Retailer
Retailer - Summer 2017

July 13, 2017

EXPRESS LANE

NEWS & ANALYSIS

Danger, Will Robinson? Automation is replacing – but also enhancing – many retail jobs

Of the 16 million Americans who work in retail, nearly half could lose their jobs to robots over the next decade, a new study has found. More particularly, 7.5 million retail jobs are expected to become automated over that time period, and cashiers are the most likely to be affected.

The study, which was released by Cornerstone Capital Group, revealed that the 16 million Americans who work in the retail industry make up 10 percent of the nation’s workforce and generate 6 percent of the United States’ gross domestic product. While the cost-savings of automating numerous jobs in the struggling retail industry may be a welcome respite to employers – particularly in the face of employees’ demands for wage increases – mass automation also poses a challenge for dealing with future job losses. As stated by Erika Karp, Cornerstone’s founder and Chief Executive Officer, “The winners in retail will be companies that provide recruitment, retention, and training for workers and innovate with forward-thinking future store strategies.”

The study revealed that although technology may eliminate a number of jobs, it is not yet sophisticated enough to take over positions that require high levels of customer interaction. Indeed, some technological advances will complement labor by relieving workers of mundane tasks, allowing them to create a more personalized customer experience. However, in other cases, technology could make jobs obsolete due to the automation of a substantial portion of the sales process.

In addition to the now-ubiquitous self-checkout, companies in the industry are rolling out a number of different technologies that will have the effect of taking over retail jobs. One of these developments is the use of mobile apps that allow customers to scan a barcode or take a picture of an item in order to retrieve additional product information or find other colors or sizes on a retailer’s website. Another advance is the proximity beacon, which alerts shoppers to promotions and gives sales associates information on customers who frequent the store so they can provide high-touch service. Additionally, retailers are introducing autonomous robots that can direct customers to desired products or assist with inventory replenishment. The study also predicted that these robots will be able to check customers out, return items to shelves, and clean up stores, thereby greatly reducing the need for employees.

Price tags and inventory management are also being affected by technological advances. The first of these, the Radio Frequency Identification tag, allows retailers to enhance inventory tracking throughout their entire supply chain. In addition, companies are using so-called “smart price tags,” which allow retailers to change prices in real time due to demand or other trends. Smart shelves are another advance that detect when inventory is low so appropriate orders or supply chain changes can be made.

Similar to self-checkout, sensor checkout looks to greatly reduce a retailer’s need for cashiers. With sensor checkout, products are automatically scanned as a customer walks out of the store. An example of this is the much-touted Amazon Go store, which the company announced in late 2016 and began testing with its employees in Seattle. According to Amazon’s website, the company “created the world’s most advanced shopping technology so you never have to wait in line.” They call the shopping experience Just Walk Out. The brick-and-mortar store uses cameras, sensors, and algorithms to automatically detect when products are taken or returned to the shelves and keeps track of them in a virtual cart. Once customers are done shopping, they can leave the store, and Amazon will charge their account and send a receipt. As evidenced by the Amazon Go store, the report said, “These headwinds are pushing retailers to rethinking the traditional business model.”

The Amazon Go store was supposed to open to the public this past March, but testing with Amazon employees revealed technological issues that have delayed the debut. More specifically, Amazon has had difficulty tracking customers when there are more than 20 people in the store and when people move quickly. Additionally, there have been issues related to tracking items that are moved from their specific spots on the shelf. Amazon is currently working out the kinks with the technology, but it is clear that automation will have a significant impact on the retail industry and its employees. Indeed, the rise of e-commerce, store closings, and technological advances are likely to dramatically affect the employment landscape in America.

NOTEWORTHY NUMBERS

laws banning requests for salary history
Does not include salary history restrictions on public sector employers.

RETAILER'S RECAP

Is Obama’s overtime rule roaring back like a Wage and Hour Opinion letter? The Obama Administration’s overtime regulations – which more than doubled the salary threshold necessary for an employee to qualify for the administrative, executive, or most professional exemptions to the minimum wage and overtime provisions of the Fair Labor Standards Act – was thought to be on its last legs when it was enjoined by a court after Donald Trump was elected President. But maybe not. The Trump DOL has filed a brief indicating that it more or less agrees with the Obama Administration that the court ruling was wrong. Jim Coleman, co-chair of our Wage and Hour Practice Group, has an excellent analysis of the DOL’s arguments here. And Ellen Kearns, Jim’s co-chair, has a blog post about a lawsuit brought against Chipotle’s Mexican Grill, Inc., claiming back wages based on the restaurant chain’s failure to comply with the overtime regulations – even though they have not taken effect – at least, not yet.

