Oregon becomes first state to enact scheduling-protection laws for service industry

Following similar local ordinances in New York City, San Francisco, and Seattle, Oregon has become the first state to enact a law restricting the scheduling practices of service-industry employers. On August 8, Gov. Kate Brown signed into law Oregon’s “Fair Work Week” bill, which primarily takes effect on July 1, 2018. City ordinances have focused on retail and food-service establishments, but Oregon’s law goes further by also covering hospitality establishments. The result will be that larger retail, hospitality, and food-service employers with operations in Oregon will have burdensome new compliance obligations.

Which employers must comply, and which employees are covered?

The law applies to Oregon employers with at least 500 employees worldwide who provide services related to retail trade, hotels and motels, or food services—as used in the 2012 North American Industry Classification System. Separate entities that are an “integrated enterprise” will be considered a single employer for determining the number of employees. The Oregon Bureau of Labor and Industries will adopt rules concerning whether an entity is part of an “integrated enterprise,” but, generally, the factors to consider include (a) whether multiple entities have interrelated operations, (b) whether they have common management, (c) whether there is common ownership or financial control over the entities, and (d) whether there is centralized control over labor relations.

Employees who are covered are nonexempt employees who are providing services relating to retail trade, hotels and motels, or food services. The law does not apply to exempt employees performing administrative, executive, or professional work. Workers supplied to an employer by a worker-leasing company and employees of businesses that provide services to, or on behalf of, an employer are also not covered.

Employees who are subject to a collective bargaining agreement are covered by the law. But the law is not intended to create an additional remedy for rest between shifts and compensation for shift changes where the employees have an equal or better remedy under their collective bargaining agreement.

What does the law require?

The law is intended to create work-schedule predictability and ensure a minimum rest period between shifts. Employers will be required to give advance notice of work schedules. Once set, those schedules cannot be changed except as provided by the law. Specific requirements include the following:

• Estimated work schedule. A new employee must be given a written,¹good-faith estimate of the work schedule at the time of hire (on or before beginning employment). The estimate must state the median number of hours the employee can expect to work in an average one-month period and must explain that the employee can be included on a voluntary standby list for additional hours.
• Voluntary standby list. Employers can maintain a standby list of employees who can be asked to work additional hours to address unanticipated customer needs or unexpected employee absences if the listed employees have requested or agreed in writing to be included on the standby list. Each employee on the standby list must be notified in writing (a) that the list is voluntary and how the employee can request removal from the list, (b) how the employer will notify employees on the list of additional hours available and how the employee can accept the additional hours, (c) that the employee is not required to accept the additional hours offered, and (d) that employees on the standby list are not eligible for premium compensation for changes to the written work schedule resulting from the employee’s acceptance of additional standby hours. Coercing an employee to be added to the standby list subjects an employer to a civil penalty of up to $2,000 per offense.
• Right to input in work schedule. Employees can identify limitations or changes in their availability and request not to be scheduled for work shifts during certain times or at certain locations. Employers cannot retaliate against employees for requesting a particular schedule or work location. But employers are not obligated to grant the request and may require the employee to provide reasonable verification (at the employer’s cost if a medical verification) of the need for a particular schedule.
• Advance notice of work schedule. Employers must provide work schedules in writing at least seven days before the first day of the work schedule. Beginning July 1, 2020, the written schedules must be provided 14 days in advance.
• Right to rest between shifts. Employees must be given a 10-hour rest period between shifts unless an employee requests or consents to work during this period. For compliance purposes, the employer should obtain the employee’s request or consent in writing. The employer must pay the employee 1.5 times the regular rate of pay for work during the rest period.

Schedule changes after the advance notice date

An employer seeking to change an employee’s schedule after the notice date is required to provide the employee with “timely” notice of the change, but the employee may decline to work any shift not included in the written work schedule.

For changes that result in more than 30 minutes of additional work to a shift; change the date, start time, or end time of a shift but result in no loss of hours; or schedules the employee for an additional shift or on-call shift the employer must pay the employee a premium-hour of pay in addition to the wages earned.

For changes that result in subtracting hours from a shift; change the date, start time or end time of a shift resulting in lost work hours; cancel the shift; or ask the employee not to perform work when the employee is scheduled for an on-call shift the employer must pay that employee half the regular rate of pay for each scheduled hour the employee does not work.

Unexpected absences or changes in work needs outside the employer’s control

As already noted, employers can maintain a voluntary standby list of employees who have requested or agreed in writing to be available to cover unanticipated absences or business needs. Employees on the standby list must be free to decline additional hours, but if they accept the hours, they are not eligible for additional compensation for an untimely change in their normal schedule. It is important to note that the standby list is not to be used for scheduling employees for on-call shifts.

Other exceptions to the compensation requirement for schedule changes include the following:

• The start or end time of the employee’s shift is changed by 30 minutes or less.
• Employees mutually agree to swap shifts. Employers can require that the swap be preapproved. Employers can also assist employees in finding other employees for a shift swap.
• The schedule change is made at the employee’s written request.
• Hours are subtracted for disciplinary reasons for just cause, provided that the employer documents the incident in writing.
• Work is cancelled or ceases because of threats to employees, the property, or on the recommendation of a public official.
• Work is cancelled or ceases because of a public utility failure or natural disaster, or because a ticketed event is cancelled, rescheduled, or is changed in duration due to circumstances outside the employer’s control.

Notice, recordkeeping, and anti-retaliation requirements

Covered employers will be required to display a poster providing notice of employees’ rights under the law and must maintain records of their compliance for three years.

It will be unlawful for an employer to interfere with, restrain, deny, or attempt to deny the exercise of a right under the law, or to retaliate or discriminate against employees for inquiring about their rights. Beginning January 1, 2019, employees will have a private right of action under the law, and the Oregon Bureau of Labor and Industries will have the power to seek penalties of up to $1,000 per violation.

How should retail, hospitality, and food-service employers with operations in Oregon prepare for the new law?

Absent a legal challenge, most provisions of the new law take effect on July 1, 2018. Covered employers should begin preparing now for the new requirements.

• If an employer—particularly a franchisee or possible “integrated enterprise”—has doubts about whether the law applies, promptly investigate that status.
• Ensure that accurate data exists, or determine on which data each covered location will rely, for projecting estimated monthly hours and for determining business and staffing needs going forward so that written work schedules can be as accurate as possible.
• Modify policies and procedures that are inconsistent with the law and consider how best to incorporate the new requirements into policies and procedures, including training for human resources, management, and covered employees.
• Begin creating necessary notices for use when the law becomes effective, as well as any forms to be used for compliance purposes.
• Ensure that procedures are in place for properly maintaining compliance materials, particularly work schedules—which are not required to be maintained under the Fair Labor Standards Act.

¹Fortunately, under the law, “writing” or “written” includes communication through e-mail, text message, or other electronic format as long as the communication is printable.

For a printer-friendly copy, click here.