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HR is facing pressure to balance predictability, technology and the bottom line.
He’s a college student who works part-time at a clothing store in the mall. He depends on his earnings to cover his tuition and textbooks, but his work schedule is unpredictable. Often, he’s told to call in before a shift to see if he’s needed, only to learn that he isn’t—and won’t be paid for the hours he’d planned to be on the job.
She’s a single mom who works in a fast-food restaurant and tries to juggle work and parenting duties. Last-minute shift changes leave her scrambling for child care if she is unexpectedly called in or short on funds if her employer doesn’t need her.
Individuals like these are among tens of thousands of workers, most of them part-timers earning low wages, who are subject to the vicissitudes of on-call scheduling, which requires that employees check in with a manager a few hours before their shift begins to learn if they’re needed. If they aren’t, they’re free to use their time as they wish—which may sound like a boon but is more often a burden, since most rely on a predictable income, and many may have already arranged for child care or transportation that they now won’t need.
Most common in the retail and hospitality industries, the practice has come under heavy fire in recent years from workers’ rights groups claiming that erratic schedules upend workers’ lives and erode their earning power because they must hold time open for work that may not materialize.
“It just makes your life unmanageable in terms of child care, or if you’re trying to get an education, or if you’re holding down two jobs,” says Sherry Leiwant, co-president of A Better Balance, a national legal advocacy organization based in New York City. “And even if it’s none of those things, it’s your time, and you’re not getting paid for it. In some sense, your employer owns your time if you’re putting it aside for them.”
Meanwhile, businesses are under mounting pressure to contain labor costs in the face of stiff competition from online retailers and fickle shoppers and to boost slim profits by keeping operations lean. But, in light of recent court cases—and workers’ growing resistance—many organizations are taking a hard look at the practice of on-call scheduling. In December, six major retailers—Aeropostale, Carter’s, David’s Tea, Disney, PacSun and Zumiez—dropped the practice after coming under scrutiny from a group of state attorneys general. Several other retailers did so in 2015.
HR professionals play a prominent role in shaping staffing strategies, providing their organizations with insight into issues affecting workers’ morale and turnover. They can also determine whether scheduling conflicts are taking a toll on staff retention, customer service and the bottom line.
In some cases, the fix can be as straightforward as paying a premium to employees whose schedules are subject to last-minute changes. In others, HR practitioners can advise managers on revamping their scheduling processes to adopt technologies that give workers the freedom to swap or drop shifts, pick up extra hours or even set their own schedules in a management-created template.
Unpredictable work hours are typical for part-time hourly workers, a 2014 research report by the University of Chicago found, with 47 percent of workers ages 26 to 32 saying they received their schedule no more than a week in advance. And the number of part-time retail employers who wanted more hours but couldn’t get them—a group defined as “involuntary” part-timers—mushroomed to 1.5 million in 2010 from 644,000 in 2006.
Seventy percent of retail workers received their schedules less than a week in advance, and just 10 percent of part-time employees had a set schedule, according to a 2012 survey by the Murphy Institute of the City University of New York and the Retail Action Project. One in five said they had to “always” or “often” be available for last-minute shifts.
“They would call you literally one hour before the shift, and then what do you do?” says an Urban Outfitters worker quoted in the report. “I have also had the experience where I got to work and then they would say, ‘We don’t need you.’ ”
More than a third of the respondents said they were sometimes, always or often sent home before their shift ended. But only 15 percent reported being consistently paid for when they were sent home early, which New York state law requires.
New York Attorney General Eric Schneiderman fired a warning salvo in 2015 when he and eight other attorneys general cautioned 15 national retailers, including Gap, Target, Williams-Sonoma, Coach and Forever 21, that their labor practices might be illegal. By the end of 2016, all of the companies said they had stopped using on-call scheduling, had never used it or were ending the practice.
But litigation continues. David C. Leimbach, formerly of Marlin & Saltzman in Irvine, Calif., represents 30,000 Victoria’s Secret workers in California in a class-action lawsuit involving the clothing company’s scheduling methods. The retailer agreed in July to pay a $12 million settlement to resolve the class-action lawsuit that began in 2014. Another half-dozen California cases against other retailers are pending as well.
At issue is whether employees who called in to their managers and were told they were not needed should receive up to four hours of pay, as required under California law for employees who “report for work.” Victoria’s Secret attorneys have argued in legal briefs that the company need not pay workers who weren’t at the physical workplace and were free to use their time as they wished.
