Tag: labor compliance

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Payroll Challenges by Industry: What California Employers Need to Know

Summary

  • Different sectors in California face unique challenges, from varying pay rates to complex, location-specific labor laws.
  • Industries like hospitality, healthcare, retail, construction, entertainment, and agriculture often struggle to stay compliant while accurately paying staff.
  • A powerful payroll system can help simplify payroll no matter how complex the rules.

California isn’t just known for its beaches and movie sets; it’s also home to some of the most complex labor laws in the country. And those rules can get tricky fast when it comes to payroll. 

But here’s the catch: not every industry is dealing with the same challenges. In California, payroll compliance isn’t one-size-fits-all. Payroll challenges can look different for a restaurant in LA, a construction site in Fresno or a vineyard in Napa. 

So, let’s break it down. Here’s what California businesses in six major industries—hospitality, healthcare, retail, construction, entertainment, and agriculture—need to watch out for when it comes to paying their teams.

Hospitality: Tips, Schedules, and Challenging Payroll Scenarios

Complying with California Tip Laws

California law is clear: all gratuities belong to the employees. That sounds simple, but confusion often arises around who gets the tips, how they should be pooled, and whether tips count toward the regular rate of pay for things like overtime. 

Unlike in other states, California doesn’t allow a tip credit, meaning employers can’t count tips towards meeting the state’s minimum wage. Every nonexempt employee must earn the full minimum wage before tips are factored in.

Workforce.com Solution: Proper tip handling requires a clear, written policy. Setting expectations upfront is vital, whether you allow tip pooling among front-of-house staff or distribution to everyone working a shift. Once your policy is in place, Workforce.com can help manage the rest. The platform integrates directly with your POS system, enabling you to automate tip distribution based on hours worked, roles, or even custom percentages. Tips can be routed through a virtual “tip jar”, ensuring every employee gets their fair share alongside their regular wages.

Also read: Should you Implement Tip Pooling? Pros, Cons, and Best Practices for Restaurants

Managing Predictability Pay

In California, last-minute schedule changes can come at a cost. Cities like Los Angeles enforce Fair Workweek rules that require employers to post schedules at least 14 days in advance. If you cancel a shift, add work hours, change start and end times within that window, you may owe employees additional “predictability pay”. 

Predictability pay counts as regular wages, which means that they are taxed and must be clearly listed on employee pay stubs.

Workforce.com Solution: Demand-based employee scheduling can help you plan ahead and reduce last-minute changes that trigger predictability pay. Workforce.com analyzes key data points like bookings, events, weather, historical sales, and foot traffic to help forecast demand and optimize staffing. 

What if schedule changes happen within the 14-day window? You can set conditions in Workforce.com to automatically calculate predictability pay when certain conditions are triggered. This ensures that premiums are correctly calculated and won’t be overlooked when it’s time to process payroll. 

Healthcare: Minimum Wage Rules and Off-the-Clock Work Risks

Minimum Wage Compliance

Healthcare workers in California are entitled to higher minimum wages, ranging from $18 to $23 per hour, depending on the type of facility. These rates are set to rise in the coming years.

The first challenge with healthcare minimum wages is figuring out which rate applies. Employers need to know whether their organization falls under the covered categories. The Department of Industrial Relations provides a complete list of who qualifies and what rates apply.

However, knowing the applicable rate is just the first step. You also need a system that keeps up with rate increases and ensures that every employee gets paid correctly based on their job and worksite.

Workforce.com Solution: Workforce.com automatically applies the correct minimum wage rate based on each employee’s location and role. You know that your staff is getting paid what the law requires, whether they’re rotating across departments, facilities, or cities.

Preventing Off-the-Clock Work

It’s common in healthcare facilities for employees to start early or stay late to finish tasks. However, when those tasks happen outside of scheduled hours and without proper time logs, employees can be held liable for unpaid wages and penalties.  

What counts as off-the-clock work? Think nurses reviewing charts before clocking in, staff prepping meds after hours, or handoff meetings that happen outside scheduled shifts. These are all job-related tasks for which employees should be compensated.

Workforce.com Solution: It’s all about having an efficient time tracking system. Workforce.com helps by automating clock-ins, generating real-time timesheets, and sending alerts when employees try to clock in or out outside of their scheduled shifts. 

If an employee tries to log in before or after their shift, the system can prompt them to provide a reason, giving managers visibility into potential issues. Aside from preventing unpaid work, it also helps identify whether extra hours qualify as overtime. 

Employee time and attendance information can be turned into reports that help spot recurring patterns and address off-the-clock trends to avoid non-compliance.

Retail: Local Wage Rates, Predictive Scheduling, and Seasonal Staff Challenges

Managing Varying Minimum Wage Rates

Retail business owners in California can face challenges with varying minimum wage rates across cities and counties. If you’re operating stores in both Los Angeles and San Francisco, for example, you’re looking at two different minimum wage rates: $17.28 in LA and $18.67 in San Francisco. Keeping up with local wage ordinances and applying them correctly can make payroll complicated. 

Workforce.com Solution: Workforce.com’s payroll solution automatically calculates pay based on the location listed in each shift and clock-in record. Because payroll, scheduling, and timekeeping are all connected in one ecosystem, there’s no cross-checking required between spreadsheets or separate platforms.

Dealing with Predictive Scheduling Laws

Retailers in California may be under specific predictive scheduling laws, such as the Formula Retail Employee Rights Ordinance in San Francisco. These laws generally require you to post work schedules at least 14 days in advance, and any last-minute changes can mean extra pay for affected employees. That’s great for workers and improving retention, but tough on payroll if you’re constantly shuffling schedules to keep up with fluctuating demand. 

Workforce.com Solution: While last-minute changes are sometimes unavoidable, demand-based scheduling can help minimize them. Workforce.com uses labor forecasting to build more efficient schedules ahead of time. It factors in data like historical sales trends, local events, weather, and customer traffic patterns, helping managers align staffing with actual demand. This means fewer last-minute changes, fewer penalties, and better compliance. And honestly, even if you’re not legally required to, giving employees their schedules early is just good business practice.

Hiring and Paying Part-Time and Seasonal Staff

Retail relies heavily on seasonal and part-time employees, especially during holidays or promotional events. But quick hiring can often lead to messy paperwork, incorrect classifications, and payroll errors. In the rush to fill part-time and seasonal roles, it’s all too easy for key details to fall through the cracks when you’re onboarding at scale. 

Workforce.com Solution: Workforce.com streamlines onboarding with a paperless process that feeds directly into scheduling, time tracking, and payroll. New hires enter their information directly into the system, eliminating manual data entry errors and ensuring every employee is classified correctly from day one. It allows you to hire faster and focus more on training new hires so they can get up and running instead of being buried in onboarding paperwork.

Construction: Job Sites, Overtime Pay, and Workers’ Comp Risk

Multiple job sites

Construction projects rarely happen in just one place. Tracking hours can become complex when you have crews moving between job sites and working varying schedules. It becomes even more problematic when you rely on manual methods or outdated systems. Without accurate time data, you’re more at risk for wage disputes, payroll errors, and staffing gaps. 

Workforce.com Solution: Workforce.com’s mobile time clock uses geofencing to ensure employees clock in at their assigned job site. It’s a simple way to guarantee that time logs are accurate and tied to the right location. This also allows you to monitor which sites are properly staffed and which ones need more support. 

Workers’ Comp and Classification

In California, construction businesses are legally mandated to provide workers’ compensation insurance. While workers’ comp premiums aren’t technically a payroll deduction, complying with this legal requirement depends heavily on accurate employee classification and payroll records.

Getting the classification right is crucial because different tasks come with varying levels of risk. Premiums are calculated based on the work being done. If you misclassify a worker or fail to track task-specific job codes, you could end up paying too much or facing a compliance issue.

