Fair Work Week laws have landed in Los Angeles. As of April 1st, 2023, certain retailers are required to give employees early notice of work schedules, pay premiums for late changes, and provide adequate rest between shifts — or face fines and other penalties.
But like all new laws, we’re hearing a lot of questions from businesses on how the Ordinance actually works and whether it applies to them.
So, with assistance from our internal legal experts, we’re going to help break down the Los Angeles Fair Work Week Ordinance for you. Of course, we want to specify that this is not legal advice. We just interpret the Ordinance, which you can read in full here, and break it down in the simplest way possible.
Does the Fair Work Week Ordinance apply to my business?
You are covered by the Los Angeles Fair Work Week Ordinance if your business meets all three of these requirements:
You have 300 or more employees globally;
Your business is identified as a retail business or establishment in the North American Industry Classification System (NAICS) within the retail trade categories and subcategories 44 through 45; and
Your business exercises control over the wages, hours, or working conditions of any employee (this includes indirect control through a staffing agency).
That means that even retailers with a small shop in LA can still be affected by Fair Work Week if their total workforce internationally meets that 300-employee line.
What counts as a retail business?
This question usually comes from organizations where retail is just one part of their business, like a grocery store that has a cafe inside the shop — or a salon that also sells a small range of hair care products. Since these businesses could be classified under multiple NAICS codes, what makes them a retail business instead of a beauty salon or a limited-service restaurant?
According to the City of Los Angeles Office of Wage Standards, it all depends on your primary business activity. In other words, the activity that drives the largest percentage of your total receipts. If your revenue primarily comes from retail, then it’s likely that the Fair Work Week Ordinance applies to you.
Let’s run with the example of a grocery store that also has a small cafe. If most of your receipts for the year come from the grocery store portion of the business, and you meet the other requirements (e.g. you have more than 300 employees globally), then all your employees are likely covered by Fair Work Week, even the ones that work in the cafe.
Are we calculating our total number of employees correctly?
As we said, the Ordinance applies to retailers with at least 300 employees worldwide. But what if your total number of employees fluctuates throughout the year?
Well, the Office of Wage Standards will look at the previous year. They’ll calculate a weighted average for how many paid employees you had, per week, and apply that number to the current year.
That number will include all paid employees, including but not limited to:
Full-time, part-time, temporary, and seasonal employees;
Employees outside Los Angeles (the calculation includes employees who are not covered by the Fair Work Week Ordinance);
Employees of a subsidiary that identifies as a retail business;
Employees who work at a non-retail location, such as your head office;
And very specifically: “Employees of an employer who operates a franchise that identifies as a retail business and whose business size is over 15,000 square feet”.
So even if you’re a hardware store with a small location in Los Angeles and most of your 300-strong workforce outside the city, you’re still affected.
And if you operate a franchise with only 50 employees, but your location occupies over 15,000 square feet within the City of Los Angeles, and the franchisor has over 300 employees, you’re most likely impacted as well.
Which employees are affected?
The Office of Wage Standards applies the following guidelines when determining which employees are affected by the Los Angeles Fair Work Week Ordinance:
In any work week, the individual performs at least two hours of work within the City of Los Angeles for an employer covered by the Ordinance, including full-time, part-time, temporary, or seasonal workers. If an employer labels a worker as an “independent contractor”, the worker will be presumed to be an employee under California law unless the employer proves they are a bona fide independent contractor.
The individual qualifies for the minimum wage under the California minimum wage law (in other words, the Ordinance applies to nonexempt employees); and
The individual's primary work location supports retail operations. That includes but is not limited to a retail store or warehouse. Very importantly, if the individual is primarily working to support administrative functions related to the corporate office, they are likely not covered by the Ordinance.
Another important note: An employee is not covered by the Ordinance if they perform all their work outside the City, even if the employer is based in Los Angeles. And hours worked outside the city are likewise not covered.
Good Faith Estimates. What counts as a “substantial deviation”?
A Good Faith Estimate is a reasonable, fact-based prediction of an employee’s regular work schedule. What do they mean by “fact-based”? Well, that can mean using forecasts, prior hours worked by a similarly-situated employee, or other relevant information.
The aim is to give employees a reliable prediction of the days, hours, and locations they’ll be expected to work, so they can better plan their lives outside their job. After all, when you have kids, or you study, or you work multiple jobs, the last thing you need is a totally unpredictable work schedule.
A Good Faith Estimate should be provided at the time a job offer is made to a new hire and within ten calendar days of a request from a current worker.
But once you’ve given an employee a good faith estimate of their hours, what happens if you deviate from that? And what counts as a reasonable deviation or a substantial deviation?
