Hunton Employment & Labor Perspectives

Beginning next week, on March 13, 2017, San Jose employers must offer existing part-time employees additional work hours before hiring any temporary, part-time, or new worker. This is a result of a vote last fall by voters in San Jose, California who approved “The Opportunity to Work Ordinance” (Ordinance No. 2016.1, codified at Chapter 4.101 of the San Jose Municipal Code) – a local measure that directs employee hours and hiring practices.

San Jose’s Office of Equality Assurance, the local agency tasked with monitoring, investigating, and enforcing the Ordinance, recently issued its Opportunity to Work FAQs, which provides additional guidance on how employers can comply with the new ordinance.  Following more comprehensive scheduling ordinances passed in San Francisco and Emeryville last year, San Jose is the third northern California city to enact a scheduling ordinance.

Who’s Covered?

The Ordinance applies to private and non-profit employers that have 36 or more nonexempt employees and are subject to San Jose’s business tax or maintain a place of business in San Jose which is exempt under California law from San Jose’s business tax. For a chain business not owned by a franchisee, the number of employees shall be determined by the combined employee count at every location of that chain business.  For a chain business owned by a franchisee, the number of employees shall be determined by the combined employee count at every location owned by and operated under the same franchisee.  For non-chain businesses, the threshold number of employees only includes those working in San Jose.

An individual qualifies as an employee under the Ordinance if (1) in a calendar week, the individual performs at least two hours of work for the covered employer within the geographic boundaries of San Jose, and (2) the individual is entitled to the payment of a minimum wage under California’s minimum wage laws.  If these two factors are met, the Ordinance also applies to temporary or seasonal employees.

The provisions of the Ordinance may be waived by a bona fide collective bargaining agreement. Also, the Office of Equality Assurance may grant a “hardship exemption” for up to 12 months if the employer can show that it has taken reasonable steps to comply but full and immediate compliance would be “impracticable, impossible, or futile.”  The Ordinance will apply to Welfare-to-Work programs, though participants may opt out of the coverage.

What’s Required?

The Ordinance requires covered employers to offer additional work hours to existing qualified part-time employees (those working less than 35 hours) before hiring additional employees or subcontractors, including hiring through temporary staffing agencies.  It is left to the employer’s discretion to determine whether an employee is qualified, and thus should be offered additional hours.  The only modifiers are that the employer exercise judgment in good faith and in a reasonable manner, and use a “transparent and nondiscriminatory process” in distributing the additional hours among existing employees.  Unlike its San Francisco counterpart, which grants covered employees 72 hours to accept offers of additional work, the San Jose Ordinance places no timing requirements on the employer.  The recently issued FAQs clarify, by way of example, that an employer satisfies the Ordinance by emailing its part-time employees at 9 am and notifying them that they must respond by 12 noon that day in order to secure additional hours that may become available.  The Ordinance does not require an employer to offer an employee additional hours where that would cause the employee to incur overtime or other premium hours.

Employers also will be required to post an Official Notice of employee rights, recently published by the Office of Equality Assurance.  The Official Notice is to be published in four languages: English, Spanish, Vietnamese, and Cantonese.

Employers also are required to retain for a minimum of four years: 1) work schedules; 2) payroll records; 3) copies of written offers to current and former part-time employees for additional work hours; and 4) any other records that the Office of Equality Assurance may require that employers maintain to demonstrate compliance.

Lastly, retaliation against employees exercising their rights under the Ordinance is strictly prohibited.

What San Jose Employers Need To Do Now

Covered employers in San Jose should take immediate action to (i) ensure they have processes in place to comply with the new Ordinance as of March 13; (ii) train managers and supervisors responsible for scheduling on these new requirements; (iii) review policies to ensure compliance with the new Ordinance; (iv) obtain and post the required notice; and (v) review record keeping practices.  Violations of the Ordinance can trigger city fines of $50 per employee for each day of violation. The Ordinance also authorizes private actions. Any person not offered work under the ordinance can bring a private suit in court, and if successful, the individual could be entitled to lost wages, penalties, and attorneys’ fees.

Employers that are not covered by this Ordinance should continue to monitor this growing trend of local regulation concerning employee hours and scheduling.  This trend is not unique to California, as Seattle passed its own version of a “secure scheduling” ordinance in 2016 and numerous other cities have considered doing the same.