Workforce.com Solution: Workforce.com allows you to assign employee classifications, which can include job codes tied to specific tasks or roles. These classifications are then connected to time tracking and scheduling, so when employees clock in or are scheduled for a shift, their job code and classification are automatically reflected in your records. That way, your payroll data stays accurate, and your workers’ comp reporting aligns with the actual work being done.

Keeping Up with Overtime Rules

Overtime is a given in the construction sector. However, overtime rules in California can add another layer of complexity. Beyond the standard 40-hour workweek, employees are also eligible for overtime after 8 hours a day and double time after 12 hours. 

Workforce.com Solution: Workforce.com payroll software handles California’s overtime rules automatically. Whether it’s time-and-a-half after a full 8-hour shift or double time after working 12 hours, the system applies the correct rates once the appropriate conditions are met. 

Agriculture: Break Tracking, Worker Classification, and Piece-Rate Pay

Tracking meal and break times

California state law entitles workers to a paid 10-minute rest break for every 4 hours of work and an unpaid meal break of at least 30 minutes if they work more than 5 hours. It sounds easy on paper, but enforcing these rules on the field can be more challenging with fast-paced work spread across large areas. 

Workforce.com Solution: Workforce.com’s time tracking system helps ensure that your team doesn’t miss legally mandated breaks. It sends break reminders to employees, flags missed or late breaks, and alerts managers when someone’s about to skip one. Every break taken or missed is automatically logged in the system, so you’ve got a clear paper trail come payday or audit time.

Avoiding Employee Misclassification

Misclassifying workers as independent contractors, whether by mistake or misunderstanding, can lead to legal risks. When that happens, workers miss out on wages and protections they’re entitled to, and employers can face penalties. 

To guide employers, California has provided the ABC test to help determine whether a worker should be classified as an independent contractor or not. Unless a worker operates independently, outside the core of your business, and without your control, odds are they need to be classified as an employee.

Workforce.com Solution: Classification starts during onboarding with Workforce.com. Employers can set each new hire’s status right from the beginning, helping avoid errors and payroll discrepancies later.

Managing Piece-Rate Pay

In agriculture, paying by the piece, say, per basket of fruit picked, is common. However, California has strict rules to protect piece-rate workers. You can’t just pay per unit harvested and call it a day. Workers still need to be paid for rest breaks, and their total earnings must meet or exceed the minimum wage. They’re also entitled to overtime and detailed, itemized pay stubs.

Workforce.com Solution: Workforce.com’s time and attendance tools help track every hour worked and every break taken, even for piece-rate workers. If someone’s earnings fall below the hourly minimum wage, the system automatically flags and adjusts it. It also generates detailed pay stubs showing piece rates, break compensation, overtime, and other key wage information. 

Entertainment: High Turnover, Multiple Roles and Rates, Local Labor Laws

Quick Onboarding for Seasonal Work and Rotating Crews

The entertainment industry, whether it’s theme parks, theaters, concert venues, or live events, relies heavily on seasonal staff and rotating crews. That means onboarding needs to be fast and accurate. But rushing this process often leads to errors in tax forms, missing I-9s, or incorrect employee data, all of which can cause payroll issues later.

Workforce.com Solution: Workforce.com makes onboarding fast and paperless. New hires input their own information, upload documents, and complete required forms like the I-9 and W-4 in one secure system. Everything flows automatically into payroll and scheduling.

Managing Multiple Job Roles and Pay Rates

It’s common for entertainment workers to wear multiple hats. One can be an usher one day and a merchandising attendant the next. Often, these roles come with different pay rates. Manually tracking these role changes across shifts is prone to error and slows down payroll processing.

Workforce.com Solution: With Workforce.com, you can assign pay rates by role and location. When managers build schedules, they select the job the employee is working on. Workforce.com then carries that rate through time tracking and straight into payroll. This ensures every shift is accurately paid based on the actual job performed.

Location-specific labor laws

Location-specific labor laws affect entertainment businesses operating in particular localities in California. One such law is the San Francisco Health Care Security Ordinance (HCSO). 

This law requires certain employers to make health care expenditures for employees who:

  • Work at least 8 hours in San Francisco per week
  • Have been employed for more than 90 calendar days
  • Work for a business with 20 or more employees (50 or more for non-profits)

This can cover entertainment employees who meet the criteria, such as ballpark concession workers, ushers, security, janitors, and ticket agents at locations like Oracle Park or Chase Center.

Workforce.com Solution: Much of the eligibility for the San Francisco HCSO is based on hours worked and employment duration, which are all key information that Workforce.com stores and tracks. With everything centralized, employers know exactly who qualifies, how much to remit, and when. Plus, by tracking benefits obligations in real time, you can manage labor costs more effectively while staying compliant.

Much of payroll happens even before you export that timesheet. From onboarding and scheduling to clock-ins and break tracking, every step affects how accurate and compliant your payroll will be.

Workforce.com ties all those steps together in one system. Because time tracking, scheduling, and employee data flow seamlessly into payroll, you get built-in wage and hour automation that reduces errors and keeps you compliant, whether you’re navigating complex labor laws in California or operating in a more relaxed regulatory environment.

Discover how Workforce.com simplifies payroll. Get a demo today.

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What New Jersey’s Pay Transparency Law Means for Payroll

Summary

  • New Jersey’s Pay Transparency Act will be in effect by June 1, 2025.
  • Employees will be required to disclose pay ranges and benefits new hires can expect to receive within 12 months of employment..
  • Payroll software is crucial to ensuring that publicized salary ranges match what employees are being paid.

New Jersey joins a growing list of states that have implemented pay transparency laws, including New York, California, and Colorado. Starting June 1, 2025, the Pay Transparency Act will require covered employees to include pay information and benefits data in job postings, both for new roles and internal opportunities.

The act is designed to improve pay equity by making compensation more transparent to job seekers and employees alike. 

Who’s covered?

The law applies to employers who meet the following criteria: 

  • Have 10 or more employees over 20 calendar weeks 
  • Conduct business in New Jersey
  • Employ workers in New Jersey
  • Accepts applications for employment in New Jersey

What must be disclosed? 

Employers must disclose:

  • The hourly wage, salary, or pay range
  • A description of the benefits an employee can expect to receive in the first 12 months

These conditions apply to external job postings, internal promotions, and transfer opportunities. Employers must disclose any opportunities for promotion to all current staff in the affected department. However, promotions resulting from “unforeseen events” or based on years of service or performance are exempt from the notice requirement.

What happens if you don’t comply?

Employers who fail to comply can be subject to a penalty of $300 for first-time violations and up to $600 for subsequent violations.

What the new law means for payroll teams and how New Jersey businesses can adapt

Compliance with this new regulation has a lot to do with policy changes, and it’s easy to think that this is more of HR’s domain. However, once salary bands are made public, payroll teams must ensure that those numbers align with actual compensation data. 

Here are some practical tips to help payroll teams prepare:

Standardize pay rates across locations

If you’re hiring across state lines, you must ensure that each job post meets corresponding pay disclosure requirements in every state. 

Businesses operating in multiple locations often face challenges with standardizing job titles and pay rates. With Workforce.com, you can set pay rates for different roles or locations, which helps avoid any inconsistency between what’s posted on job listings and what’s paid.

Align job postings with actual pay data

To comply with laws like this, job postings must be audited against internal pay data. But this is easier said than done when compensation information is scattered across different spreadsheets or platforms. 

With Workforce.com, all your pay and role information lives in one system, making it easy to review, audit, and generate realistic pay ranges. 

For instance, instead of posting a vague range of $15-$25/hour, Workforce.com can help you determine the median pay rate for the role across locations, which will help you set a more realistic pay band.

In states that already have pay transparency laws, some businesses have received criticism for posting an overly broad range (e.g. $40,000-$120,000), which feels less like transparency and more like an attempt to skirt the law. If you’re serious about compliance and attracting the right people, realistic ranges matter. 

