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Predictability Pay: What Employers Need to Know

min read
August 21, 2023

Creating an employee work schedule is an art form—you need to carefully balance the needs of your business with the availability, preferences, and well-being of your workforce. 

But even the best-laid plans can come up short. And chances are, there will be times you'll need to change an employee's schedule or ask them to work off-schedule—and sometimes only hours before a shift begins.

But unpredictable work hours make it hard for your employees to manage their time and work-life balance and contribute to unpredictable pay—making it difficult for your workforce to stay on top of their finances.

To combat these issues, many state and local governments have been implementing protections and incentives via fair workweek legislation

These laws require certain businesses in these areas to provide predictability pay to offset last-minute schedule changes and work hours. But what is predictability pay? How does it work? And when does your business need to offer it?

What Is Predictability Pay?

Predictability pay is compensation paid to an employee when their employer makes their work schedule less predictable. Depending on the situation, you might be required to provide predictability pay when you:

  • Make changes to a published schedule with little or no advance notice
  • Change, cut, or add to an employee's work hours
  • Change an employee's work location 

Like overtime pay, predictability pay is a premium paid on top of an employee's regular rate of pay. But how much do you have to pay if and when you have to change an employee's schedule?

That depends on local and state employment laws. Some jurisdictions require that the premium is based on an employee's hourly wages; other localities require employers to pay flat penalties based on the amount of advance notice they provide to affected employees.

What Cities and States Have Predictability Pay Laws?

Currently, one state and eight cities have passed predictive scheduling laws that restrict or limit an employer's control over scheduling work shifts. These laws also specify how and when predictability pay needs to be paid.

Localities with predictability pay laws include:

Predictability Pay Laws by Locality
Location Date enacted
Oregon August 8, 2017
San Francisco, California July 3, 2015
Emeryville, California January 1, 2018
Berkeley, California January 12, 2023
Los Angeles, California April 1, 2023
Chicago, Illinois July 1, 2020
New York City, New York May 30, 2017
Philadelphia, Pennsylvania April 1, 2020
Seattle, Washington July 1, 2017

Keep in mind that specifics differ between locations. For example, in some cities, predictability pay laws are limited to schedule changes and on-call shifts. 

In others, businesses need to provide their employees with "good faith estimates" of their work schedule—or, in other words, an as-accurate-as-possible prediction of when and how often they'll be expected to work. 

Does Predictability Pay Apply to Your Business?

So, what types of businesses are on the hook for paying predictability premiums under these types of laws? 

Generally, they fall under one of two categories:

  • Companies that can offer and stick to regular work schedules but that choose not to
  • Companies that need to make frequent changes to meet customer demand

Businesses most commonly impacted by fair workweek laws include:

  • Banks and financial institutions
  • Bars
  • Building services
  • Healthcare providers
  • Liquor stores
  • Restaurants (including both fast food and casual/fine dining venues)
  • Retailers and grocery stores
  • Sales and service providers
  • Takeout food stores/establishments
  • In some cases, a business's janitorial and security contractors

Certain industries that rely on irregular scheduling or that limit employees to working a maximum number of hours—like doctors, pilots, or truckers—aren't typically subject to predictive scheduling laws.

The type of business isn't the only factor that matters; size also plays a part in predictability pay. 

In general, only businesses that employ more than a certain number of employees need to pay premiums for changing an employee's schedule—typically 50 employees globally. This means that, in most cases, these laws only apply to large chains and franchises vs. very small, local, or single-location businesses.

How Much Do You Owe Employees for Predictability Pay?

The amount of the premiums you're required to pay depends on your location and its specific laws; there's no single rule that applies to all businesses. 

Plus, how you calculate the premium depends on a variety of factors—like how soon you provide advance notice of work schedule changes, how many extra hours of work an employee ends up working, the type of shift they pick up (regular vs. on-call), and the employee's hourly rate.

Here are a few examples:

Predictability Pay in San Francisco

Covered employers in San Francisco must pay a premium of:

  • 1 to 4 hours of pay at a covered employee's regular hourly rate (depending on the amount of notice and the length of the shift) if changes are made to the employee's schedule with less than seven days' notice
  • 2 to 4 hours of pay at a covered employee's regular hourly rate (depending on the amount of notice and the length of the shift) if an employee is on call but not called in to work
  • 1 hour of pay for all other changes made to a covered employee's schedule with less than 24 hours notice

Predictability Pay in Los Angeles

In Los Angeles, covered employees are entitled to:

  • An additional hour of pay at the employee's regular rate of pay for each hour an employee works if changes are made to a work schedule within 14 days of a shift and don't result in lost time or count as overtime
  • Half an employee's regular hourly pay if changes made to a schedule within 14 days of a shift result in lost work

Predictability Pay in Chicago

Covered employees in Chicago must be paid:

  • 1 hour of additional pay any time a covered employer makes changes to the work schedule less than 14 days before it begins
  • 50% of their lost hours any time a covered employer subtracts hours from an employee's scheduled shift less than 24 hours before the start of the shift
  • 1 hour of additional pay any time a covered employer adds hours or makes changes to a shift (without a loss of hours) less than 24 hours before the shift begins

What Happens if You Don't Comply?