The federal Fair Labor Standards Act does not regulate on-call scheduling, and no state laws bar it, though California, Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Oregon, Rhode Island and the District of Columbia require employees who report to work to be paid, even if they’re sent home early.
In 2014, San Francisco became the first U.S. city to address on-call scheduling problems with the Retail Workers’ Bill of Rights. The law penalizes businesses for failing to give sufficient notice to workers and gives hourly employees “predictability pay” for last-minute changes.
Laws governing employees’ schedules in Seattle and Emeryville, Calif., took effect July 1. Oregon adopted the nation’s first statewide measure mandating predictable scheduling. The law, which applies to large employers in the hospitality industry, takes effect in July 2018 and will require businesses with more than 500 employees worldwide to give hourly workers at least seven days advance notice of which shifts they’re working. By 2021, the notice period expands to 14 days.
Starting in November, legislation adopted in New York City will require retail and fast-food businesses to release schedules to employees two weeks in advance and penalize employers that do not give adequate notice of schedule changes. More than a dozen other jurisdictions are considering measures that restrict employers’ use of unpredictable schedules.
The National Retail Federation, which represents retailers and restaurants, has opposed such regulations, saying they restrict employees’ ability to collaborate with management to create schedules that accommodate their needs.
“These ordinances are largely a solution in search of a problem,” says Lizzy Simmons, senior director of government relations for the federation. Rigid regulations create “a lose-lose situation,” she says, penalizing employers and workers. “It’s best left to the employer and the employee to work together on these issues and not to government mandates, whether state, federal or local.”
Businesses have pushed back with actions of their own. Bills that would have extended statewide key provisions of San Francisco’s on-call scheduling ordinance stalled in the Legislature in 2015 and 2016. In Albuquerque, critics scuttled efforts in 2015 to pass the Fair Workweek Act, which would have mandated three weeks’ notice for scheduling. Minneapolis’ Working Families Agenda, which included two weeks’ notice and paid sick leave, ignited staunch opposition.
On the federal level, the Schedules That Work Act, which would have penalized retail, food service and cleaning companies with 15 or more employees for using on-call scheduling, fizzled in 2015.
Experts on both sides of the issue agree that employee-friendly legislation has little chance of making headway in a Republican-dominated Congress under a pro-business president.
Some experts fear that legal uncertainty will create an administrative burden for businesses.
“The reality is it’s going to drive all the issues to the states and local governments and create this patchwork that is going to be very, very tricky” for retailers to navigate, says Brett E. Coburn, an Atlanta-based partner in Alston & Bird’s labor and employment practice. The result is that organizations will be saddled with “burdensome mandates with their own tricky nuances,” Simmons says.
Regulatory scrutiny and publicity surrounding “just-in-time” scheduling have prompted some employers to be more innovative in their approaches to staffing, says Carrie Gleason, director of the Center for Popular Democracy’s Fair Workweek Initiative. “We have these amazing technologies that can do very sophisticated forecasting and, if you’re adequately staffing, you don’t need to keep people on call,” she says.
Employers continue to seek some level of scheduling flexibility without running afoul of laws, drawing activists’ ire or crushing workers’ morale. “There may be ways to have some amount of it without saying, ‘Call me an hour before, and I’ll let you know,’ ” Coburn says. “There may be degrees of gray between having on-call scheduling and not.”
Victoria’s Secret uses “on-call shift extensions,” where employees report for a scheduled four-hour stint and then, while at work, wait to be notified if they’re needed for an extra two hours. That strategy avoids state scrutiny for dodging reporting pay laws, Gleason says, though it does not eliminate unpredictability. As employers become more innovative, “it’s going to make for some murky waters in terms of how this is regulated,” Leimbach says.
Even if employers can’t end on-call scheduling, they can mitigate the pain it causes by spreading just-in-time assignments throughout their workforce, using technology to forecast staffing needs and paying incentives to workers who accept last-minute changes. Organizations that make these efforts are often rewarded with higher morale and employee loyalty.
Chicago’s Fifty/50 Management Group seeks to limit last-minute scheduling changes for its 450 employees, three-quarters of whom are part-timers. It uses Nimble Software Systems’ Ximble software to set schedules two weeks in advance at its nine restaurants, says Malinda Reicher, the company’s HR and training manager.