Audit job titles across roles

Payroll teams should look for pay disparities between employees with similar roles. If two people are doing the same work but receiving different pay, it’s important to understand why. 

Again, addressing these gaps is a matter of having the right data. Workforce.com houses employee records and pay rate history, which enables you to quickly identify inconsistencies among job titles and their pay. Managers can filter reports by job title and location to check whether employees with similar roles are paid within the same pay range.

Maintain clean payroll records

Keeping payroll records organized is a huge part of complying with different labor laws, including pay transparency requirements. Workforce.com keeps this information organized because it unifies time tracking, scheduling, and payroll. Ultimately, it creates a clean audit trail that connects job titles, hours worked, and pay rates. Having that information organized can help with compliance, especially if state regulators and employees ask for proof.

Invest in a good payroll system

Payroll is too complex to manage manually or with outdated tools. More than processing paychecks, a good payroll system centralizes your data such as pay rates, job roles, and other relevant information that can be crucial to compliance. 

Workforce.com was built to simplify this. It brings payroll and HR together, giving you a clearer view of your team and helping you stay compliant with new regulations.

Simplify compliance with Workforce.com

Pay transparency is both an HR and payroll challenge. With New Jersey’s law taking effect, it’s high time to ensure job postings align with what employees are actually paid. Workforce.com has the tools to help audit pay data, standardize pay rates across locations, and make payroll reports—all to help you stay compliant. 

See how Workforce.com makes payroll transparency easy for hourly teams. Book a demo today.

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California Minimum Wage by City and County: What Employers Need to Know

Summary

  • Payroll deductions can be more challenging to manage for hourly teams due to different factors such as variable schedules, different pay rates, higher turnover, and location-based compliance rules.
  • Handling payroll deductions for hourly teams goes beyond automation. It requires a system that can adapt to the complexities of hourly work. 
  • Workforce.com’s payroll software simplifies deduction tracking, ensuring accurate wage calculations and compliance on every pay run.

Effective January 1, 2025, the minimum wage in California is at $16.50 per hour. But that’s not the only thing you should know, especially if you have multiple business locations in the state. Many cities and counties in California have their own minimum wage laws, many with rates higher than the state’s. 

Whether you’re operating in one city or twenty, staying compliant means more than being adept at the law; it’s about having the systems in place to implement it.

The minimum wage landscape in California

California’s state minimum wage is currently $16.50, which is well above the federal minimum, with enforcement being overseen by the Department of Industrial Relations. The 2025 increase was deemed necessary because the consumer price index (CPI) grew by 3% over the previous year, as required by state law. 

California also enforces prevailing minimum wage laws specific to certain industries, such as fast food and healthcare.

  • Fast food employees – $20 per hour, effective April 1, 2024 for covered workers
  • Healthcare workers – $18-23 per hour effective October 16. 2024 for covered workers depending on the type of facility

Beyond statewide and industry-specific labor laws, business owners must also monitor local minimum wage rates. Some localities follow the state minimum wage, but other cities and counties impose their own, which is often higher than the state’s. Cost of living, economic conditions, and local policy goals are typically the factors that drive local regulations for setting unique minimum wage rates.

California minimum wage by city or county

Below is a breakdown of cities and counties in California that have their own, many of which have higher minimum wage rates than the state’s.

City/County2025 Minimum Wage
Alameda$17
Belmont$18.30
Berkeley$18.67
Burlingame$17.43
Cupertino$18.20
Daly City$17.07
East Palo Alto$17.45
El Cerrito$18.34
Emeryville$19.36
Foster City$17.39
Fremont$17.30
Half Moon Bay$17.30
Hayward$17.36

*$16.50 or state minimum wage for businesses with 25 or fewer employers
Los Altos$18.20
Los Angeles City$17.28
Los Angeles County (unincorporated)$17.27
Malibu$17.27
Menlo Park$17.27
Milpitas$17.70
Mountain View$19.20
Novato$17
Oakland$16.89
Palo Alto$18.20
Pasadena$17.50
Petaluma$17.97
Redwood City$18.20
Richmond$17.77
San Carlos$17.32
San Diego$17.25
San Francisco$18.67
San Jose$17.95
San Mateo$17.95
San Mateo County (unincorporated)$17.46
Santa Clara$17.27
Santa Rosa$17.87
Sonoma$18.02

$16.96 for employers with 25 or fewer employees
South San Francisco$17.70
Sunnyvale$19.00
West Hollywood

Local minimum wage variations by size

In some cities, local minimum wages include different rates based on employer size. For example, Hayward and Sonoma set lower minimum wage thresholds for small businesses with 25 or fewer employees. 

This adds yet another layer of complexity for business owners, especially when it comes to calculating pay accurately and staying compliant across multiple jurisdictions. 

Understanding unincorporated localities 

Another detail to watch out for is unincorporated areas. These regions are not part of an incorporated city but fall under the direct jurisdiction of the county government. 

Take Los Angeles County, for example. Cities like Los Angeles or Pasadena have their own local governments and wage laws. But places like Hacienda Heights and Walnut Park are unincorporated and are not part of the City of Los Angeles but within Los Angeles County. This means that the county’s minimum wage applies to them, not the city’s.

Challenges for California employers

Handling minimum wage in California presents unique challenges, especially for businesses operating in multiple areas. Here are some challenges business owners typically face and tips on what to watch out for:

Payroll complexities

Managing payroll is never simple, but it becomes more complex when you’re dealing with multiple locations, varying pay rates, and hourly employees working in various roles. Add to that the different local minimum wages across cities and counties. It could be easy to overlook details, such as mistakenly paying an employee in an unincorporated area the city minimum wage rather than the county wage.

Inconsistent labor costs

Multiple minimum wages in California, along with industry-specific wage laws, overtime and meal/rest break laws, and other labor ordinances, can lead to inconsistent labor costs for businesses in the state. This presents a significant challenge to organizations wanting to keep their labor costs leveled and consistent as much as possible. 

Wage compression issues 

Wage compression occurs when the pay gap between entry-level employees and more experienced workers narrows. This often happens when minimum wage increases outpace raises for more seasoned staff, making the difference between the two smaller. 

To further illustrate, here’s an example. Let’s say your business in Los Angeles used to pay entry-level workers $16 and shift supervisors $18. And now, the minimum wage is at $17.28 per hour. Naturally, entry-level pay should follow this new rate to comply with the law. However, your shift supervisors will end up just earning $0.72 more, which may not be reflective of their responsibilities and roles. 

This can result in a drop in morale, and experienced employees may feel undervalued. Raises may also become reactive rather than strategic, creating a ripple effect in your payroll structure.

Best practices for complying with California’s minimum wage laws

California has one of the most complex labor landscapes in the country, including local minimum wage rates and rules. So, how do employers stay on top of compliance?

Automate HR and payroll

Even the most experienced payroll and HR professionals can make mistakes, especially when handling multiple wage rates across cities, industries, and employee roles. That’s why using software to automate processes is vital.

However, not all payroll systems are built the same. If you’re managing something as nuanced as California minimum wage laws, you need a robust and centralized system. This is where Workforce.com comes in, and these are the ways it helps California businesses stay compliant and efficient:

  • Wage and hour automation: Multiple pay rates and minimum wages are the least of your concerns with Workforce.com. The platform automatically applies the minimum wage according to role and location, including cases where employees work multiple roles across different cities. It also accurately calculates overtime.
  • Employee classifications: Another cause of payroll mistakes is misclassifying employees, and that’s one thing that Workforce.com eliminates for employers because all data and information live in one place. This includes employee details, such as their employment status, corresponding pay rates, and bank information. If any employee information gets changed down the line, it’s reflected instantly across schedules and payroll. No need for manual re-entry.
  • Accurate time and attendance tracking: Inaccurate employee time logs can lead to payroll mistakes.. Workforce.com turns employee clock-in and clock-out into timesheets, which managers can easily verify and check.
  • Labor forecasting: California’s ever-changing labor rules can cause inconsistent labor costs. Workforce.com helps stabilize costs by forecasting demand based on relevant factors such as historical sales, upcoming events, booked appointments, foot traffic, and even weather.