Like other employment laws, not complying with these predictability payment laws can lead to consequences for your business. Though specific penalties will vary from location to location, they generally include:

  • The potential for a civil lawsuit
  • Fines ranging between $50 and $500 (or more) per covered employee per day
  • Up to $1,000 in penalties for retaliating against covered employees who exercise their rights under a fair workweek ordinance
  • An order to provide back pay, injunctive relief, court and attorney's fees, and/or reinstatement for an employee who files a lawsuit against a covered employer

Which Employees Do These Laws Apply To?

It's not just your location or industry that dictates if you need to follow these employment laws. Many of these ordinances only apply to non-exempt employees. However, they don't differentiate between full-time and part-time employees or those who earn wages vs. salaries. Some laws even cover temporary employees.

(If you have questions about how—or if—predictability laws apply to you and your business, consider consulting with an attorney. They can give you deeper insights into your local laws and what kind of pay you'll need to offer workers.)

Why Are Predictability Pay Laws on the Rise?

The fair workweek initiative (including laws around predictability pay) is part of an overall movement to secure better working conditions—including more consistent and stable scheduling.

According to a 2019 report, 70% of workers reported at least one change to the timing of one of their shifts over the past month, while 50% worked back-to-back closing/opening shifts separated by less than 11 hours—also known as "clopening." While these issues impact all types of employees, women and people of color are often the hardest hit.

But these problems aren't new. In fact, they're very common in a number of industries—particularly those that have a tendency to pay low wages, like retail and hospitality. This, in turn, creates a ripple effect that makes workers' schedules and incomes more volatile—prompting five cities and one state to adopt fair workweek ordinances between 2014 and 2017.

Fair workweek laws are an attempt at a solution. These laws have been introduced or enacted across the country, with ongoing momentum for additional state and local governments to consider similar legislation.

The aim is to make employees' schedules (and their income) more predictable and stable—and to compensate them for any potential expenses or costs they incur when work schedules change (like bus fare or child care).

Best Practices for Predictability Pay

Fair workweek and predictive scheduling laws are put into place for a reason—to discourage employers from making frequent and last-minute changes to employee schedules. 

And while you should always do your best to provide a reliable schedule for your employees (whether you're required to pay predictability premiums or not), if your business operates in an area where these laws are enforced, it's a must. (Premiums and penalties for last-minute schedule changes can get expensive!) 

So how, exactly, do you do that? Here are some best practices to keep in mind:

  • Provide accurate good faith estimates: Most locales that have adopted these laws require employers to provide good faith estimates of a new employee's work hours. When creating these estimates, use any and all information at your disposal to make them as accurate as possible (for example, you'll want to consider their personal availability as well as any times of the year when their hours might fluctuate—like the holidays—when creating your estimate). The more accurately you estimate when and how often you need your employee to work, the less likely it is you'll have to change their schedule unexpectedly—and the less likely it is you'll have to pay a premium and/or penalty.
  • Plan schedules in advance: With this type of employment law, changing a current employee's shift too close to a scheduled shift means you're on the hook for paying a premium. Avoid this by creating and publishing schedules as early as you can. Having schedules done far in advance will give you more wiggle room to adjust and change the schedule sooner—before you're required to pay a premium for those changes.
  • Use staffing technology: To create accurate employee schedules—and minimize changes—consider using staffing or scheduling software. These tools analyze and predict labor needs based on historical data and forecasting to prevent over- or under-scheduling your workforce.
  • Train managers: Ensure managers and supervisors are familiar with labor laws, including any applicable laws around predictability pay. This can help prevent employees from being sent home or called in unnecessarily—and ensure any schedule changes are made with potential premium payments in mind.
  • Maintain records: Fair workforce laws allow employees to file complaints about employers who aren't in compliance. Maintain records of schedules, shift changes, and advance notices. This can help you contest claims of noncompliance and save you from paying unwarranted premiums—as well as attorney's fees and other fines.

Take the Guesswork Out of Work Schedules

For many employees, the workday doesn't necessarily start and end with the clock. Workers need to commute and arrange transportation, hire childcare, and manage their families. 

Laws like predictability pay penalize employers who make schedule changes with little or no advance notice to dissuade them from changing an employee's schedule too often and with minimal notice. And the penalties aren't cheap.

If you live in an area with predictive scheduling laws, understanding and complying with these laws is a must. 

And even if your city or state hasn't adopted these types of pay laws yet, adopting the spirit of fair workweek legislation supports your employees' work-life balance, helping you maintain morale, retain your staff, and attract new talent—which ultimately helps not only your employees but your business.

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