Fashioning Employee Schedules: Employees Question Compensation Practices

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Technological advancements have impacted employee scheduling in certain industries. Notably, employers with access to real-time data that suggest the level of expected business on any given day may require employees to be “on call.” But, in a recent lawsuit against clothing retailer Forever 21, employees allege they’ve been subjected to “exploitative” scheduling practices regarding so-called “on call” shifts. Comparable suits have recently been filed against other fashion retailers like Victoria’s Secret and BCBG Max Azria, regarding similar policies.

On-call shifts require employees to call a few hours before the shift to confirm whether their presence is needed at the workplace.  However, an employee who arrives at work only to be sent home is not compensated. According to the lawsuit, California law mandates that employers pay for “reporting time”, i.e. compensate employees when they are required to report to work even if they’re eventually sent home before completing a shift. According to the suit, on-call shifts are no different than regular shifts, and Forever 21 has misclassified them in order to avoid paying for “reporting time”.  This employer practice of scheduling employees for on-call shifts but failing to compensate employees for required reporting time could be construed as a form of wage theft.

On-call shifts, which provide a shorter lead time for scheduling, are common to employers that require varying levels of staff depending on the uncertainty of business traffic. This tactic has become more widespread as employers increasingly embrace technology that enables companies to adjust employee schedules to anticipate labor needs, using factors like weather, time of day, and consumer traffic to predict customer demand at any given time.  Such scheduling is particularly popular in some industries, such as food/beverage and retail, because it enables an employer to avoid paying for excess labor during slow periods.

While on-call shifts are technically legal for now, the practice, and just-in-time scheduling in general, have recently come under scrutiny in suits like the Forever 21 action, state investigations, and new legislation.  A California federal judge recently granted Victoria’s Secret employees leave to appeal the dismissal of their on-call suit.  Shortly thereafter, the New York Attorney General commenced an inquiry into on-call shift practices.  Legislation in several jurisdictions is in the works regarding the practice.

The law in this area remains in flux and serves as an important reminder to employers about employee scheduling, a topic that will become particularly important as the busy holiday season approaches.  Make sure to closely monitor this proposed legislation to ensure your business ready to implement policy changes to comply with any changes in the law.