    When creating schedules, managers can easily see how much each shift would cost and receive alerts if they schedule someone for overtime or forget to schedule break times. This will help avoid unnecessary labor costs or potential fines for non-compliance. 
  • Real-time alerts: Managers get live updates when employees fail to clock in or out for a shift or break time. They will also get alerts when employees are about to breach overtime, especially if they’re not scheduled for it. This allows teams to fix small issues before they turn into bigger problems.

Conduct regular wage audits

Conducting wage audits in the state of California is essential because it helps employers stay on top of local rate changes. While most cities raise their minimum wages annually, note that they can do so on different schedules. 

Regular wage audits ensure your pay structure reflects the latest local rates. They also help you catch wage compression issues early, keeping your compensation strategy fair and employee morale intact. In case you face a labor board inquiry or employee complaint, having audit records on hand gives you the evidence you need to respond quickly.

Train your managers

Automation is powerful, but it also pays to equip your managers with the right information and training on handling complicated labor rules. 

Regularly train your management team on California’s local wage laws. These rules can change frequently, so ongoing refreshers are vital. Managers should also have tools and resources to help them explain wage-related issues and faqs to employees and recognize compliance gaps in workflows or systems.

California’s minimum wage rules can change quickly. Stay ahead by automating wage rates and catching compliance issues before payroll with Workforce.com. See the platform in action and book a demo today. 

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Overtime Pay Laws | States + Federal (2025 Update)

Summary 

  • Federal overtime laws require that employers provide overtime pay to those who work over 40 hours per workweek.

  • Many states have their own overtime laws. States that do not have their own overtime rules default to the federal law. 

  • Many employers opt to use specialized payroll platforms that can automate overtime calculations and payments. 

If you are in charge of hourly employees, it’s likely that there will be days, weeks, or even months when your staff needs to work extra hours. Whether that’s over a typical eight-hour workday or a 40-hour workweek, the federal government has made it mandatory to compensate all non-exempt employees. This is important as it protects workers and rewards them for the additional time they spend supporting your business. 

Some states have their own overtime laws, while others do not. It’s crucial to stay informed on the current overtime regulations in your state. In fact, if an employer willfully or repeatedly violates overtime requirements, they will be subject to a civil money penalty of up to $1,000 for each violation. 

Luckily, the laws themselves are relatively straightforward. Below we’ve compiled the federal laws along with a table outlining the overtime laws by state. 

Jump to overtime law table

Federal overtime laws 

According to the US Department of Labor, federal laws on overtime pay are determined by the Fair Labor Standards Act (FLSA). The FLSA states that all non-exempt employees are entitled to overtime pay for working over 40 hours in a workweek. If an employee has exempt status, such as a salaried employee, you are not required to provide overtime. 

The rate of overtime pay must be no less than time and a half their usual hourly rate of pay (or 1.5 times the regular rate of pay). Additionally, there is no limit to the number of hours an employee can work in any workweek. 

A “workweek” is seven consecutive days or a fixed set of 168 hours. These seven days do not need to align with a typical calendar week or job starting time. As long as a fixed and regularly recurring schedule is established, employees should receive the overtime rate owed to them. Typically, overtime pay is included with the wages earned in a regular payday or pay period. 

Forced overtime work

In most states, workers can be “forced” to work overtime by their company. Employers can schedule workers for any shift length or consecutive work days. Additionally, federal law does not require breaks to be provided to the employee. However, many states have mandatory breaks and paid rest periods. If a worker refuses to work overtime, the employer has a legal right to terminate the employee. 

Salaried employees and other overtime exemptions 

Various occupations and job duties are exempt from overtime pay. The standard salary level that currently exempts executive, administrative, and professional (EAP) employees is at $684 per week ($35,568 annually). 

On April 2024, the U.S. Department of Labor announced a rule that aims to increase the salary thresholds for EAP employees to $844 per week ($43,888 annually) effective July 1, 2024, and further to $1,128 per week ($58,656 annually) starting January 1, 2025. However, the U.S. District Court for Eastern District of Texas vacated the 2024 final rule. Currently, the 2019 thresholds are being enforced.

Examples of some exempt roles include: 

A state-by-state breakdown of overtime laws

If a state does not have its own overtime laws, it must default to the federal law. However, if a state has its own overtime laws, the state law is added on top of the federal law. In other words, employers need to abide by whichever law is more generous and provides their staff with the highest earnings. 

When it comes to remote workers who work in different states, the labor laws of the state in which they are physically located and perform work apply. This is true regardless of where the company is located. So if your company is based in New York, but your employee is working from California, you would follow California’s overtime laws for that employee. 

A look at overtime laws by state

Column two denotes whether or not a state has a law establishing a daily overtime threshold and the rate at which these hours are paid. The dashes indicate that the state does not have any laws pertaining to daily overtime. 

Column three lists each state’s weekly overtime threshold as well as the rate at which overtime is paid. States with notable exceptions or unique labor laws have links to their respective Department of Labor pages. 

StateDaily OT thresholdWeekly OT threshold 
Alabama–40 hours (1.5x)
Alaska8 hours (1.5x)40 hours (1.5x)
Arizona–40 hours (1.5x)
Arkansas–40 hours (1.5x)
California8 hours (1.5x) / 12 hours (2x)40 hours (1.5x)
Colorado12 hours (1.5x)40 hours (1.5x)
Connecticut–40 hours (1.5x)
Delaware–40 hours (1.5x)
D.C. –40 hours (1.5x)
Florida–40 hours (1.5x)
Georgia–40 hours (1.5x)
Hawaii–40 hours (1.5x)
Idaho–40 hours (1.5x)
Illinois–40 hours (1.5x)
Indiana–40 hours (1.5x)
Iowa–40 hours (1.5x)
Kansas–46 hours (1.5x)
Kentucky–40 hours (1.5x)
Louisiana–40 hours (1.5x)
Maine–40 hours (1.5x)
Maryland–40 hours (1.5x)
Massachusetts –40 hours (1.5x)
Michigan –40 hours (1.5x)
Minnesota–48 hours (1.5x)
Mississippi–40 hours (1.5x)
Missouri–40 hours (1.5x)
Montana–40 hours (1.5x)
Nebraska–40 hours (1.5x)
Nevada8 hours (1.5x)40 hours (1.5x)
New Hampshire–40 hours (1.5x)
New Jersey –40 hours (1.5x)
New Mexico–40 hours (1.5x)
New York–40 hours (1.5x)
North Carolina–40 hours (1.5x)
North Dakota–40 hours (1.5x)
Ohio–40 hours (1.5x)
Oklahoma–40 hours (1.5x)
Oregon–40 hours (1.5x)
Pennsylvania–40 hours (1.5x)
Rhode Island–40 hours (1.5x)
South Carolina–40 hours (1.5x)
South Dakota–40 hours (1.5x)
Tennessee–40 hours (1.5x)
Texas–40 hours (1.5x)
Utah–40 hours (1.5x)
Vermont–40 hours (1.5x)
Virginia–40 hours (1.5x)
Washington–40 hours (1.5x)
West Virginia–40 hours (1.5x)
Wisconsin–40 hours (1.5x)
Wyoming–40 hours (1.5x)

As you can see from the table above, the majority of states base overtime pay on a 40-hour workweek, defaulting to the federal law. However, some states require overtime pay based on the hours worked in a single workday or other unique exceptions. Below we’ve delved into a few examples of state-by-state exceptions. For other exceptions, click through the links in the table above. 

