How predictive scheduling affects retail and hospitality business

Predictive scheduling, also known as secure scheduling, fair scheduling, and the fair workweek is a set of laws that place obligations on employers to provide employee schedules ahead of time.

These laws prohibit on-call scheduling in most instances and also have the following provisions in common:

  • Employees are entitled to a specified amount of advance notice of their shift schedules.
  • Employees must receive compensation if an employer makes a change to the schedule that doesn’t comply with predictive scheduling laws.
  • Employees must be given a set number of hours to rest in between shifts or be paid at a higher rate if they work during this rest period.

Here are some cities that have already adopted predictive scheduling legislation:

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  • San Francisco was one of the first places to enact predictive scheduling laws. The Formula Retail Rights Ordinances was passed in 2014. Retail businesses with 40 chain stores worldwide and 20 or more employees in San Francisco qualify as eligible employers.

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  • Seattle’s predictive scheduling laws came into effect on July 1, 2017. These laws apply to retail businesses with over 500 employees worldwide and full-service restaurants with more than 500 employees and 40 global branches.

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  • New York enacted its predictive scheduling laws on November 26, 2017. This legislation placed a range of responsibilities on some retail and fast-food companies in terms of scheduling their employees’ shifts. To read more about New York’s ‘Fair Work Week’ legislative package, check out this article.

The drive for predictive scheduling laws originated from employees demanding more certainty in relation to their working hours. The Employment Instability, Family Well-being, and Social Policy Network’s work scheduling study found employees with unpredictable work schedules had:

  • Greater family conflicts.
  • Higher stress levels.
  • More interference with non-work activities, like making and keeping doctor’s appointments.

Unpredictable shift schedules also make it difficult for employees to:

  • Plan for family, school or other personal activities.
  • Predict income.
  • Refuse shifts that are unsuitable.

The Mayor of New York stated the following in relation to predictive scheduling:

“1 in 9 New Yorkers is a retail worker they are among the lowest wage earners in our city, they struggle to survive on often part-time work, barely making ends meet. We have showed that together we can end abusive scheduling practices. On-call scheduling is a pervasive and exploitive employment practice where workers do not find out until just before a scheduled shift if they will be required to work or not.”

Predictive scheduling legislation appears to be catching on with states including Michigan, Rhode Island and Massachusetts discussing the possibility of enacting employee scheduling laws.

Most predictive scheduling laws are aimed at the retail and food industry. Here’s how the most common predictive scheduling clauses will affect your restaurant or retail store.

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Predictive scheduling and restaurants

Different cities have their own definition of what constitutes a restaurant or fast-food establishment for the purposes of predictive scheduling. New York defines a fast-food establishment as one:

  • Where the primary purpose is to serve food and drink.
  • Where patrons choose items and pay for them before eating and can consume the items on the premises, taken out or delivered.
  • That offers limited service.
  • That is part of a chain and that is one of 30 or more establishments nationally.

Here are three ways that predictive scheduling laws will affect your restaurant:

1. Amendments to your scheduling process

Predictive scheduling legislation requires you to provide current employees with advance notice of work schedules within a specified amount of time. Advance scheduling also extends to new hires. You’ll need to provide your new hire with a good faith estimate before they receive their actual work schedule.

This stipulation will affect your scheduling process if you’ve designed employee rosters in an ad hoc way to deal with busy and quiet times at your restaurant. Even if your restaurant experiences unexplainable day-to-day business changes, you’ll need a reliable way to predict your labor needs as required by predictive scheduling legislation. Your workforce management tool should have the capability to auto-approve shifts based on specific criteria like overtime and predictive scheduling triggers. Failure to provide accurate schedules means you’ll need to pay your employees a premium if you need to make changes.

2. Adjustments to opening and closing shifts

Back-to-back shifts, also known as clopenings, are banned under most predictive scheduling legislation. You’re prohibited from scheduling your employees to work shifts that close and open your restaurant without the break stipulated by predictive scheduling laws. Employees can consent in writing to work clopenings without the required rest break. In this instance, you’ll need to pay your employee a premium for every clopening shift worked.

Where you currently have employees working clopening shifts in your restaurant, you’ll need to schedule their shifts differently to comply with predictive scheduling laws. As a result, you may need to train different employees to work opening or closing shifts. The positive aspect of this requirement is that employees can agree to work clopening hours and waive their rights to the specified break. However, this could result in a significant financial cost to your restaurant. New York’s predictive scheduling laws require employers to pay employees $100 per clopening shift without the necessary rest break. This cost could add up if you have more than a couple of employees agreeing to work clopening hours without their legally entitled break.

3. Changes to your hiring process

Certain predictive scheduling legislation impacts on the recruitment process of restaurateurs. There’s a provision that employers must offer additional shifts to employees before hiring someone new to cover those shifts. Where you need to cover shifts, you’re required to offer this work to employees at your restaurants in all locations. However, you don’t have to offer extra shifts to employees if this will result in overtime.