On rare occasions, such as when unexpected spring showers fall, restaurant staffers scheduled to work the outdoor seating areas will learn as late as that morning that their evening shifts have been canceled. Though uncommon, those down-to-the-wire changes, for which workers are not paid, can dampen morale and increase turnover, Reicher says. She reminds managers to make sure not to repeatedly cancel shifts for the same employees.
‘Something is always going to come up, but being prepared and using data and your experience prepares you to do the best you can.’–Malinda Reicher, Fifty/50 Management Group
When the restaurants expect surges in patrons—during Cubs playoff games, for example—Fifty/50 makes optional last-minute shifts available to qualified workers. Those who want to pick up extra hours can do so on a first-come, first-served basis. “They know it’ll be worth their while to come in,” Reicher says, because private parties pay an 18 percent gratuity and large crowds mean more tips.
Sometimes the solution can be as simple as extra pay. There’s nothing to prevent businesses that use on-call scheduling from compensating workers, even if no laws require them to do so, Gleason and Leiwant contend.
That’s what New Castle, Del.-based N.K.S. Distributors Inc. does. The beer distributor pays its employees for four hours of labor if they’re called in outside their scheduled shifts, even if they work fewer than four hours, says Joanne P. Lee, SHRM-SCP, the company’s vice president of human resources.
Because the 130-employee company cannot always predict when long-distance truckers will arrive with goods to be unloaded, managers must sometimes call workers in with little notice. The on-call scheduling pay bonus is built into the contracts of the company’s unionized workers, Lee says. To be equitable, N.K.S. extends the provision to nonunionized staff as well. Lee credits the company’s approach with keeping turnover low, around 5 percent, less than half of the typical 13 percent rate for its industry.
San Francisco Curbs On-Call Scheduling
“There have been no complaints from employers and a lot of positive feedback from employees affected by the law,” says Seema Patel, deputy director of the Office of Labor Standards Enforcement for the city and county of San Francisco.
Her office has not issued any fines for noncompliance, though it’s investigating complaints about last-minute scheduling changes and lack of adequate notice.
“The goal here is not to be punitive,” says Judson True, chief of staff for California Assemblyman David Chiu, D-San Francisco, who introduced the measure. “It’s to protect workers from labor practices that make their lives incredibly challenging.”
If local and state governments opt to enact legislation governing schedules and pay, HR professionals will face more challenges to ensure corporate compliance, Coburn says. Some locations may have no rules regulating workers’ schedules. Others may have detailed regulations and penalties for noncompliance.
If your business operates in jurisdictions that don’t bar on-call scheduling, consider experimenting with varying amounts of notice to find a comfortable middle ground that meets the needs of workers and the business. There’s plenty of space for compromise between one hour’s notice and two weeks’ notice. “It wouldn’t surprise me to see different approaches,” Coburn says.
Ultimately, getting scheduling right may entail using data analytics, good judgment and flexibility to maximize customer service while keeping costs in check. “Something is always going to come up,” says Fifty/50’s Reicher, “but being prepared and using data and your experience prepares you to do the best you can.”
Using Technology to Tame On-Call Scheduling
The solution to on-call headaches may be in the palm of your hand. Retailers are increasingly deploying software that lets managers schedule shifts and workers pick up, drop and trade hours on their smartphones and mobile devices, including:
Workers click on the company app to view, swap and drop shifts. The company’s clients are businesses with 10 to 500 locations.
Ideally, Percolata schedules workers two weeks in advance and later performs “touch-ups,” according to CEO and founder Greg Tanaka. As forecasting technologies become increasingly affordable and accurate, he expects employers to set workers’ hours farther in advance than they have previously.
Nimble Software Systems in Carlsbad, Calif., serves businesses with 50 to several thousand employees, analyzes massive amounts of cloud-based data from retail receipts to forecast sales volume and customer foot traffic down to the hour, enabling businesses to align staffing levels.
“If you don’t have enough staff, then your customer service suffers,” says founder and chief technology officer Peter Swaniker. “And if you have too much staff, you’re losing money.” Swaniker claims his company’s software, called Ximble, can save managers hours each week on scheduling tasks and offers greater convenience for employees.
June D. Bell is a San Francisco-based journalist who covers California labor and employment issues for SHRM.
Illustration by Ken Orvidas for HR Magazine.
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