AB 357 (Chiu; D-San Francisco) will dramatically increase the cost of doing business for any entity that conducts “any type of retail sales activity” in California and penalizes the employer by requiring “additional pay” for making changes to the schedule with less than two weeks notice.
The author’s office has indicated the bill will be amended to limit it to employers with 500 or more employees in the state and at least 10 retail establishments nationwide.
The bill also creates an unlimited amount of protected leave from work and a broad new protected class of employees—those who are receiving public assistance or have an identified family member receiving such assistance.
In addition, AB 357 subjects employers to litigation under the Labor Code Private Attorneys General Act (PAGA), unfair competition law, and common law wrongful termination statutes.
Broad Definition of Retail
Currently, AB 357 applies to any entity that “conducts any type of retail sales activity” in the state, regardless of the size of the employer or the number of employees, and mandates such employers provide two weeks’ notice of employee schedules.
The author’s office has indicated it plans to amend the bill to limit its application to employers with 500 or more employees in the state and at least 10 retail establishments nationwide that maintain two or more of the listed characteristics, such as standard uniforms or similar signage. Although this amendment narrows the bill, the legislation still potentially has an impact on small businesses that are franchisees and may own only one store, but are part of the larger franchise.
In addition, as set forth below, regardless of the size of employer to whom this bill applies, it is still problematic for any business model and will inhibit the ability to conduct business in California.
Any changes made less than two weeks before the scheduled shift will result in “additional pay” (which is undefined by the bill) to an employee.
AB 357 fails to consider the reality of business demands, fluctuation in customer attendance, or even the expansive list of California-only protected leaves of absence that employers must adhere to that create short-notice schedule changes for employers and employees.
For example, California has more than 20 mandated, protected leaves of absence, in addition to federal leaves of absence. Employees requesting such leaves are not required to provide employers with two weeks’ notice, but rather “reasonable notice” (which is undefined by the bill).
Under AB 357, an employer who complies with a mandated leave will be doubly penalized with “additional pay” for accommodating that absence by: 1) changing the schedule of the employee who is requesting the leave; and 2) calling in another employee to cover that shift, with less than two weeks’ notice.
Similarly, customer demands and business changes are not always known by the employer two weeks ahead of schedule, which will make it nearly impossible to comply with the scheduling mandate under AB 357. For example, hotels and restaurants constantly suffer from customer changes due to last-minute reservations or last-minute cancellations that are outside the control of the employer.
Under AB 357, a restaurant that has a large party cancel its reservation and, therefore, is losing money already, will be forced to either pay for staff who are not needed or send staff home and suffer a financial penalty due to a last-minute schedule change.
AB 357 precludes any type of flexibility to an employer or employee, as any employer who tries to accommodate last-minute employee schedule requests or last-minute business demands will be subject to financial penalties. This bill harms employers just as much as it does employees.
AB 357 allows an employee to take an unlimited amount of protected leave from work in order to attend any appointment at the county human services agency.
This mandate on employers will result in last-minute employee absences that will trigger a financial penalty under AB 357 for a schedule change.
It is an unfair predicament in which to place employers by mandating an unlimited leave for an employee that can be taken at any time, without notice, and then financially penalizing the employer for complying with the mandate.
Moreover, an unlimited leave of absence will disrupt an employer’s ability to provide two weeks’ notice of other employees’ schedules, as well as maintain the day-to-day operations of the business.
New Protected Classification
AB 357 also creates a new, protected classification of employees in California, defined as any employee who: 1) receives CalWORKS cash aid; 2) is a parent, guardian or grandparent of one or more children who receive CalWORKS cash aid; or 3) someone who receives CalFresh food assistance.
Under AB 357, an employer would be prohibited from discriminating against or discharging any employee who falls within one of these three categories. Combined with the new, unlimited leave referenced above, this precludes an employer from taking any conservative action against an employee who regularly misses work on a daily, weekly or monthly basis to attend an appointment, for threat of discrimination/retaliation litigation.
There is also no evidence of which we are aware of systematic employment discrimination against employees on this basis that would justify a new, protected classification in California law. As such, this protected classification will simply lead to an increase in litigation as it provides a new basis upon which to sue an employer who takes an adverse employment action for a legitimate reason against an employee who falls within one of these protected categories.
Multiple Litigation Threats
AB 357 adds a new section to the Labor Code, so any alleged violation could be pursued against the employer as a “representative action” under PAGA, Labor Code Section 2699, et seq., with employee-only right to attorneys fees, statutory penalties and interest.
An employee also could threaten to file an unfair competition claim under Business and Professions Code Section 17200, as well as a common law wrongful termination claim. Increasing the cost of doing business on all employers who engage in retail activity with the “additional pay” mandate, as well as subjecting them to multiple threats of litigation, is detrimental to the economy and the ability for businesses to thrive in this state.
San Francisco Ordinance
In December 2014, the San Francisco Board of Supervisors passed the “Retail Workers Bill of Rights” that included a “fair scheduling” mandate, similar to that proposed in AB 357 but notably, much narrower.
Even in this narrower form, San Francisco Mayor Ed Lee refused to sign the ordinance. Less than six months since its passage and before the ordinance takes effect on July 1, 2015, the San Francisco Board of Supervisors is already working on a clean-up measure.
Nevertheless, AB 357 proposes a broader fair scheduling mandate on a statewide basis. California still has areas of high unemployment. The increased costs imposed by AB 357 on California employers will only exacerbate the unemployment problem and create a more hostile business environment.