On July 24, 2019, the Chicago City Council unanimously passed the most comprehensive “predictive scheduling” ordinance in the nation that includes significant notice, scheduling, and rest provisions for many employers in Chicago. Mayor Lori Lightfoot is expected to sign the measure that, beginning in July 2020, will add Chicago to the list of other major U.S. cities attempting to standardize work schedules and limit employers’ ability to make last-second changes.

Who is Covered?

The Chicago Fair Workweek Ordinance is a culmination of two years of legislative wrangling about precisely which industries and employees should be governed by the ordinance. In its final form, the rules cover employers in eight major industries: day and temporary labor service agencies, hotels, restaurants, building services, health care, manufacturing, warehouse services, and retail.

Private employers maintaining a business facility in Chicago are covered when they are primarily engaged in one of the covered industries, have 100 or more employees (250 or more employees for nonprofit corporations), and if 50 or more of those are covered employees. The ordinance covers employees earning $26.00 per hour or less, as well as salaried employees earning $50,000 or less. These wage thresholds will increase annually based on the Consumer Price Index.

The law is tailored to avoid most small Chicago restaurants, applying only to those with 30 or more total locations (globally) and 250 or more combined employees. Franchisees who operate three or fewer locations are also exempted from the ordinance. The ordinance does not apply to most employees working in Chicago sports stadiums.

The ordinance does not affect any collective bargaining agreement in effect as of the July 1, 2020 effective date. That said, however, the ordinance dictates that it will apply to any CBAs that become effective after July 1, 2020, thus compelling an employer to negotiate with a labor union representing covered employees if it seeks the permitted “clear and unambiguous waiver” of the ordinance requirements.

Notice Requirements

Under the ordinance’s notice requirements, for newly hired employees, employers must provide a good-faith estimate of the employee’s work schedule during the first 90 days of employment. This notice includes the expected average number of hours per week and the days and times that the employee can expect to work, including on-call shifts. Later, employers must provide work schedules to their employees at least 10 days in advance, increasing to 14 days of minimum notice on July 1, 2022. Employers may post schedules at the workplace or electronically transmit the schedules to all employees. Should the employer fail to provide adequate notice, employees have the right to decline those hours.

Employers who change a worker’s schedule within the notice period (at first 10 days) must give the worker one hour of “predictability pay” at the employee’s regular rate for each changed shift. If the employer cancels or reduces and employee’s hours with less than a 24-hour notice, the employer would have to compensate the employee at half of their regular rate of pay per hour for any hours not worked as a result. Employers must post a notice of employees’ rights under the ordinance and to distribute a similar notice to each employee with his or her first paycheck.

The ordinance also includes a “right to rest” provision allowing employees to decline any hours within 10 hours of a previous shift. Unless the employee agrees in writing to work those hours, the employer must pay the employee 1.25 times their regular rate for any hours worked fewer than 10 following the end of their last shift.

Notice requirements do not apply under certain “exemptions,” such as if there is an act of nature that prevents operations from continuing, unforeseen circumstances, if an employer makes schedule changes for disciplinary reasons, or if employees mutually agree to trade shifts. Employers can also avoid predictability pay when an employee agrees to a proposed schedule change in writing.

First Refusal for Existing Employees

The ordinance attempts to move more employees to full-time schedules by creating a sort of right of first refusal for employees when an employer is looking to add more hours. Before hiring new employees or adding temporary workers, the ordinance first requires employers to offer additional hours to existing covered employees who are qualified to do the work. Only when a covered employee declines the shift may it be offered to a temporary or seasonal worker for the employer for at least two weeks. Importantly, the rule does not require employers to offer additional hours to employee when doing so would make the employees eligible for overtime pay. Employers may not otherwise change pay rates or schedules to avoid coverage by the ordinance.

Recordkeeping and Penalties

Employers are expected to maintain comprehensive scheduling records under the new law including payment records, schedules, written offers to change schedules, consent to work forms, and employee written responses for three years. Employers must provide employees with a copy of their records upon reasonable request. All scheduling changes must be made in writing.

The city will have the authority to investigate workplaces for violations under the ordinance with resulting violations carrying a potentially steep penalty. Employers may be fined between $300 and $500 per day per employee for each violation. The ordinance also creates a process for employees to bring a private action within two years from the date of an alleged violation. If an employee pursues civil action and prevails, they will be entitled to damages sustained, withheld predictability pay, litigations costs, and attorney’s fees.

How does an employer prepare?

With just under a year to prepare, Chicago employers should act now to determine whether the new law will cover them in whole or in part, then determine which employees are covered so that notices and communication plans can be put in place. Affected employers should revisit procedures and ensure scheduling software complies with the law. Employers with unionized workforces should plan to negotiate a waiver or otherwise address ordinance requirements in any upcoming contract negotiations that may conclude after July 1, 2020. Finally, employers should watch for additional guidance from Chicago Department of Business Affirms and Consumer Protection expected before the effective date.