California 

In California, employers are required by law to provide 1.5x pay for every hour an employee works beyond: 

  • 40 hours in a workweek
  • 8 hours in a workday 
  • 6 days in a workweek  

Moreover, California also has a law in which an employer must pay 2x an employee’s regular hourly rate, also known as double time pay, if they work over:  

  • 12 hours in a workday 
  • 8 hours on the seventh consecutive day of work in a workweek

Alaska

Like California, Alaska’s state overtime law requires that employers pay overtime when a non-exempt employee logs more than 40 hours of work and eight hours in a workday. However, the overtime rules have a number of exemptions related to occupations in agriculture and aquatic work. ‌

Colorado

Colorado’s state overtime law requires overtime pay for hours worked beyond: 

  • 40 hours in a workweek 
  • 12 hours in a workday 
  • 12 consecutive hours, regardless of the start and end time of the workday  

Kansas 

Unlike the conventional 40 hours of most states, Kansas overtime law requires employers to pay overtime when an employee has worked over 46 hours in a workweek. However, because the FLSA requires that overtime is awarded at 40 plus hours, Kansas businesses that are covered by the FLSA must follow the federal law. If not, they must follow Kansas’s overtime rules for non-exempt employees.  

Minnesota 

Minnesota’s state overtime law requires companies to pay overtime for those working over 48 hours in a workweek. Like Kansas, Minnesota businesses covered by FLSA must follow the federal law. 

Stay on Top of Overtime

Overtime is expensive. While necessary at times, ideally, it should never be the norm. If you find yourself consistently paying out overtime hours even in the face of manageable workloads, something is probably wrong. Check out the free webinar below to figure out how to keep your labor costs low by drilling down on where you are overspending on overtime. 

Webinar: How to Lower Your Overtime Hours

For the few times you do need to pay overtime, make sure you are doing it correctly. There are many ways to do this; however, manually tracking and calculating overtime hours is a dangerous game.

Workforce.com’s Payroll platform makes the hassle of recording, calculating, and paying overtime much easier. Through an extensive time clock system, employee overtime hours and pay are automatically compiled on electronic timesheets, helping you improve visibility, reduce errors, and avoid compliance risks. With special tags, you can customize multiple earnings rates to match your state’s specific overtime rules. These rates automatically trigger whenever an employee crosses into overtime. 

To learn more about how Workforce.com can help you manage overtime, book a call today. 

This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, labor laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to comply with the most current standards.

Posted on

How to Manage Compliance for Contractors

Summary

  • Managing contracted employees (1099s) fundamentally differs from managing typical W-2 staff.
  • Employers are legally responsible for correctly classifying workers according to the FLSA, IRS, and any applicable state-based rules. However, the line between employees and contractors can easily get blurred.
  • Workforce.com helps streamline contractor compliance management by ensuring workers are treated according to their classifications.

Suppose you are considering hiring independent contractors for a specific job. Or maybe you already employ a few. Have you done all of your research to handle them compliantly? If not, this guide is for you.

Strict labor standards govern how to properly classify and manage independent contractors, otherwise known as 1099 workers. Let’s examine how to stay on top of these rules and safeguard your business from legal risks.  

Why hire an independent contractor?

Hiring independent contractors offers flexibility, especially when you need help for short-term projects. Unlike full-time employees, contractors usually come in with the expertise required to start working right away, meaning less time spent on training and onboarding. 

Another advantage is cost-effectiveness. Contractors are not entitled to overtime pay, employee benefits like health insurance or retirement plans, or perks like paid vacations and promotions. You also avoid expenses like unemployment insurance and tax contributions that generally come with traditional employment. 

While engaging independent contractors gives you flexibility, there are risks involved. Misclassification is the biggest one. Since contractors are not entitled to the many lucrative benefits of regular employment mentioned above, misclassifying an employee as a contractor can result in serious legal trouble, fines, back taxes, and even lawsuits. Because of this, it is vitally important to understand what qualifies someone as a contractor. 

Key legal guidelines for managing independent contractors

Employee Classifications

Correctly classifying a worker as a contractor is the first step to staying compliant. At the federal level, the Fair Labor Standards Act (FLSA) uses a six-factor test that evaluates the “totality of circumstances” around the working relationship. With this assessment, businesses can determine the correct classification while considering crucial aspects such as control, independence, and the nature of work. These factors are:

  • Opportunity for profit or loss depending on managerial skill
  • Investments by the worker and the potential employer
  • Degree of permanence of the work relationship
  • Nature and degree of control
  • Extent to which the work performed is an integral part of the potential employer’s business
  • Skill and initiative

It’s important to note that the FLSA doesn’t assign a rule defining whether someone should be a contractor or an employee. Instead, it evaluates the facts of each situation to determine the working relationship and whether the worker is truly independent and doesn’t rely on the business like an employee would. 

Aside from federal rules, businesses must also check if there are state rules that govern how they should differentiate contractors from employees. In California, for instance, a worker is classified by default as a standard W-2 employee unless all of the following conditions are met: 

  • The worker is free from the control and direction of the hiring entity in connection with the performance of the work
  • The worker performs work that is outside the usual course of the hiring entity’s business
  • The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. 

In essence, a worker in California can only be classified as an independent contractor if they have autonomy over how and when they perform their tasks, as long as they complete their responsibilities. Also, the work must be fundamentally different from what the business does; For instance, a hospital commissioning people to construct a new building wing. Lastly, the worker must be independently engaged in an established trade and offer services to multiple clients.

Understanding the difference between independent contractors shapes how you manage payroll and benefits. Full-time employees are protected by wage and hour laws, ensuring they’re paid at least minimum wage and receive overtime pay. Full-time employees are also protected under meal break rules depending on the state. On the other hand, 1099 workers aren’t generally covered by these rules. Independent contractors are paid according to their contracts. In addition, they are not entitled to certain benefits, such as health insurance and workers’ compensation.

IRS Rules

Employers must also look at IRS guidelines because these will define how active their role is when handling taxes for their workers. It will also dictate how they report workers’ compensation, the types of forms to submit, and whether or not they would be legally liable to withhold taxes.

Employers withhold and deposit income taxes, social security taxes, and Medicare taxes from employee wages. On top of that, they also match contributions to SSS and Medicare taxes. But it’s a different situation for contractors. Employers generally don’t deduct income taxes from the contractor’s payment and don’t need to match contributions. 

So, under IRS rules, what factors will help you gauge whether a worker should be classified as an employee or contractor?

  • Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  • Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how a worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  • Type of relationship: Are there written contracts or employee type benefits (that is, pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Like California’s ABC Test, the IRS guidelines also consider the level of autonomy workers have over their jobs. Employers typically have less control over how contractors fulfill their tasks and don’t dictate the methods and tools workers use. 

The IRS also considers how financially dependent workers are on their employers. Contractors typically cover their own costs, such as transportation and equipment, whereas employees rely on their employers for those provisions. 

Employees typically have an ongoing relationship with an employer, while contractors typically work for a set period on specific tasks or projects and aren’t as involved in a company’s core operations. 

Classifying employees correctly is also a prerequisite for filing the correct forms and determining whether you must file a W-2 or 1099. Employers typically file W-2s for full-time and part-time employees, reporting all wages, compensation, and tax withholdings for the year.

On the other hand, form 1099 shows how much an employer pays an independent contractor in a tax year. You must file a 1099 if a contractor earns $600 or more annually. These 1099 forms will not include tax withholdings since contractors calculate and submit them to the IRS independently.

OSHA Regulations

The Occupational Safety and Health Administration (OSHA) requires employers, including those using contractors, to adhere to safety regulations and keep workplaces free from hazards to prevent injury or death.

OSHA has general safety regulations that apply to most workplaces, but specific guidelines exist for construction, maritime, and agriculture industries. If you’re in any of those sectors, it would be wise to know these regulations.

