Chicago Publishes Fair Workweek Guidance Ahead of July 1 Effective Date

Seyfarth Synopsis: Chicago’s Fair Workweek Ordinance goes into effect on July 1. The law will require covered employers to provide covered employees ten days’ notice of their work schedule. Save for certain exceptions, schedule changes after that time will require payment of “Predictability Pay” to the impacted employee. The City recently published additional guidance on the law, which includes, among other things, clarification on the impact of COVID-19-related schedule changes and the calculation of Predictability Pay for covered salaried-exempt employees.

It’s official: pandemic notwithstanding, Chicago’s Fair Workweek Ordinance is going into effect on July 1. And that means, in addition to thinking through return-to-work and reopening plans, covered employers must also account for the new law as they endeavor to set and manage employee work schedules amidst a turbulent business environment.

As we detailed in an alert just after the measure was passed, Chicago joins several other cities to have enacted so-called “fair workweek” or “predictive scheduling” legislation. Chicago, however, goes further than its predecessors by expanding its law beyond the retail, hospitality, and fast food industries. Under Chicago’s law, “Covered Industries” will include: (1) building services; (2) health care; (3) hotels; (4) manufacturing; (5) restaurants; (6) retail; and (7) warehouse services. The law will cover employers in these industries with over 100 employees globally, so long as they employ at least 50 “Covered Employees.” “Covered Employees” are generally those who earn less than $26 per hour or $50,000 annually, who perform the majority of their work in Chicago, and who perform most of their work in a Covered Industry.

In a nutshell, the Fair Workweek Ordinance has the following key requirements:

• Employers must provide employees with a “good faith estimate” of their work schedule upon hire.
• Employers must schedule employees with 10 days’ advance notice (14 days after July 1, 2022).
• Employers must pay employees “predictability pay” for schedule changes made within the 10-day (or eventually, 14-day) notice period, subject to certain exceptions.
• Employees are entitled to premium pay if they agree to work within 10 hours of a prior day’s shift (and cannot be forced to do so).
• Before hiring new employees, employers must first offer shifts to existing, qualified Covered Employees, then temporary or seasonal workers, subject to certain exceptions.

To aid businesses in complying with the law, the City recently published its Final Rules, “Fair Workweek FAQs,” and a Notice that must be posted in a conspicuous place.

The Final Rules provide helpful clarification on a handful of points. For example, the guidance provides that schedule changes of 15 minutes or less do not require predictability pay. Also, predictability pay and advanced scheduling requirements do not apply when an employee is returning to work from an agreed leave of absence.

Through its guidance, the City also confirms that predictability pay requirements will apply to salaried-exempt employees in a Covered Industry who earn less than $50,000 per year. Their predictability pay, when required, is to be “calculated on an hourly basis based on the regular rate of pay” which the City instructs “means dividing the salary by 52 weeks and then by 40 hours (assuming a full time schedule).”

In addition, the City sheds light on the new law’s predictability pay exception for schedule changes that are “because of” a pandemic. Notably a schedule change will be considered “because of” the current pandemic—and thus predictability pay will not be required—if COVID-19 causes a business to “materially change its operating hours, operating plan, or the goods or services provided … which results in the Work Schedule change.” This exception applies to the schedule for the week in which the material change occurs, as well as the following week’s schedule. This clarification should provide some relief to employers concerned about forecasting schedules with the threat of continued COVID-19 impacts lurking in the background.

The right to file a private lawsuit for violations of the Ordinance has also been pushed back until January 1, 2021. That does not impact, however, the City’s ability to enforce the Ordinance once it goes into effect on July 1, 2020.

Chicago employers in a “Covered Industry” must act now to ensure their compliance with the new law starting on July 1. This may include, for example, posting and disseminating the required notices (both the City’s poster and a notice accompanying the first paycheck on or after July 1), preparing a protocol and associated forms to help promote compliance with the law’s various requirements, and training managers, payroll personnel, and other key stakeholders to ensure they are well equipped to promote compliance with the law.

As always, please feel free to reach out to us or to your favorite Seyfarth attorney if you would like to discuss this important topic.