Bay Area Blues: San Francisco’s Employers/Franchisees Face Retail Workers Bill of Rights
by Bryan H. Clements
Doing business in San Francisco can be difficult, to say the least. At $10.74/hour, the city already had the highest minimum wage in the country at the end of 2014. On January 1, 2015, San Francisco employers began shelling out $11.05/hour; on May 1, 2015, they will begin paying $12.25/hour; and on January 1, 2018, they will pay $15/hour (a 39.6 percent increase over three years).
Nevertheless, franchisors, franchisees and other multi-unit business owners doing business in San Francisco, referred to as “Formula Retail Establishments,” will soon see their resolve to continue doing business in the city further tested.
On November 25, 2014, San Francisco’s Board of Supervisors (BOS) unanimously approved two ordinances, collectively referred to as the “Retail Workers Bill of Rights.” These ordinances are the first of their kind in the United States and are being added to the Police Code.
Formula Retail Establishments Defined
The Retail Workers Bill of Rights applies to employers with 20 or more employees and with 20 or more locations worldwide – if one or more of their locations operates in San Francisco. Formula retailers include companies with at least two of the following:
- A Standard Array of Merchandise
- Standard Facades or Interior Designs
- Standard Signage
- Use of Common Trademarks/Servicemarks
- Standard Uniforms
San Francisco’s definition of formula retail businesses includes retail trade businesses, movie theatres, hotel chains, food service businesses (including restaurants and bars) and banks. It also includes businesses providing professional, financial (accountancies, insurers, etc.), repair (plumbing, closet installation, oil change, etc.) and cleaning and janitorial services.
Franchised businesses will typically fall within the definition of a formula retail business, so franchisees can expect to be disproportionately impacted.
Groups advocating for franchise companies have attacked the ordinances claiming they unfairly target franchised businesses. For example, the day following the BOS’s vote, Robert Cresanti, Executive Vice President, Government Relations & Public Policy of the International Franchise Association, the nation’s most powerful lobbying group for franchisors, penned a sharp letter to the Mayor of San Francisco urging him to veto the ordinances.
Despite these protests however, the Mayor neither signed nor vetoed the ordinances, and they became law.
Employer Compliance with SF’s Retail Bill of Rights
The Retail Workers Bill of Rights will affect employers in many ways. To comply, formula retailers must:
- Additional Hours: Offer additional hours to part-time employees before hiring new employees or engaging temporary workers.
- 90 for 90: If the company is sold, successor employers must retain all current employees who have been with the company for at least 90 days, for a period of 90 days.
- Predictability Pay: Excepting certain circumstances, employers must provide employees with two weeks’ advance notice of their schedule. Employers providing less than seven days’ notice must pay one hour of extra pay per changed shift; and two hours of extra pay for less than 24 hours’ notice, per changed shift.
- On-Call Predictability: Employers must give employees at least 24 hours’ notice before cancelling or rescheduling an on-call shift.
- No Part-Time Prejudice: Part-time employees will start at the same hourly wage as full time employees, and be provided with the same opportunities to advance.
- Retain Records: Employers must retain written records pertaining to written offers of employment, offers of additional hours, employees retained during a change of control, and work schedules for three years. Failure to preserve records will be deemed to be a failure to comply.