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Do California Employers Have Any Scheduling Flexibility Options Left?

Posted in Labor Law, New Legislation and Regulations, Wage & Hour

Scheduling employees is becoming more difficult for employers, and the State seems to be hurtling toward predictive scheduling laws.

Last month, my partner Lukas Clary blogged about the recent California Supreme Court case, Ward v. Tilly’s, Inc., in which the Court ruled that “reporting time” pay is owed whenever an employee is required to “report” to work, even if that “report” is by phone, instead of physically showing up for work. In Tilly’s, the employer required employees to call in two hours before their shift to find out whether they were needed, or not.  If needed, the employees would come to work; if not, Tilly’s did not pay the employees any compensation.  The Court ruled that this was a violation of the applicable Wage Order, finding that Tilly’s requirement that employees phone in, triggered the obligation to pay the employee a “reporting time” premium (between one and four hours of pay). 

Tilly’s “on call” practice was one of several ways that many employers, especially in the retail and hospitality industry, try to adjust schedules based upon unpredictable workforce needs.  The Court’s decision in Tilly’s did not find that “on call” scheduling is unlawful – only that this practice does not avoid an employer’s reporting time pay obligations.  The take away from this ruling for conservative employers is that any other affirmative “call in” required – such as sending a text, or requiring employees to log on to a scheduling app or portal – would probably be viewed the same way as the telephone report.  But, Tilly’s left open a question – how far in advance, if at all, can an employer ask employees to confirm their schedule, without owing a premium?  And, if any advance call-in triggers a reporting time obligation, what’s the alternative?

One possible alternative that has been proposed by some clever employers could be to schedule employees for “split shifts”.  This means scheduling employees for two separate, shorter shifts during the workday – i.e., a morning shift, followed by a gap that is longer than a meal period, followed by another shift later in the day.  This would, in theory, allow an employer to tell the employee during their first shift that the employee’s second shift is canceled.  The employee would not technically “call in” or “report” for the second shift – that shift would simply have been canceled before the end of the employee’s early shift.  Employees, especially in a tipped workplace, might even find this option preferable to an on-call arrangement, since they’d have more certainty of at least some work, and would potentially earn more money by comparison to receiving just the reporting time premium if they are called off for the whole shift.

This method is not without its own drawbacks. First, if the employee does work that second shift, then the employer would owe a ‘split shift’ premium. But, since split-shift premiums are paid at minimum wage, and are fixed at one hour (as opposed to being one to four hours), this may be less costly than reporting time pay. Also, because the premium can be offset, for employees who earn more than minimum wage, a split shift premium may cost the employer less than the reporting time premium for the same cancelled shift.  (A “split shift” occurs only when an employee’s scheduled working hours are interrupted by one or more unpaid, nonworking periods established by the employer – other than bona fide rest or meal periods.)  Second, a word of caution: employers must ensure that employees are truly “off duty” and relieved of all duties between shifts, or else they are entitled to minimum wage for the time the employee is waiting to work.

The California Court of Appeal addressed split shifts in a 2011 case involving workers who worked graveyard shifts in Securitas Security Services USA, Inc. v. Superior Court.  That decision was employer-friendly, in that merely starting work on one day (i.e. Tuesday at 10:00 p.m.) and working continuously into the next day (i.e., Wednesday at 5:00 a.m.) does not trigger a split shift premium. But, here too, the court left open a fundamental question: how many hours must there be between two scheduled shifts, to avoid it being a “split” or being considered “on call” and on duty?  There is no hard rule covered by federal or state law or the Wage Orders for most employees (except for certain positions, like airline pilots or truckers).  This is a particular concern in a 24-hour facility, or a restaurant/bar open from morning to 2 a.m., where employees may be scheduled for “clopenings” – working until closing one day, and come back several hours later and open.  This option, too, may also be going the way of the dinosaur.

The trend among cities like San Francisco, New York, and Seattle and the state of Oregon, is to regulate employee scheduling that leaves little flexibility or predictability for employees, putting the burden of unpredictable staffing needs fully on the employers.  In 2017, for example, the city of Seattle outright banned “clopening” shifts, unless the employee consented, and was paid at 150% of their regular rate if shifts are separated by less than 10 hours.

Another alternative is to simply overschedule employees, and then cancel shifts before they “report” to work, or using “just in time” scheduling software to generate schedules with very little advance notice. Currently, California law does not prohibit these practices, and employers are permitted to cancel any employee’s shift without penalty as long as they have not reported to work (by phone or in person).

But, again, the trend is shifting toward regulating how much notice an employer can give an employee. The City of San Francisco – the first California city to enact predictive scheduling rules – passed the San Francisco “Predictable Scheduling and Fair Treatment for Formula Retail Employees Ordinance”.  This ordinance applies to “Formula Retail Establishments” (including their janitorial and custodial staff) in the city with 20 or more employees in San Francisco and 40 employees worldwide. It requires covered employers to (among other things) provide “predictability pay” for both on-call work and schedule changes.  Covered employers must provide employees with their schedules two weeks in advance, and if the schedule is changed within 7 days, to pay compensation of 1 to 4 hours depending on the amount of notice and length of the shift.  On-call shifts – defined as a shift where the employee confirms their shift less than 24 hours in advance of the shift – are allowed, but the employer must provide 2 to 4 hours of pay if the employee is not called into work (with some exceptions). Further, on-call shifts must be written into the schedules.

As our clients often lament, the options available to employers are few and most are not without a cost – and lobbyists have been pushing since 2015 for state-wide predictive scheduling rules, bans or limitations on the use of on-call shifts, and requirements for advance notice of scheduling changes. It remains to be seen what the next legislative session will bring. Until then, employers using on-call, split shifts and other flexible scheduling devices are should work with legal counsel to ensure current practices are lawful and to keep themselves apprised of changes in the law, statewide and in cities and counties.