Typically, OSHA regulations cover the following areas: 

  • Safety training requirements include construction safety training, such as handling scaffolding, fall protection measures, and ladder safety.
  • Handling hazardous tasks, including hazard communication standards, proper labeling, data sheets, and training on handling hazardous substances.
  • Personal protective equipment (PPE) for specific working environments, including hard hats, gloves, goggles, or respirators, should meet OSHA standards.
  • Rules that must apply when multiple employers are present in a worksite, which is typical for big projects involving contractors and subcontractors. The company that hired them, the controlling employer, is responsible for following OSHA rules. This means that they must check for hazards, ensure safety standards are followed, especially with heavy equipment, and have a system to report and address safety concerns. 

Aside from training, employers are also responsible for communicating such rules and ensuring that contractors have the safety training needed for the job.

How to build an effective contractor compliance management policy

Employing third-party contractors differs from managing employees, but your legal obligations remain just as important. It’s crucial to have a dedicated compliance strategy for employing contractors to reduce risks and avoid violations. Here are some practical tips:

Establish rules and guidelines for classifying contractors.

A significant part of contractor compliance is classifying them correctly, so you must have a process for doing so.

Before hiring, vet potential workers carefully. Assess the task or job and how you plan to oversee it. From there, you can determine whether a part-time worker or a contractor is the right fit. Getting the classification right from the start ensures compliance with tax filings, payroll, and other regulations.

Create airtight contracts.

Contracts and agreements between you and contractors must clearly outline the scope of work, duties and responsibilities, and payment terms. Draft them with the regulations in mind. To avoid legal missteps, ensure these agreements comply with FLSA, IRS, and OSHA regulations.

Avoid scope creep. 

The law is very clear on factors that dictate whether a worker qualifies as an independent contractor. Remember that it all comes down to their financial and behavioral independence. Be careful not to overstep legal boundaries that could change their classification.

The key is consistency. Set clear rules for overseeing the job and adhere to the contract’s terms. Your treatment of contractors should remain uniform and standard throughout the project.

Provide necessary training. 

Safety training is a must for hiring contractors. Ensure they complete all required health and safety training before the project begins. 

It’s also in your best interest to train your managers on the legal principles governing contractors and employees. This can equip them during the vetting process and help them better manage projects in accordance with regulations. 

Set regular progress check-ins. 

See to it that the process stays on course. Establish regular check-ins where contractors submit performance reports detailing their deliverables, remaining tasks, and any challenges they face. This keeps you informed and allows for timely adjustments if needed.

At the same time, conduct routine assessments or audits from your end to track how the project is progressing. This helps ensure that contractors are set to meet deadlines and follow safety and health regulations. Regular check-ins keep the projects on track and minimize potential issues before they become bigger problems.

Stay abreast of relevant rules and regulations.

Labor laws can change at any time, so employers must stay up-to-date. Case in point: US Department of Labor’s final rule on worker classification. Previously, the law only looked at the economic dependence of workers on their employers. The more economically dependent a worker was on the employer, the more likely they were to be considered an employee. However, the changes take a broader approach and now consider the “totality of circumstances” when classifying workers. 

Streamline the process with technology. 

Contractor compliance can be complicated, requiring new administrative tasks and management processes for your managers and HR. However, technology can simplify some processes involved with working with contractors, such as onboarding, time tracking, payroll, and documentation.

Workforce.com simplifies contractor compliance

Managing employees is complicated enough, and adding contractors into the mix can come with its own set of challenges. But don’t let this discourage you from getting contractors for specialized projects, especially if they provide more flexibility. 

There’s a way to manage contractors in a more streamlined way. Here’s how Workforce.com can help. 

Onboarding 

Workforce.com’s onboarding system lets 1099 workers easily and independently submit all necessary paperwork, bank details, and contracts to employers. This self-service portal relieves the administrative burden from the employer and ensures all information is in place for contractors to get paid correctly.

Time tracking

Depending on the contract, contractors submit timesheets before they get paid, but you can simplify the process with Workforce.com’s time and attendance system. Instead of dealing with paperwork, contractors can log in and out through the time clock, automatically generating timesheets based on their time punches.

You can set up a Workforce.com on-site or you can allow contractors to clock in and out through their own device via the Workforce.com app. This ensures accurate time tracking across multiple locations, making recordkeeping more manageable and ensuring contractors are paid on time, especially if specific hours were agreed upon.

Scheduling & task management

Workforce.com also has a scheduling system that contractors can use to plan their work accordingly. They can build and assign shifts, create to-do lists, and communicate with other workers to more easily map out where and when work gets done.

PayrollWorkforce.com’s payroll system can simplify how you pay contractors. Along with your W-2 staff, the system will also automatically process payment for your 1099 workers based on hours worked and the terms of their contract. At the end of the year, Workforce.com will also provide you with all necessary 1099 forms, which your contractors will use to file their taxes.

Recordkeeping

Workforce.com keeps all contractor records organized in one place, helping you access everything in case of audits or compliance reviews. It stores contracts, timesheets, IRS forms, and other important documents related to each project, helping you stay on top of everything and remain compliant. 

Ready to improve how you manage contractor compliance? Book a demo and see how Workforce.com can help.

Posted on

Predictive Scheduling Laws Explained: A Guide for Employers [2024]

Summary:

  • Inconsistent shifts and sudden schedule changes place undue financial and logistical stress on the lives of employees outside of work. 
  • Predictive scheduling laws address this issue by mandating advance notice for schedules and premium pay for sudden shift changes. However, navigating these laws can be challenging due to varying city and state regulations.
  • Employers navigate predictive scheduling laws with specialized software that accounts for local labor ordinances, enforces fair scheduling practices, automates predictability pay, and maintains records.

Unpredictable shifts and last-minute changes have long been sources of financial instability and stress among hourly workers. In response, some cities nationwide have implemented predictive scheduling laws, also known as Fair Workweek laws, to create more predictable and transparent schedules for employees. 

While predictive scheduling laws are intended to improve worker well-being and foster a healthier workplace, it is not always easy for employers to implement these new standards. Understanding the ins and outs of these ordinances is essential to avoid penalties and maintain workforce satisfaction and productivity. 

Whether managing a retail chain, restaurant, hotel, or any business with hourly staff, this article will help you balance operational flexibility with legal compliance. 

What are predictive scheduling or Fair Workweek laws?

Predictive scheduling laws are ordinances that promote fair schedule processes, including giving sufficient notice to employees about their work schedules. 

While Fair Workweek ordinances may vary city by city, they typically include the following:

  • Advance notice of work schedules, typically 14 days in advance
  • Predictability pay or premiums when schedules change after the notice period
  • Right to rest between shifts or clopening bans
  • Right to decline shifts made past the advance notice or opportunities for extra hours
  • Good faith estimates of work schedules upon hiring

The impact of unpredictable schedules on workers

Unpredictable schedules are a significant source of disruption in workers’ personal lives. Employees cannot properly budget for the month, make plans with acquaintances, or reliably fulfill other obligations without an appropriate degree of certainty in their work schedule.

For shift-based workers, flexibility means knowing their work schedules well in advance, not the day before a shift so that they can plan for childcare, doctor’s appointments, second jobs, studies, and other obligations.

Financial pain points are another issue workers must contend with when their schedules are unpredictable. It’s hard for them to anticipate their earnings and manage their budgets when their income is erratic.

In response, some cities have passed rules around predictive scheduling to help alleviate such challenges for employees. So, which places implement Fair Workweek ordinances?

Where are predictive scheduling laws being implemented?

Oregon

Oregon is the only place where predictive scheduling laws are being implemented state-wide so far. 

Covered employers

Businesses in the retail, hospitality, and food services industries that have at least 500 employees

Advance notice requirements

  • 14 days in advance, including on-call work
  • Good faith estimates upon hiring
  • Employees can decline shifts that are not included in the written work schedule.