But in better news, the Trump DOL has restored the practice of issuing Wage and Hour Opinion Letters, which address specific FLSA questions raised by employers and, sometimes, unions (as well as questions about the Family and Medical Leave Act, which is also enforced by the Wage and Hour Division of the DOL). David Phippen has the story here.

If it seems too good to be true, it probably is. Raising the minimum wage seems like such an easy solution to low-wage jobs. Maybe a little too easy? According to a study commissioned by the City of Seattle, which has increased its minimum wage to $15 an hour, the increase resulted in a net loss for low-wage workers overall. You can probably guess the reason: Although wages went up, work hours and the number of jobs decreased. David Phippen has more.

Politics at the EEOC. President Trump recently nominated Janet Dhillon, a private sector attorney, to head the Equal Employment Opportunity Commission. Victoria Lipnic is currently serving as Acting Chair. More on Ms. Dhillon’s background is available here. And the Administration is considering a merger of the EEOC with the Office of Federal Contract Compliance Programs, which enforces anti-discrimination laws that apply to federal contractors. There is significant overlap in the functions of the two agencies, but employee as well as employer groups are, for the most part, opposed to the merger. Angelique Lyons has an excellent discussion of the pros and cons of the proposed merger in this blog post.

The times, they are a’changin’: Will Supreme Court decide on Title VII protections for sexual orientation? In April, the U.S. Court of Appeals for the Seventh Circuit ruled that discrimination based on sexual orientation is prohibited by Title VII. More recently, the U.S. Court of Appeals for the Second Circuit agreed to decide the same issue. And even more recently, the U.S. Court of Appeals for the Eleventh Circuit declined to rehear a case in which a panel found that Title VII did not prohibit sexual orientation discrimination. Lambda Legal, which represents the plaintiff in the Eleventh Circuit case, has said that it plans to ask the U.S. Supreme Court to rule. Although the Supreme Court can say no, it’s very possible that they’ll take this issue up and resolve it once and for all.

Treat your employees right! On this installment of ConstangyTV’s Close-Up on Workplace Law, Mel Haas, renowned labor lawyer from our Macon Office, talks with host Leigh Tyson, co-chair of our Labor Relations Practice Group, about the importance of treating employees with dignity and observing the “six As.”

Effective employment investigations. How should an employer go about conducting a workplace investigation, and what should it do with the information it gets? To find out, check out this two-part blog series by Robin Shea: “9 traits of a bang-up workplace investigation,” and “After the investigation: Now what?

Da states. A lot has been going on at the federal level, but state and local governments have been even busier, and many of these state and local laws are expected to have a big impact on retail employers.

California. Nestor Barrero has a summary of the state’s revised protections for transgender employees (effective July 1). Nestor and Regina Musolino also have an analysis of a state Supreme Court decision on the “day of rest” statute. But wait! There’s more! Richard Bromley and Aaron Rutschman offer guidance on the state’s meal and rest break requirements, which are quite complex. But before you get too discouraged, read Sean Kramer on an “employer-friendly” decision from the state Supreme Court on time “rounding” under California wage and hour laws. (Always good to end on a happy note.)

Massachusetts. Connor Cobean reports on a state Superior Court decision finding that employers who violate the state’s blue laws (which require certain retail employers to pay time and a half to non-exempt employees who work on Sundays) may be subject to private lawsuits by employees, with the possibility of automatic recovery of treble damages.

Missouri. The governor recently signed into law a package of legislation that amends the state Human Rights Act to require more rigorous proof from plaintiffs and to impose caps on damages, among other provisions. In addition, the legislation codifies the state’s whistleblower protections and imposes some reasonable limits on those claims as well. Bob Ortbals and Spring Taylor discuss the employer-friendly news here.

New York City. Mayor Bill de Blasio has signed into law “Fair Work Week” scheduling laws that apply to retail and fast food establishments in the City of New York. Among other things, the legislation applicable to retail employers will prohibit on-call scheduling, as well as schedule changes made with less than 72 hours’ notice. Jim Coleman has a comprehensive analysis of the legislation – which will take effect November 26, just in time for holiday shopping season – here. (And for details on NYC’s “salary history” legislation, which will take effect October 31, see this by Anjie Cabrera and Stephen Stecker.

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