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Victoria's Secret will pay $12 million to resolve a class-action lawsuit brought by hourly employees who claimed they were shortchanged by the retailer's use of on-call shift scheduling.
The proposed settlement, which affects about 36,000 workers, ends litigation that started in 2014 and raised a perplexing question: Must California employees physically "report for work" to trigger the state's pay protections for canceled shifts?
California law requires that employees who report for work but are not needed or are sent home early receive two to four hours of pay at their usual rate. The state's reporting-time law doesn't ban on-call scheduling. However, the workers in this case argued that they should be paid because they met the intent of the "report for work" requirement.
The lingerie retailer's policy allowed on-call employees to call in—rather than show up—to see if they were needed at work, but the plaintiffs said this still compelled employees to reserve their shift time for work even when they did not report to the store when shifts were cancelled.
Attorneys for Victoria's Secret had argued that the call-in workers whose shifts were canceled should not be provided reporting-time pay because they did not physically report to the store.
National retailers and fast-food establishments have historically used on-call scheduling to help control labor costs. But workers say that the daily unpredictability of on-call scheduling hinders their ability to earn a living, hold more than one job, arrange reliable child care or attend classes. The practice has been abandoned by many major retailers, including Victoria's Secret, after coming under fire from unions, labor activists, legislators and attorneys general in several states.
[SHRM members-only toolkit: Complying with California Wage Payment and Hours of Work Laws]
On-call scheduling hasn't disappeared entirely, however, and more litigation is pending, said Michael Avenatti, an attorney with Eagan Avenatti in Newport Beach, Calif. In 2015, the firm sued eight retailers on behalf of workers who challenged the businesses' on-call scheduling practices. The retailers included Abercrombie & Fitch, Forever 21, Gap and Williams-Sonoma.
"I envision these on-call issues will be around for some time," Avenatti said.
California isn't the only state where on-call scheduling practices have been under the microscope. New York's attorney general, Eric Schneiderman, launched an inquiry into the practice in 2015, targeting brands that included Gap, J.Crew, Abercrombie & Fitch and L Brands—the parent company of Victoria's Secret and Bath & Body Works.
A half-dozen retailers announced the following year that they would halt the use of on-call scheduling as the practice came under increasing fire.
Legislation and Changes
Federal and statewide California legislation that sought to regulate on-call scheduling has stalled—but some cities have stepped in to pass legislation requiring employers to provide work schedules in advance or pay penalties.
For example, in Northern California, Emeryville's Fair Workweek Ordinance, which took effect on July 1, requires businesses to provide schedules 14 days in advance. Seattle's scheduling ordinance took effect July 1, and Chicago is considering one.
Additionally, certain fast-food and retail businesses in New York City must comply with new scheduling laws by Oct. 31.
The piecemeal legislation creates headaches for employers that operate in multiple locations, said Timothy Hoppe, an attorney with Seyfarth Shaw in San Francisco.
Some employees divide their time between several stores, which further complicates compliance. But businesses may opt to standardize their procedures to conform to the strictest ordinance. "Why have four different scheduling policies?" Hoppe asked.
'I'd Lose My Whole Day'
Victoria's Secret management told certain California workers in early 2016 that it would no longer use on-call scheduling, according to an employee who asked not to be identified because she was not authorized to comment.
Previously, she and her co-workers called in an hour before the start of their shifts to see if they were needed that day. About 40 percent of the time, she wasn't. "I'd lose my whole day waiting to see if I was working or not," she said. "It was a little stressful because I didn't know that day if I was coming in."
As a part-time employee who earns $12 an hour, she said she now receives her schedule two weeks in advance. It is posted online and in the store breakroom. "I like that they have it in advance so you can plan," she said.
'Reporting' to Work
In the Victoria's Secret case, the U.S. District Court for the Central District of California rejected lead plaintiff Mayra Casas' reporting-time claim on grounds that making a phone call did not meet the state's definition of reporting for work. The court did, however, grant an appeal on the issue.
Attorneys argued the issue last fall before a panel of judges from the 9th U.S. Circuit Court of Appeals, and the judges suggested that they would send the matter to the California Supreme Court for resolution. That didn't happen, however, because the parties began settlement talks a few weeks later.
The settlement in the Casas case, which includes a denial by Victoria's Secret of any wrongdoing, must be approved by the court. Attorneys for Victoria's Secret and the plaintiffs agreed not to comment on its terms.
The $12 million settlement includes fees of $3.6 million for Marlin & Saltzman, the Southern California firm representing Casas and a co-plaintiff. The lead plaintiffs will receive $10,000 each as service awards for their time spent representing the class of workers. Another $50,000 will be paid to resolve claims under the state's Private Attorneys General Act (PAGA), with $37,500 of that going to the California Labor and Workforce Development Agency and the remainder going to the net settlement fund for the class. After additional expenses are deducted, each class member will receive around $223.
The agreement also requires that if Marlin & Saltzman wants to tout the settlement in its marketing materials, it must refer to Victoria's Secret only as a "retailer."
Avenatti expects that the Victoria's Secret settlement will spur resolutions of other California on-call, class-action cases. "It certainly emboldens the plaintiffs' bar," he said, "and causes the defense bar and defendants to take a hard look at how these cases are being litigated."
June D. Bell, a regular contributor to SHRM, covers legal issues for a variety of publications. Contact her at firstname.lastname@example.org.
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