On-call scheduling debate: Where retailers stand

Call it the domino effect.

Under pressure from worker advocacy groups, government agencies and conscientious consumers, six major retailers last year promised to end on-call scheduling, a practice through which companies wait until the last minute to tell workers whether they're needed, depending on how busy their store is that day. (Think of a hardware store, for example, which might need more hands ahead of a major snowstorm.)

The headlines were a big win for critics of the custom, which was condemned for limiting workers' ability to plan ahead for child care, pick up shifts at other jobs, and earn a steady wage.

An employee folds clothes at a Gap store in San Francisco, Calif.
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An employee folds clothes at a Gap store in San Francisco, Calif.

Now, some six months after retailers began publicly pledging to the end the use of on-call scheduling, comes the next step — making sure they weren't empty promises.

Gap, which told New York Attorney General Eric Schneiderman in August that it would stop using on-call scheduling at its five brands, told CNBC that it completed its phase-out of this practice in September. The company is still in the process of ensuring employees receive their schedules 10 to 14 days in advance, which will be completed early this year.

Abercrombie & Fitch likewise told CNBC it has discontinued on-call scheduling across its brands in New York, but continues to work toward implementation across the remainder of the U.S. And Urban Outfitters, which in October expanded its promise to end on-call shifts in New York to include the entire U.S., totally eliminated the practice across its portfolio on Monday, a spokeswoman said.

The three other major retailers that told Schneiderman they would stop using on-call scheduling — Victoria's Secret parent L Brands, J Crew and Pier 1 Imports — did not respond to multiple requests for comment.

Across the industry as a whole, labor experts say the broader push to do away with on-call scheduling remains a work in progress. Though many retailers are making honest efforts to move away from the practice — particularly as worker rights become more important to consumers — implementing such widespread change across a portfolio of stores can be difficult. Challenges include technology shortfalls, and finding a means to better staff their stores for the ebbs and flows of traffic.

Meanwhile, there are staunch opponents who argue the government should step aside and leave scheduling decisions to retailers and their employees — namely, the industry's trade group, the National Retail Federation.

"This topic of employee experience is top of mind," said Steven Kramer, CEO of employee management platform WorkJam.

Who's pushing for change

Though pressure has been building across the country to end on-call scheduling, two epicenters have been largely behind the movement.

In San Francisco, the local chapter of Jobs With Justice, a national workers' rights group, was instrumental in the city's passing the Retail Workers Bill of Rights. This legislation, which became law in December 2014, not only requires employers to give workers two weeks' notice about their schedule, but also mandates how they must notify employees about changes.

In New York, the Attorney General's Office sent inquiries to 14 retailers — the majority of which were dated April 2014 — asking for details regarding whether or not they utilized on-call scheduling.

Though there is no law in New York explicitly prohibiting on-call scheduling, the office has been working within the framework of regulation 12 NYCRR 142-2.3. It states that an employee who shows up for work at the employer's request shall be paid "at least four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the basic minimum hourly wage." Eight other states and Washington, D.C., have similar laws.

In New York, eight of the retailers to which the Attorney General sent inquiries about on-call scheduling — Burlington, TJX, Crocs, Ann (now part of Ascena), Sears, Williams-Sonoma, Target and J.C. Penney — said they had never used or already discontinued this practice.

As for the six others who promised to do so, a spokeswoman for the AG said the office has had open communications with them about how to change their corporate policies to enable the change. That includes making extra shifts voluntary for workers, and promising there will be no retaliation for employees who do not volunteer for those shifts.

The Attorney General's Office said that at this time, it has no reason to believe that the retailers it's been working with are not following through with their commitments. However, it will soon ramp up its work to corroborate their efforts, which will include check-ins with the companies and worker advocacy groups. It was through these advocacy groups and workers themselves that the office compiled its initial list of companies to investigate.

Though the AG's office declined to go into detail about the next steps it will take to end on-call scheduling, the spokeswoman said it will continue to be engaged in the issue. Elsewhere, campaigns to follow in its and San Francisco's footsteps are taking shape, including proposed legislation in Washington, D.C.

"I am proud of the work my office has done to secure agreements with several major retailers to end their use of on-call scheduling and create a more predictable work environment," Schneiderman said in a statement to CNBC.

Not just a flip of the switch

Because the price of labor typically accounts for the largest chunk of a retailer's expenses, businesses have used on-call scheduling as a means to cut costs, by sending workers home when store traffic is slow, and flexing up when they receive an unforeseen burst in traffic. But while this cuts back on their short-term expenses, many argue it does not benefit retailers in the long-term.

