Philadelphia Fair Workweek Law Burdens Restaurants, Retailers Under New Regulations

November 19, 2019Alerts

Set to take effect on January 1, 2020, the City of Philadelphia's Fair Workweek Employment Standards ordinance is expected to impose significant new burdens on certain restaurant and retail employers in light of extensive proposed regulations recently issued by the Mayor’s Office of Labor.

If approved, the regulations would affect how employers handle advance notice of employee schedules, compensation for changed schedules and more. They also further define some key terms and concepts in the law. 

Significantly, the proposed regulations will require employers to ascertain a Good Faith Estimate of anticipated schedules. When schedules deviate from the Good Faith Estimate, the regulations mandate that compensation, known as Predictability Pay, is owed to the employee.

Our previous alert describing the Ordinance’s key provisions is available here.

The proposed regulations provide as follows:

Covered "Employees" Defined Further 

The regulations refine who is a covered "employee" under the Ordinance and who will be entitled to advance notice of schedules and the other benefits of the law. 

A covered employee is defined as an employee entitled to overtime under state and federal law or an employee who performs work involving the direct provision of retail, food or hospitality services to the public.

This includes floor managers who directly oversee such services, employees engaged in completing such sales and front-of-house employees who greet or provide services to customers. 

This excludes administrative and professional hourly employees, such as those in human resources, payroll and receptionist positions. 

Good Faith Estimates 

A Good Faith Estimate must include: 

  • A specific average number of hours – not a range – that the employee can expect to work each week over a typical 90 day period
  • The days the employee can expect to work during the week, which cannot be every day of the week
  • The hours the employee can expect to be scheduled on those days
    • The total number of hours may not exceed the expected average number of hours (over a typical 90 day period) by more than 50%
    • i.e. if the average number of hours is 25. 25 * 50% = 12.5. The subset of hours can at most be (25 + 12.5) 37.5.
  • Whether the employee can expect to work on-call shifts

There is flexibility on the specific hours scheduled in the two-week posted schedule. 

  • i.e. the Good Faith Estimate identifies 8 AM – 1 PM on Saturday. The employee could be scheduled 8 AM – noon, 9 AM – 1 PM or 8 AM – 1 PM and still be in compliance with the GFE.

Alternative forms of the GFE chart are possible including:

  • Alternating A and B week schedules
  • A GFE schedule stating the hours they will NOT be scheduled within the week

Significant Change Defined

An employer may continue to use the Good Faith Estimate given to an employee at hire until there is a “significant change” in the employee’s schedule. The regulations define “significant change” as any of the following occurring in three out of six consecutive workweeks:

  • Actual hours worked differing from the Good Faith Estimate by more than twenty percent
  • Days of work differing from the Good Faith Estimate at least once per week
  • Start or end times for at least one shift per week differ from the Good Faith Estimate by at least one hour

Employee-initiated changes/differences will not constitute a significant change.

Predictability Pay Rate Calculation

Employers must pay “predictability pay” to employees when schedules change after the required notice period.

  • An employer must pay an employee one hour of predictability pay at their regular rate – when hours are added OR the date or location of a shift change with no loss of hours
  • An employer must pay an employee at a rate of 1.5 x their regular rate – when hours are subtracted from a regular or an on-call shift or the cancellation of a regular or on-call shift

For employees earning $7.25 or more per hour, their regular rate for predictability pay is their customary rate.

For employees earning less than $7.25 per hour (those who take a tip credit) the Office of Benefits and Wage Compliance in the Office of Labor will calculate and publish a rate annually by June 15.

Exceptions where schedule changes do not require predictability pay:

  • Changes within twenty-four hours of posting schedule
  • Employee-initiated changes
  • Changes based on volunteering for a shift following mass communication of an employee-initiated change
  • Certain emergencies affecting the employer's operations

Posted Schedules Must Include All Employees

The Ordinance requires an employer to post schedules in a conspicuous and accessible location at least ten days in advance (increasing to 14 days as of January 1, 2021). The regulations clarify that the posted schedule must include the names of all employees who work at the location, including those who are on vacation or leave and those who are not scheduled for any hours.

Posting Available Shifts

Before hiring new staff, an employer generally must post written notice of available shifts for 72 hours, so that existing staff may ask to fill the open shifts.

Among other requirements, this posting must be in English, any language spoken by at least five percent of existing employees and any other language requested by an existing employee. Fortunately, the regulations permit translation by an existing employee who is fluent and literate in the language and also permit the use of any “free translation service publicly available online,” which appears to be bureaucratic jargon for a Google Translate-type service.

Presumed Damages

The regulations establish presumed damages for various violations, which the Office of Labor Compliance may triple for repeat offenders. The damages range from as little as $25 per impacted employee for failure to notify employees of changes to posted work schedules, to $1,000 per impacted employee for failure to award available shifts to existing employees.

These proposed regulations are subject to change before final regulations are issued, likely toward the end of this year.

For more information about this Alert, please contact Steven K. Ludwig at 215.299.2164 or [email protected] or any other member of Fox Rothschild LLP’s Labor & Employment Department.