Concerns about proposed 'utilization scheduling' bill

Over the past several years, an employer's ability to schedule employee work hours according to business needs has been the target of increasing legislative activity. In 2015 and 2016, the California Legislature attempted predictable scheduling legislation with the Fair Scheduling Act of 2015 (Assembly Bill 357) and Reliable Scheduling Act of 2016 (Senate Bill 878) - which would have required employers to provide employees with work schedules one or two weeks in advance of scheduled shifts, and imposed additional pay requirements for changes made without sufficient notice. We have seen similar predictive scheduling efforts from city councils to high-profile congressional proposals like the 2014 and 2015 Schedules That Work Act, sponsored and proposed by none other than Sen. Elizabeth Warren and several congressional co-authors. Some efforts passed (i.e., San Francisco); others (like the two California bills), failed. But lawmakers' focus on employee schedules has not waned. Attentions have turned this year to what we'll call utilization scheduling - requiring that employers offer additional hours to existing part-time employees (i.e., making sure they're fully utilized) before hiring additional employees or temporary workers.

California Assemblymembers Lorena Gonzalez-Fletcher and Ash Kalra introduced the Opportunity to Work Act (Assembly Bill 5), on the very first day of the Legislature's 2017-18 regular session. In its current form, AB 5 would require utilization scheduling for any employer with 10 or greater employees in the state of California, regardless of industry or locale.

Employers are understandably very concerned about the administrative difficulties and increased costs this legislation, if enacted, could cause. While California is the first state to consider such a law, the narrower reach in some recently enacted city utilization scheduling ordinances show that these concerns may be well founded and that prudence would dictate watching and learning from the local laws before adopting an expansive statewide mandate:

City of SeaTac

On Nov. 5, 2013, voters in the city of SeaTac, Wash., narrowly passed the far more narrowly tailored Proposition 1 - the "Good Jobs Initiative." The ordinance, which went into effect on Jan. 1, 2014, is limited in industries and size of employer of which it requires utilization scheduling: hospitality employers with 30 or greater employees; food service or retail employers with 10 or greater nonmanagerial, nonsupervisory employees; and transportation employers with 25 or greater nonmanagerial, nonsupervisory employees. Its stated purpose was to improve the working conditions for workers in and around the Sea-Tac Airport, including the promotion of full-time employment.

City of San Francisco

On Nov. 25, 2014, the San Francisco Board of Supervisors passed the "Hours and Retention Protections for Formula Retail Employees" ordinance, which became operative in mid-2015 (and was half of the "San Francisco Retail Workers' Bill of Rights" - the other half addressed predictive scheduling). This ordinance, applicable only to employers within a specific industry and small geographic area, and of a certain workforce size, requires businesses with at least 40 retail sales establishments worldwide and at least 20 employees in the city of San Francisco engage in utilization scheduling with their part-time employees (anyone working fewer than 35 hours a workweek). This ordinance's stated purpose is to address scheduling practices by chain retail stores that "relegate their employees to involuntary part-time status."

City of San Jose

Most recently, on Nov. 8, 2016, San Jose voters overwhelmingly approved Measure E: the Opportunity to Work Ordinance. This marked the first utilization scheduling law to apply to all employers, regardless of industry, with greater than 35 employees in the city of San Jose. A coalition of labor unions and community organizations called Silicon Valley Rising authored and campaigned for Measure E, which won 64 percent of the votes cast.

State of California

Then, on Dec. 5, 2016, less than a month after approval of Measure E and prior to Measure E going into effect, Assembly members Lorena Gonzalez Fletcher and Ash Kalra (who, not surprisingly, represents San Jose) introduced Assembly Bill 5. As noted in the Assembly Committee on Labor and Employment's analysis, AB 5 is modeled after Measure E, which "is the first of its kind in the country to apply across all industries."

But can a law fashioned and passed in the Silicon Valley "bubble" really serve as a model across California's varied industries and regions? Assembly Bill 5 is far broader than Measure E. It would apply to employers with at least 10 employees - far fewer than the 35 employees threshold San Jose requires. This could have far greater potential impact on small businesses, ranging from increased underemployment and unemployment to an exodus of employers out of California. Silicon Valley Rising states that its work is focused on reducing the income disparity in prosperous Silicon Valley between those who hold high-paying jobs with profitable technology companies and those who make low hourly wages and struggle to meet their basic needs. Even among the panoply of unique regions in California, Silicon Valley stands apart from the rest. While large and profitable technology companies and their employees may be able to absorb the additional burden and costs associated with Measure E, it is less clear if businesses - especially small businesses - elsewhere in California can do the same.

As Fletcher conceded in the bill's last committee hearing, the bill leaves much to be desired among the business community, and as the bill's opponents pointed out, the bill's ambiguities raise more questions than the bill answers. Perhaps Fletcher did in fact introduce such a broad-sweeping bill to allow room for compromise and narrowing through the legislative process. Perhaps the bill's current stall in the Assembly Appropriations Committee is a well-intended break or reevaluation. Perhaps the governor, as he has done in other contexts, will put the brakes on this bill until we can watch and learn from San Jose before considering whether utilization scheduling is viable and is the best solution to the problem presented for the entire Golden State.