John Orr, senior vice president of retail at Ceridian workforce management, said retailers who use this scheduling strategy often end up with an unhappy workforce, which leads to a higher turnover rate. That higher turnover rate then results in more time spent searching for new employees and getting them trained — and often, poor customer service.

"They're thinking they're saving money… but it's poor planning," Orr said. "If you're planning better, you don't need that extra fudge factor."

A report issued last year by the Economic Policy Institute argues the negative side-effects of on-call shifts take an even broader toll on the economy. The non-partisan group said at least 10 percent of the workforce is assigned to irregular or on-call hours, and these employees are more likely to have work-family conflicts. This has the potential to hinder their children's education and future, said Leila Morsy, who co-authored the report.

"I don't think that companies on their own are going to choose to care for their employees over making a quick profit," Morsy said. "There needs to be legislation in place."

Macy's to cut 3,000 jobs, close 36 stores
Macy's to cut 3,000 jobs, close 36 stores   

But not everyone agrees that the government should be involved in retailers' workplaces at such a granular level. While many have cheered the progress made toward improving retail workers' lives, others are standing firm on the idea that these changes should be left up to the individual retailers — not to politicians whom, they say, are overstepping the boundaries.

The National Retail Federation, the trade organization for the retail industry, has been one of the biggest opponents to government involvement in retail's day-to-day operations. David French, senior vice president for government relations at NRF, referred to legislation to end on-call scheduling as "an issue that seems to be a solution in search of a problem," adding that the retailers who abuse scheduling practices are "much more the exception than the rule."

He said many retail workers choose to work in these positions because they like the flexibility the industry offers, and legislation often has unintended consequences. For example, if a law were to pass in D.C. but not in Virginia, it would complicate a retailer's ability to schedule an employee to work across different stores in the chain. That, in turn, could limit the number of hours they work.

As it stands, the D.C. proposal would require employees receive their schedule 21 days in advance. French argued many employees aren't ready to decide which shifts they'll be available to work that far in advance. Finally, French questioned how the government is going to enforce certain aspects this legislation, calling into question San Francisco's efficacy so far.

"I don't think the city has figured out how to enforce certain elements of this law," he said. "This is city and local governments getting in the middle of employer-employee relationships at a level that they really shouldn't be engaged."

Seema Patel, deputy director at the Office of Labor Standards Enforcement in San Francisco, said that since the Retail Workers Bill of Rights went into effect in October, her office has been primarily focused on educating employers about how to be compliant, as well as teaching workers what constitutes a violation.

But following issuance of the law's rules late last week, come March 1, the office will be able to enforce any parts of the legislation implicated by these rules.

The office has a hotline number that employees can call if they feel they have been wronged. Then, if warranted, the office could decide to launch a formal investigation into the complaint.

According to the law, which broadly addresses unpredictable scheduling, a retailer that requires a change to a worker's schedule will owe them "predictability pay" in the range of one to four hours. The amount of predictability pay that will be owed depends on when the schedule change occurred, and how extreme the change was. The rate of pay is determined through a formula that takes into account the employee's base wage and past commissions.

The legislation also states that the agency can order relief "including but not limited to" an administrative penalty in the amount of $50 to each person whose rights were violated, for each day that the violation occurred.

"It will snowball if you don't stop," Patel said.

Gordon Mar, executive director for Jobs with Justice San Francisco, said the broader organization will continue pushing for national efforts, adding it would like to see federal action on these issues. He referenced a bill that was introduced in Congress last year, which he said was a means of calling attention to the issue. But facing gridlock at the federal level, the organization is more optimistic about action happening at the state or local level, he said.

No matter how it's tackled, on-call scheduling is not an easy thing to switch off. Though WorkJam's Kramer said most retailers are working to get ahead of headlines about their hiring practices, such changes require massive work at an organizational level, particularly when it comes to national chains.

For one, out-of-date systems mean that retailers currently have to use email, text messages or phone calls to get the word out that shifts are available last-minute, Kramer said. Likewise, workers looking to pick up an extra shift don't have an easy way to vocalize it. But with the proper technology in place, a retailer can take what was once an on-call shift and broadcast it as "open." That means any employee who wants to work an additional shift can volunteer.

"Predictable scheduling is a critical aspect of these workers' lives," Patel said. "Happier workers, I think, makes for a happier business."