Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
Update: On May 12, 2020, the Chicago Department of Business Affairs and Consumer Protection (BACP) published its finalized rules on the Fair Workweek Ordinance. It also published a supplemental COVID-related rule addressing how the pandemic exception to the obligation to pay predictability pay would be interpreted. The rule provides that a work schedule change will be considered to be “because” of the pandemic “only when the pandemic causes the Employer to materially change its operating hours, operating plan, or the goods or services provided by the Employer, which results in the Work Schedule change.” Further, the rule clarifies that this exception will only apply “in the Work Schedule during which the event changes the Work Schedule and the Work Schedule immediately following.”
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Chicago passed the Chicago Fair Workweek Ordinance in July 2019. This Ordinance, which is set to take effect on July 1, 2020, requires covered employers to provide advance notice of work schedules to their covered employees, and to pay additional wages if posted schedules are changed within a certain time period. The Ordinance also requires employers to offer additional hours to existing employees before hiring new employees.
As previously discussed, employers covered by this Ordinance are those that employ 100 or more employees (or 250 or more employees if a non-profit corporation), 50 of whom are “covered employees,”1 and are primarily engaged in the following industries: building services, healthcare, hotels, manufacturing, restaurants, retail, and warehouse services.
When the Ordinance passed, the employers covered by this new law could not have foreseen what perils lay ahead for their industries in the year that followed. Employers knew the Ordinance would be in effect starting July 1, 2020, and had time to plan and prepare for implementation. Nevertheless, the Ordinance caused consternation as to certain vague language and a lack of guidance on how to comply where it can be a challenge to predict what the next week may hold. The proposed regulations did little to clarify the Ordinance’s vague language, and the final regulations are yet to be published. Now, with little guidance and in the midst of the COVID 19 pandemic, these employers, many in industries hardest-hit by the pandemic, must prepare for compliance with the Ordinance.
What is the Status of the Ordinance?
Many employers have inquired whether Chicago will postpone implementation or waive enforcement of the predictability pay provisions of the Ordinance, in light of the pandemic. Chicago Mayor Lori Lightfoot previously stated that she did not intend to postpone the Ordinance or its enforcement, but recent reports indicate that some portions of the Ordinance will be delayed. Specifically, the City Council will meet to vote next week on a proposal to delay the provision allowing employees to initiate a private lawsuit against their employers until January 1, 2021. At this time it is unclear whether the proposed delay would prohibit solely the filing of a lawsuit in this period, or will also prevent a private cause of action from accruing between July 1, 2020 and January 1, 2021. Either way, the remainder of the Ordinance, including the authority for the City of Chicago to investigate and enforce compliance with the Ordinance, is still expected to go into effect on July 1. As such, employers in covered industries must be prepared.
Chicago employers in these industries are left with the question of how to predict schedules when very little in the present circumstances is predictable. Two exceptions to the predictability pay requirements of the Ordinance, however, may come into play: an exemption for pandemics/public safety and an exemption for mutually agreed-upon schedule changes.
First, the Ordinance exempts employers from paying predictability pay when there is a work schedule change because of “war, civil unrest, strikes, threats to public safety, or pandemics.” It remains to be seen how this exemption will be applied. For example, will an employer be exempted from paying predictability pay to an employee only when its business is ordered fully closed as a result of the pandemic, or will it also apply if an employer is open, but forced to limit occupancy or change its operating hours due to a stay-at-home or re-opening order? Employers faced with such changed circumstances should consult with an attorney to determine if predictability pay is owed.
Second, the Ordinance provides that employers are not required to pay predictability pay when a work schedule change is “mutually agreed” upon by the employer and employee, or when a covered employer requests a shift change that is confirmed by the employee in writing. As such, should a schedule change arise due to changing circumstances, employers should secure an employee’s agreement to a changed schedule, where possible. This exception is not a free pass, as it will only apply when an employee’s agreement is freely given.
Because employees must either agree to schedule modifications or be paid predictability pay in the future, employers also should consider setting up either an “opt out” or a “please call first” list for its employees to indicate their willingness, or not, to take on additional shifts. This will not insulate employers from the need to pay predictability pay in all instances of a schedule change, but it can alleviate administrative hurdles and avoid claims of disparate treatment or favoritism when offering additional work.
While many questions remain unanswered, there are steps employers can take now to be in compliance come July 1. Employers should develop employee scheduling policies and train front-line managers and payroll personnel alike in the requirements of the Ordinance. Employers should also get in the habit of seeking employee agreement to shift modifications, where possible, rather than unilaterally requiring employees to work different shifts. Further, employers should memorialize, in writing, all agreed-upon shift changes made after the work schedule posting deadline, and obtain employee signatures.2 Employers can get a head start by preparing forms to be used in these circumstances now.
Employers should take the next 45 days to train managers on the Ordinance and recommended practices for staffing to business needs while avoiding situations that would trigger predictability pay obligations. Further, employers should work with their Human Resources Information Services and payroll teams to ensure that when obligations to pay predictability pay arise, it is paid timely and correctly.
1 “Covered employees” are employees (as opposed to contractors), or temporary workers if the workers are on assignment with an employer for 420 hours in an 18-month period, who (a) perform the majority of their work within the City of Chicago; (b) perform the majority of their work in a “covered industry”; and (c) earn less than $50,000 a year, for salaried employees, or less than $26 an hour, for hourly employees. The minimum compensation requirement is scheduled to increase annually based on the increase in the Consumer Price Index.
2 Electronic signatures would likely suffice.