Predictability pay

Employees are entitled 1 hour at regular rate of pay plus wages if the following changes are made without advance notice:

  • Additional 30 minutes or more to a shift
  • Date or time change of a shift with no loss of hours
  • Additional work or on-call shift

Employees are entitled to half of their regular rate of pay if:

  • Hours are subtracted from the shift before or after they report for duty
  • Changes result in loss of shift hours
  • A shift is canceled
  • When they are scheduled for on-call work but are not called in

Rest hours and clopening

There must be a rest period of 10 hours in betweeen shifts. Employees can decline the rest period and be paid time and a half pay. 

Exceptions

Additional pay is not required for schedule changes due to natural disasters or events outside an employer’s control, such as floods, earthquakes, tsunamis, wildfires, extreme temperatures, war, or explosions. 

California

Berkeley

Covered Employers

  • Employers in the City of Berkeley with 10 or more employees in the:
    • Building services, healthcare, hotel, manufacturing, retail, or warehouse services with 56 or more employees globally
    • Restaurant industry and has more than 100 employees globally
  • Franchisees primarily engaged in the retail or restaurant industries associated with a network of franchises that employ 100 or more globally
  • Non-profit organizations in the building services, healthcare, hotel, manufacturing, retail, warehouse services, or restaurant industries and employ 100 or more globally

Advance notice requirements

  • 14 days or two weeks’ notice
  • Good faith estimate for new employees
  • Employees have the right to decline hours that are added after the notice period.

Predictability pay

  • 1 hour of predictability pay for any schedule change made between 1 and 14 days before a shift.
  • Up to 4 hours of predictability pay (or the number of hours reduced, whichever is less) for cancellations or reduced hours with less than 24 hours’ notice.
  • 1 hour of predictability pay for adding, changing, or moving a shift with less than 24 hours’ notice.

Rest hours and clopening

Employers must allow employees to decline shifts that occur less than 11 hours apart.

Exceptions

Predictability pay is not applicable to employee-initiated shift swaps or changes. It is also not owed for grace periods of 10 minutes before and after a shift.

Access to hours for existing employees

Employers must offer any additional hours to existing part-time employees before hiring new staff or temporary workers. 

Emeryville

Covered employers

Employers with nonexempt full-time, part-time, on-call, contract, and seasonal employees that are in:

  • Retail with 56 or more employees globally
  • Fast food with 56 or more employees globally or 20 or more employees in Emeryville

This includes franchisees associated with a franchisor or a network of franchisees with more than 12 locations globally. 

Employers located outside the city but employ workers performing work in Emeryville are also covered.

Advance notice requirements

  • 14 days in advance
  • Good faith estimate to new employees
  • Employees can decline unscheduled hours given less than the notice.

Predictability pay

  • If a schedule change is made between 1 and 14 days before the shift, employees receive 1 hour of pay for any affected shift.
  • For cancellations or reduced hours with less than 24 hours notice, employees get the lesser of 4 hours of pay or the originally scheduled hours.
  • Any other changes made within 24 hours will give employees 1 hour of pay.

Rest hours and Rest hours and clopening

Employers must pay time and half pay for any hours worked for shifts that are less than 11 hours apart.

Exceptions

Predictability pay does not apply to employee-initiated shift swaps or for grace periods of 10 minutes or less before and after a shift. The same goes for an employee who works past the schedule to finish a transaction.

Access to hours for existing employees

Employers must offer additional hours to existing qualified part-time employees until they reach 35 hours of work in a calendar week. 

San Francisco

Covered employers

Formula Retail establishments with at least 40 stores worldwide and 30 or more employees in San Francisco, including janitorial and security contractors.

Advance notice requirements

  • 2 weeks in advance
  • Good faith estimate to new hires

Predictability pay

  • 1 to 4 hours of pay for schedule changes made with less than 7 days’ notice
  • 2 to 4 hours of pay if an employee is on-call but not called in to work

Exceptions

Predictability pay is not applicable when:

  • There is a threat to the safety of employees’ and employers’ property, public utility failure, Acts of God, or causes outside the employer’s control.
  • An employee scheduled to work cannot come in and did not provide at least 7 days’ notice.
  • An employee failed to report to work or was sent home.
  • An employer requires the employee to work overtime.
  • An employee swaps shifts with a co-worker or asks for a shift change.

Access to hours for existing employees

Employers must first offer additional work to existing part-time employees as determined by the employer or if the part-timer has done similar work. 

Los Angeles

Covered employers

Retail businesses with 300+ employees globally

Advance schedule notice period

  • 14 days notice
  • Good faith estimate for new employees
  • Employees reserve the right to decline hours, shifts, and work locations made after the advance notice period.

Predictability pay

  • 1 hour at the regular rate for any increase in hours over 15 minutes
  • 1 hour at the regular rate for changes in the date, time, or location without changing the hours
  • Half the regular rate for a reduction in hours by 15 minutes or more
  • Half the regular rate for on-call hours when the employee isn’t called to work

Rest hours and Rest hours and clopening

Employees must not work a shift that starts less than 10 hours from the previous shift. Otherwise, employees must provide written consent, and time and a half pay applies for shifts following an insufficient rest period.

Exceptions

Predictability pay does not apply if:

  • An employee initiated the schedule change.
  • An employee agrees to cover an absent employee’s shift, provided the employer informs them that it’s voluntary and they can decline.
  • The employee’s hours are reduced due to a violation of law or company policy.
  • The employee accepts additional hours offered under section 185.05.
  • The employer’s operations are affected by legal issues or force majeure.

Access to hours for existing employees

Employers must offer work to current employees at least 72 hours before hiring a new employee or using a contractor, temporary service, or staffing agency to perform work. 

Illinois

Chicago

Covered employers

  • Employers that have at least 100 employees globally in the building services, healthcare, hotels, manufacturing, and warehouse services industries
  • Restaurant businesses with 250 employees and 30 locations
  • Employers with employees earning less or equal to $31.85 per hour or less than or equal to $61,149.35 in a year

Advance notice requirements

  • 14 days’ notice
  • Written estimate of work hours for new employees

Predictability pay

  • 1 hour of pay for every affected shift if the employer subtracts, adds, and changes shifts with no loss of hours after the 14-day notice period
  • 1 hour of additional pay for every affected shift when an employer adds hours or changes shifts with no loss of hours less than 24 hours before a shift
  • 50% of pay for lost hours when the employer subtracts hours less than 24 hours before a shift starts

Rest hours and clopening

Employees can decline shifts that start less than 10 hours after their last shift. If they work a shift within that time, they must be paid 1.25 times their regular rate.

Exceptions

Predictability is not applicable in cases of:

  • Threats to employers, employees, property, or when authorities advise against work.
  • Utility failures (electricity, water, gas, or sewer issues) at the workplace.
  • Natural disasters like floods, earthquakes, tornadoes, or blizzards.
  • War, civil unrest, strikes, safety threats, or pandemics.
  • Shift trades or coverage agreed upon by employees.
  • Schedule changes mutually agreed upon by employee and employer, confirmed in writing.
  • Schedule changes requested by the employee, confirmed in writing.
  • Reduction in hours for documented disciplinary reasons.

Access to hours for existing employees

Employers must first offer extra shifts to qualified employees. If no employees accept, the shifts can be offered to temporary or seasonal workers who have been with the employer for at least two weeks.

Evanston

Covered employers

Employers with:

  • 100 or more employees globally, franchises included, in the hospitality, retail, warehouse services, manufacturing, and building services industries
  • At least 30 locations globally and 300 employees in the food service and restaurant industry

Advance notice requirements

  • 14 days notice
  • Good faith estimate for new employees

Predictability pay

  • 1 hour of predictability pay if employers add hours or change the date/time of a shift after the 14-day notice period, with no loss of hours.
  • 1 hour of predictability pay if employers reduce hours from a regular or on-call shift with more than 24 hours notice.
  • If less than 24 hours notice is given, employees may receive up to 4 hours of predictability pay, depending on the number of hours affected.
  • For on-call employees not called in, the employer must pay half of the missed hours or 4 hours, whichever is less, if the employee isn’t being paid their regular rate.

