that required automakers to manufacture vehicles that produced lower emissions, said Catherine Fisk, a professor at the University of California, Irvine School of Law. California's low emissions requirement ultimately drove the big three automakers to produce more efficient vehicles, she said.

Fisk noted that both proposals being floated in San Francisco include a waiver for businesses that have a collective bargaining agreement. The exemption speaks to the reason why these types of ordinances that deal with low-wage work are needed: Worker advocates are unable to persuade employers to change policies that are problematic for employees, Fisk said.

"You don't need a statute regulating part-time scheduling if the employer has a mechanism to design a schedule with its employees that suit them," she said.

Business groups, meanwhile, worry that while well-intentioned, the proposals could burden employers with additional costs and eliminate needed flexibility for staffing stores.

Mark Askanas, a shareholder in Jackson Lewis PC's San Francisco office, said if the ordinance is enacted it is likely that retailers will hire fewer workers in order to avoid potential liability tied to changing employee schedules.

"All of this [is] extremely well-intentioned, but retailers operate on extremely thin margins and this is just going to be another burden or pressure on them with regard to their operating budgets," he said.

The nature of retail is unpredictable, Askanas said, and the ordinance could pose problems associated with hiring seasonal employees.

"Nobody is going to close their store in San Francisco, but it may really impact the number of people they hire," he said. "I think it's going to be another cost of doing business in California, and San Francisco specifically."

The San Francisco Chamber of Commerce is monitoring the proposed legislation. Jim Lazarus, the chamber's senior vice president for public policy, said members have begun talking with city officials about their concerns with the ordinances.

Among those concerns, Lazarus said, is the fact that this would apply to all businesses deemed "factory retail" by San Francisco, a designation that includes restaurants and hotels. Lazarus said each industry operates differently, and individual businesses have their owns needs which might not mesh with one-size-fits-all ordinances.

Lazarus said discussion of those ordinances are currently on hold, however, as the city prepares to decide whether or not to amend its definition for what qualifies as a factory retail business under the San Francisco Planning Code.

A public hearing on potential changes to the definition will be held later this month, he said. The city's current definition for factory retail covers approximately 1,250 businesses, including McDonald's Corp. and Wells Fargo & Co.

Attorneys noted that San Francisco has greater leverage than other jurisdictions to try enact the types of statutes that benefit workers because the city — which has one of the most affluent populations in the country — is valuable to retailers.

"The notion that all of these retail and restaurant employers will leave California is something the Chamber of Commerce has been trumpeting for many years," Oakland-based employment attorney Bryan Schwartz said. "I think retail and restaurant businesses are flocking to San Francisco and California despite the fact that our Bay Area and our state have the strongest worker protections in the country."