Written by Jeremy Mittman and Thea Rogers

On April 1^st, the Los Angeles City Fair Work Week Ordinance (“FWWO”), an employee-friendly law affecting mid-size and large retail businesses, takes effect.  The FWWO, which was passed by the Los Angeles City Council during the final days of 2022, is generally applicable to retailers (with over 300 employees globally) with nonexempt employees who work at least two hours per week in the City of Los Angeles.

The City of Los Angeles published FWWO FAQs on March 1^st, and subsequently updated them on March 15.  

The stated goal of the FWWO is to provide employees of retailers (broadly defined under the Ordinance) with more predictability and advance notice of their work schedules and pay.  In order to accomplish this, the new law requires covered employers to comply with each of the following rules:

Before hiring a new employee or engaging an independent contractor, current employees must first be offered work, to the extent that the additional work would not result in overtime and the payment of overtime.  These “current employee offers” must be conspicuously posted for 72 hours before new workers are hired or engaged, unless all current employees decline sooner.

Before hiring a new employee and within ten days of a current employee’s request, the employer must provide a new employee/current employee with a written “good-faith estimate” of their work schedule.  A good-faith estimate includes:

(1) the estimated number of hours the employee will be expected to work each week (which cannot be a range of hours);

(2) the days of the week the employee can expect to work (or, conversely, the days of the week when the employee will not be expected to work), and an employer cannot simply state “all days of the week”;

(3) the shift times that the employee can expect to work, including start or end times, and this number cannot be more than 50% greater than the estimate previously provided regarding the number of hours the employee is expected to work each week;

(4) the locations the employee will be expected to work at, and an employer cannot simply state “all work locations” if it has multiple locations; and

(5) whether the employee can expect to work any on-call shifts.  Although this good-faith estimate is not a binding contractual offer, as explained below, an employer must have a documented and legitimate business reason for substantially changing an employee’s work schedule from the previously provided good-faith estimate.

During employment:

1. Covered employers must post a notice published each year by the City of Los Angeles’ Office of Wage Standards (“OWS”), notifying employees of their rights under the FWWO.  At the time of publication, the OWS has not yet released its notice for posting.
2. Employees must also receive written notice of their work schedules at least 14 calendar days in advance of their work period.  Employers may provide this advance notice by either posting employee work schedules at a conspicuous and accessible location routinely used for all-employee notices, or by sending each employee an email (or similar communication) that provides actual notice of their particular work schedule.  Employees may request work schedule changes, however such requests can be denied.
3. Employees must receive written notice of any changes to their work schedules, meaning changes that were made after they received their original work schedules. Employees must be permitted to decline any hour, shift or work location changes that were not part of their original work schedules.  If employees voluntarily consent to the hour, shift or work location changes, they must consent in writing.  Additionally, if an employee’s actual work hours substantially deviate from the good-faith estimate provided by the employer, the employer must have a documented, legitimate business reason for the deviation.  All writings between employees and employer regarding work schedules, including changes, requests, approvals and denials, must be retained by the employer for three years.
4. Employees cannot be required to find coverage for a shift (or partial shift) if they are unable to work for reasons protected by applicable laws.
5. Furthermore, employees who accept changes to their work schedules must be compensated with “predictability pay” of one hour of pay at their regular rate for changes that do not result in a loss of employee time, or result in additional employee work time of more than 15 minutes.  Employees are also owed “predictability pay” of half their regular rate of pay for time not worked if their scheduled time is reduced by 15 minutes or more.  However, “predictability pay” is not required if the work schedule changes are employee-requested, due to other employees’ absences and voluntarily accepted, or the extra hours would result in overtime payments.  An employee’s regular rate for purposes of “predictability pay” should be calculated in the same manner as the regular rate of pay when calculating an employee’s overtime premiums.
6. Employees cannot be scheduled to work a shift that starts less than ten hours from the employees’ last shift, without written employee consent.  Employees must be paid 1.5 times their regular rate of pay for each shift not separated by at least ten hours.  

Penalties and Fines for FWWO Violations

The FWWO has a 180-day implementation period, which means that the OWS will not impose penalties or administrative fines for violations that occur before September 28, 2023.   However, this 180-day grace period only applies to City penalties for employer violations, and the OWS specifically states in its FAQ that it “cannot guarantee how a Court might adjudicate a private civil action during the first 180 days after the Ordinance becomes effective.”

Potential penalties and administrative fines a covered employer may be subject to include: (1) an administrative penalty of up to $50 per day that an employer unlawfully withholds predictability pay; (2) an administrative fine of up to $500 for failure to post a notice of FWWO benefits, failure to maintain FWWO records for three years, or failure to allow OWS access to FWWO records; and (3) an administrative fine of up to $1,000 for retaliating against an employee for exercising their rights under the FWWO.  Additionally, each day that a violation exists constitutes a separate and distinct violation, and a subsequent violation of the same provision by the same employer within three years of a prior OWS-issued Notice of Correction may result in a 50% increase in the maximum administrative fine allowed.

An employer will be provided with a Notice of Correction before the OWS assesses any penalties or administrative fines for violations, and the employer will have 15 calendar days from the receipt of this Notice to take action to cure the alleged violations. 

Takeaways

Head spinning yet?  Given just how complicated and nuanced the new FWWO is, covered employers should consult with employment counsel regarding what steps they need to take to ensure full compliance with the Ordinance by April 1^st (or if that is not feasible, at least by September 28^th).

Covered employers are also advised to check the City of Los Angeles’ wage information homepage in the coming weeks for OWS’s required notice posting and forthcoming FWWO rules and regulations.