Rest hours and clopening

Employees must be paid 1.5 times their regular rate for any hours worked less than 11 hours after their last shift. They must provide written consent to work within this 11-hour window.

Access to hours for existing employees

Employers must offer extra shifts to qualified employees first. If no employees take the shifts, they can be offered to temporary or seasonal workers who have been with the employer for at least two weeks.

New York

New York City

Fair Workweek rules in New York City apply to two work sectors — fast food and retail industries.

Covered employers

  • Fast food establishments that are part of a chain and are one of 30 or more establishments nationally.
  • Retail employers that operate one or more retail establishments in New York City

Advance notice requirements

  • Fast food businesses must give regular schedules that stay the same week-to-week and must give schedules 14 days in advance. 
  • Retail employers must give 72 hours’ advance notice of work schedules. Shift additions and cancellations are prohibited with less than 71 hours’ notice, and there must be no on-call shifts. 
  • Workers can accept or decline additional work time.

Predictability pay

  • Fast food employers must pay $10 to $75 for every change made to a shift after the notice period for 
  • Retail employers must pay $300, as well as damages, to the affected workers. A fine of $500 can also be imposed. It could be more if the employer violated the law before.

Rest hours and clopening

Fast food employers are not required to pay premiums for schedule changes due to:

  • Threats to employees’ or employers’ property
  • Public utility failure or public transport shutdown
  • Natural disasters such as fire or flood
  • Federal, state, or local state of emergency
  • Severe weather conditions that can compromise employee safety
  • Employee-initiated changes such as time off requests, using sick leaves, arriving late, or needing to leave early (must be adequately documented)

More about New York City’s Fair Workweek Laws for Fast Food and Retail Businesses

Pennsylvania

Philadelphia

Philadelphia

Covered employers

Employers with more than 250 employees worldwide and 30 or more locations worldwide, including chains and franchises in the service, retail, and hospitality industries.

Advance notice requirements

  • 14 days’ notice
  • Good faith estimate upon hiring an employee
  • Employees may decline additional work hours not posted in the schedule after the notice period.

Predictability pay

  • 1 hour of regular rate of pay when the employer adds time to a scheduled shift. The same applies when changes are made to the date, time, or location with no loss of hours. 
  • Half of the regular rate of pay for any scheduled hours the employee does not work due to reduced hours from a regular or on-call shift. The same applies when an on-call shift is canceled.

Rest hours and clopening

There should be a rest period of at least 9 hours between shifts. Otherwise, an employee must consent in writing. Employers must also pay $40 for each clopening shift.

Access to hours for existing employees

Before hiring new employees or using subcontractors or staffing agencies, the employer must first offer available shifts to existing employees.

Washington

Seattle

Covered Employers

  • Retail and food service establishments with at least 500 employees worldwide
  • Full-service restaurants that have at least 40 full-service locations worldwide

Advance notice requirements

  • 14 days advance notice
  • Good faith estimate for new employees
  • Employees can decline hours not in the originally posted schedules

Predictability pay

  • 1 hour of pay for hours added to a shift or when the date or time is changed
  • Half of the hours not worked when an employee is sent home early
  • Half of the hours not worked when an employee is scheduled for on-call work but is not called in

Rest hours and clopening

There must be 10 hours of rest in between shifts. Employees are entitled to time and a half pay for clopening hours that are less than 10 hours apart. 

Exceptions

Predictability pay is not applicable when:

  • The employee asked for the changes in schedule or traded shifts with a co-worker. 
  • The employee responded to a message about available hours because another employee couldn’t work.
  • The employee replied to a message about hours available due to unexpected customer needs.
  • The reduction in hours was due to discipline.
  • The change was due to threats, public official recommendations, utility failures, natural disasters, or legal issues.

Access to hours for existing employees

The employer must offer extra hours to current employees before hiring external candidates, subcontractors, or temporary workers. Employers must post a notice of available hours for three days. Employees have two days to decide if they want the extra hours before the employer hires outside help.

Compliance Tips for Fair Workweek Ordinances

Implementing predictive scheduling laws into your operations can be complicated – it’s easy to overlook crucial details if your policies aren’t thorough. Here are some practical tips to help your business remain on the right side of the law.

Stay abreast of ordinances in your place of business

Only a handful of cities have an ordinance for predictive scheduling, but this could change in the future. It’s best to stay informed about any updates or new regulations in your area.

Keeping up with changes is crucial if you’re in a city or state that has existing Fair Workweek laws. For example, New York City previously required fast food employers to provide a good faith estimate of work hours to new hires, but this was replaced with a mandate for regular week-to-week schedules.

Check with local and state governments regularly for updates on employment laws and scheduling practices to ensure your business remains compliant.

Invest in predictive scheduling software

Predictive scheduling laws are just one of the many employment regulations that businesses must comply with. Many businesses invest in scheduling and payroll solutions that help mitigate predictive scheduling headaches. Software like this automates key areas like shift notifications and predictability pay, ensuring that you meet Fair Workweek standards.

Workforce.com, a scheduling and payroll platform designed for hourly workforces, specializes in predictive scheduling and Fair Workweek compliance. Here’s how it can help:

  • Shift scheduling and labor forecasting – Avoid over or understaffing with demand-based schedules. Workforce.com can use data that indicates possible demand, such as historical sales, foot traffic, booked appointments, and even weather information, so you can schedule the correct number of staff for each shift well in advance.
  • Alerts and announcements—A critical part of Fair Workweek ordinances is ensuring employees are notified of posted schedules in time. Workforce.com makes this easy—once a schedule is published, employees are notified through the app, and you can also print the schedule. A robust communications feature lets you send announcements about schedule updates and live chat with staff and managers to maximize transparency and efficiency.
  • Pay rules – Assign pay rules to each employee, including those predictability pay they may be entitled to when certain conditions get triggered. Once set up, these rules are automatically applied during payroll, eliminating the need for manual entries and calculations.
  • Employee tags and classification – Assign tags to covered employees of predictive scheduling rules to ensure they receive the correct pay when predictability pay conditions are met. You’ll also receive automatic alerts when scheduling an employee at risk of working a clopening shift.
  • Shift swapping – Workforce.com has shift-swapping functionality that allows qualified staff to take up vacant shifts. This helps automate the process and provides a simple way to track and record shift changes. 
  • Payroll – Another crucial part of complying with predictive scheduling laws is ensuring covered employees are paid what they’re owed, including applicable predictability pay. Workforce.com automatically computes wages, overtime, deductions, and predictability pay premiums based on timesheets and hours worked by your employees. 
  • Recordkeeping – Employers are required to maintain records of schedules and documentation related to Fair Workweek compliance. Workforce.com centralizes this information, making it easily accessible. In the event of an audit or when you need to retrieve these records, everything is organized and readily available. 

Train managers and HR teams

Managers and human resources are at the frontline of implementing predictive scheduling laws. Train them to understand the specifics of these ordinances and how to communicate them to staff. As a crucial part of compliance, they must have the training and resources to ensure company policies align with and adhere to applicable labor laws.

Why fair scheduling practices matter

Fair scheduling practices are essential to any hourly workforce, regardless of whether predictive scheduling laws exist in your area. Equitable workplace policies should not just stem from the need to comply – they should begin with the desire to equip and support your employees.

A consistent and transparent scheduling system minimizes scheduling conflicts, reduces absenteeism, improves retention, and provides flexibility for hourly staff. This should be standard practice, whether mandated by law or not. Discover how Workforce.com helps you implement best practices with employee scheduling, payroll, and HR for hourly workforces. Book a demo today.