This clause places restrictions on when you can hire new employees. This could affect your restaurant if you want to supplement your existing staff. A situation could arise where a restaurateur doesn’t want to offer some of their existing employees’ extra shifts due to issues of competence. It appears that, under this provision, the restaurateur would either have to fire the underperforming employee or be prepared to give them more shifts, which could negatively impact the restaurant. If the restaurateur decides to fire underperforming employees to make way for better workers, the restaurant could be understaffed during this transition, which may also impact profits.

Predictive scheduling will have a big impact on affected restaurants. Given that labor costs for fast-food and table service restaurants run about 25% and 35%, (respectively) scheduling mistakes can be very costly. Using a comprehensive tool to predict and provide accurate employee schedules will go a long way in mitigating the effects of predictive scheduling laws on your restaurant.

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Predictive scheduling and retail

Retail employers also face changes to how they schedule their employees under predictive scheduling laws. Some stipulations for retail employers are similar to fast-food restaurants but there are some differences, in particular with the New York legislation.

Similar to restaurants and fast-food establishments, each city has its own definition of what constitutes a retailer for the purposes of predictive scheduling laws. A retail business will fall under predictive scheduling laws in New York, if:

  • It has 20 or more employees and is engaged primarily in the sale of consumer goods at one or more stores in the city.
  • A store is part of a retail chain, the total number of employees across all locations is counted towards the 20 thresholds.

Here are three ways that your retail business will be affected if it falls under the predictive scheduling law umbrella:

1. Re-examination of scheduling practices

On-call scheduling is banned for retailers under predictive scheduling legislation. Retailers must provide schedules in advance (each city specifies the required notice). After notice is given, retailers can’t change, cancel or add shifts without paying a premium to affected employees. Changes can be made to schedules without incurring a penalty in emergency situations.

If you’re among the many retailers that have relied upon on-call scheduling, you may need a complete overhaul of your workforce management to comply with predictive scheduling laws. Traditionally, on-call scheduling has been used in retail to prevent unnecessary labor costs and adapt to customer needs. However, continuing this practice will have serious and negative consequences for your retail business. A new approach to scheduling is necessary. It’s strongly recommended that you use a workforce scheduling tool that keeps your retail business in compliance with predictive scheduling laws.  Affected retailers need to shift from old and unlawful scheduling practices to the new legal way to fulfill predictive scheduling requirements.

2. Assessment of communication processes

Retail employers are required to post a notice in an obvious work area to inform employees about their rights under predictive scheduling laws. Retailers also need to provide employees with a written work schedule which includes the requisite notice. Where retail employers use electronic means to distribute information, they’ll need to issue schedules to their employees electronically.

It’s not advisable to receive and give shift schedule instructions verbally, as this would make it difficult to prove that you’ve complied with predictive scheduling legislative requirements. Casual conversations about shift changes without a formal documentation process will leave your retail business vulnerable. Similarly, text, instant messenger or email exchanges about schedules can result in miscommunication. To ensure you meet the notification terms of predictive scheduling law, consider using a tool that replaces email and other common forms of electronic communication. Your scheduling software should include a collaboration hub with essential features, like read receipts, that make it easy to track conversations.

3. Review record keeping

Retailers are also obligated to keep records for a specified period (three years in the case of New York) showing they’ve complied with predictive scheduling legislation. Employees are entitled to make a request to access their records at any time.

The absence of adequate records showing you’ve complied with predictive scheduling legislation will lead to a presumption that you’ve broken the law. There are serious repercussions for your retail stores if predictive scheduling laws aren’t adhered to. You may be subject to sanctions by the city and your employees could also bring a private lawsuit against your business. To satisfy the record keeping conditions of predictive scheduling legislation, your workforce management software needs to include customizable reporting functions. In the event that your retail store is audited or an employee makes a request to see their work schedule records, you’ll readily have access to vital information like offers of additional hours and notice periods. Check out this article that has examples of real lawsuits in the workforce and how Deputy can help solve these issues.

Predictive scheduling legislation has a big impact on retailers and restaurateurs. It can no longer be business as usual when managing your workforce. Non-compliance with predictive scheduling laws could expose your business to financial penalties by way of compensatory and civil damages. If your retail store or restaurant falls under the predictive schedule banner, you need to act as a matter of urgency to become compliant.

If predictive scheduling hasn’t yet made its way to your city, it’s prudent to be prepared in the event these laws are enacted. In light of predictive scheduling law requirements, fit for purpose workforce software needs to do much more than organize shifts. Deputy has been tailored to keep you compliant to mitigate the negative effects of predictive scheduling legislation on your restaurant and retail business. Download this eGuide to understand the new predictive scheduling laws and learn tips to help your business comply to these new regulations.

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