According to the regulations, a good faith estimate substantially deviates when any of the following happens:
Actual work hours differ by 20% or more from the Good Faith Estimate for six work weeks out of twelve consecutive work weeks;
The actual work days differ from the Good Faith Estimate at least once per week for six work weeks out of twelve consecutive work weeks;
The actual location of the shift differs from what was indicated in the Good Faith Estimate at least once per week for six work weeks out of twelve consecutive work weeks; or
At least one actual shift per week is outside of the potential shifts indicated in the Good Faith Estimate for six work weeks out of twelve consecutive work weeks.
The exception to this is if one of the above occurs and the differences are due to documented employee-initiated changes, or if an employee accepts a schedule change initiated by the employer due to another employee’s absence or unanticipated customer needs. The key word there is ‘documented,’ as employers must be able to prove that it was the employee who initiated the change.
But if one or more of the above scenarios happen, and it is not due to an employee-initiated or employee-approved change, employers must have a legitimate, documented business reason to substantiate the deviation, and that reason must not have been known to the employer at the time the good faith estimate was provided.
If the employee requests a revised good faith estimate, the employer must provide one within ten calendar days of the employee’s request.
Advance notice of work schedules and changes. How much notice is required?
As an employer covered by the Ordinance, you need to give written notice of work schedules to all employees at least 14 days before the first day of the work period.
Now, that can include physically posting the schedule in an accessible physical location or sending it electronically by email or by scheduling app (which is our personal preference if you want to keep it simple).
If you, the employer, initiate a change to that work schedule less than 14 days out from the first shift, the employee has the right to decline the change. If the employee consents to the change, you need to make sure the consent is in writing.
Very importantly, even if the employee consents to the schedule change, you may also have to pay that employee predictability pay.
When are employers required to give predictability pay?
When an employer changes a work schedule less than 14 days out from the first shift on the schedule, the impacted employees may be entitled to predictability pay — and this applies for each change.
Here’s a handy table from the official regulations:
|Employer-initiated Change||Predictability Pay|
|Increase in hours that exceeds 15 minutes||One (1) hour at the Employee’s regular rate of pay|
|Change to the date, time, or location||One (1) hour at the Employee’s regular rate of pay for each change|
|Reduction of hours by at least 15 minutes||Hours not worked at one-half the Employee’s regular rate of pay|
|On-Call Shift, when the Employer does not call the Employee to perform work||Hours not worked at one-half the Employee’s regular rate of pay|
Are there exemptions to this rule?
Under certain conditions, you don’t have to provide predictability pay — even when the change is less than 14 days before the first shift. These exemptions include but are not limited to:
When an employee initiates the change (be sure to have that recorded in writing).
When an employee accepts a schedule change initiated by an employer due to the absence of another scheduled employee, such as when one calls out sick. However, the employer must communicate to the employee that accepting the hours is voluntary and the employee can decline.
When the employee accepts additional hours offered under the Ordinance’s ‘access to hours’ requirements (see below for more details on access to hours).
Offering additional work hours to employees. What’s the required process?
Under the Ordinance’s ‘access to hours’ requirement, before an employer hires new employees, secures a contractor, or even uses a staffing agency, they need to offer those hours to their current pool of employees — providing they are qualified and the extra hours don’t incur overtime.
The regulations actually set out what that process of offering additional hours to employees should look like. They state that the employer must make the offer for additional work hours in writing, or by posting the offer in a conspicuous location in the workplace. The written notice must be left open for at least 72 hours. It should contain the following:
Shifts or days/times the employee must be available to work;
The length of time the employer anticipates requiring coverage of the additional hours;
Description of the position itself;
Required qualifications for the position and what training, if any, will be provided;
The process by which the employee may accept the hours; and
Date and time by which the employee must accept or decline the offer.
What are the notice and posting requirements?
All employers covered by the Los Angeles Fair Work Week Ordinance are required to post a notice of the Ordinance within their workplace — and provide this notice to all new employees at the time of hiring.
The City has published the notice on their website for employers in several languages.
What kind of records do I need to keep and for how long?
Employers covered by the Ordinance need to keep records showing that they are compliant for up to 3 years — covering both current and former employees.
This includes Good Faith Estimates, work schedules, any changes, whether changes were initiated by the employee or employer, written offers to employees of additional hours, and more of the requirements we’ve outlined above.
What is the easiest way to manage my compliance?
Now that was a lot of information! But, to be frank, the law is very rarely simple. With so many requirements, exceptions, and specific scenarios for retailers to be mindful of, it’s no wonder businesses are worried about implementing the Los Angeles Fair Work Week Ordinance — particularly when the stakes are high.
If you want to learn how to simplify compliance with Fair Work Week using software, get in touch with one of our experts today.