Predictability Pay: A New Wage Premium Coming to a Workplace Near You

Life is about to get a little better for nearly 100,000 part-time workers in San Francisco. The city’s Board of Supervisors recently voted in favor of two new ordinances known collectively as the Retail Workers Bill of Rights (“Bill of Rights”) and it’s a game changer.

The newly enacted ordinances apply specifically to “formula retailers” employing 20 or more employees within the city limits of San Francisco, including any contractors or subcontractors they use for janitorial and/ or security services. The city defines a formula retailer as any business engaging in retail sales or services—banks, stores, fast-food and casual-dining businesses, hotels, and restaurants—with 11 or more locations nationwide.

The Bill of Rights affords part-time workers an unprecedented set of new protections that will impact the bottom-line of many employers operating within San Francisco. The Bill of Rights was enacted in response to employers increasingly utilizing “just-in-time scheduling.” This term refers to the practice of harnessing the analytical data that electronic timekeeping systems are able to provide to determine when employees are needed the most. Based on this information, employers then schedule more employees to work during peak business hours, and fewer employees during off-peak times. In essence, employers are attempting to maximize revenue through scheduling efficiency.

What's problematic is that more often than not, “just-in-time scheduling” leads to erratic scheduling practices that ultimately become a commonality in the workplace. This effectively leaves hourly employees without any sense of predictability in their daily lives, because their work schedule constantly changes from week to week with little notice.

Under the Bill of Rights, formula retailers operating within the city limits of San Francisco are required to offer existing part-time employees additional hours before hiring a new employee. Moreover, part-timers must also be given at least two weeks’ notice of their shift schedule. Employers who otherwise fail to provide an employee with two weeks’ notice, or who alter an employee’s working hours with less than a week’s notice, must provide the employee with additional compensation in the form of “predictability pay.”

“Predictability pay” is the newest form of premium pay designed to penalize employers who make last-minute changes to employee schedules. The amount of predictability pay that must be paid in addition to the employee’s regular compensation depends on how much notice was given to the employee:

• Any shift changes made with less than 7 days notice, but more than than 24 hours, will entitle the employee to one hour of pay for each shift change;
• Any shift changes made with less than 24 hours notice will entitle an employee to receive up to four hours of pay for each shift change, depending on the duration of the shift;
• For each on-call shift which requires an employee to be available, but not actually called into work, must be compensated with up to four hours of pay, depending on the duration of the shift.

Formula retailers need to ensure that they have their act together, because scheduling mismanagement will ultimately hurt their bottom-line. The impact could be significant for employers who often make last-minute schedule changes. Formula retailers looking to upgrade from manual timekeeping systems should look for solutions that also provide compliance safeguards that can help prevent unnecessary last-minute shift changes from being made.

Even those businesses which are not directly affected by the Bill of Rights need to watch out. The trend of ditching old manual time-tracking systems is not dying out anytime soon. The analytical insight gained from using automated timekeeping systems may further the popularity of just-in-time scheduling. In such a case, predictability pay may gain popularity with other states and local municipalities. After all, 59% percent of the United State’s workforce is paid hourly. Could this be the start of a new trend? Only time will tell.