California is seen as one of the most burdensome places to do business, and employment laws passed in California often set off a domino effect throughout the rest of the country. For employers in the hospitality industry, California may be on the verge of setting off a new national trend that will severely affect such employers’ ability to manage their workforce.
What is California’s Opportunity to Work Act?
On Dec. 5, 2016, the California legislature introduced a new bill that would apply to employers with 10 or more employees in California and require such employers to offer additional hours of work to an existing employee before hiring any additional employees or subcontractors (including through the use of a temporary employment agency, staffing agency or similar entity). However, employers would not be required to offer additional hours of work to existing employees if doing so would result in overtime.
Proponents of the bill claim it was introduced in an effort to fight the trend of “underemployment” among the state’s part-time employees. According to California Assembly member Lorena Gonzalez, “[t]he Opportunity to Work Act will provide a boost to the millions of workers in California who want to work more so they can afford the necessities of life and to take care of themselves and their families in a time when housing costs, student debt and surprise expenses are increasingly difficult to manage.”
Despite the bill’s noteworthy intentions, it fails to acknowledge the burden placed on employers or set forth any clear guidelines for its implementation. For instance, the bill only provides that the employer shall use a “transparent and nondiscriminatory process” to distribute the additional hours of work among existing employees, but does not clarify how to develop such a process. Therefore, employers are left to wonder whether offering additional hours to existing employees based on seniority or based on the least number of scheduled work hours would pass muster.
Another bad idea from California: AB 5 Opportunity to Work Act. Find out more in CRA's News You Need to Know https://t.co/68keto7gvE— Alden Parker (@CalLaborLaw) December 12, 2016
What Would This Legislation Mean for the Hospitality Industry?
For employers with a predominantly part-time workforce, this type of legislation would significantly impact their ability to manage the workforce. Hospitality employers have historically relied on a part-time workforce for a number of reasons, including the flexibility it provides to respond to staffing needs during fluctuating peak times and seasonal demands. With this legislation, employers would not only lose that flexibility, but would also be hampered by additional impractical and technical requirements.
Assume a company has a restaurant in San Francisco and Los Angeles with 20 part-time employees at each location. The company determines the Los Angeles restaurant needs additional employees to cover the busier dinner hours on weekends only. With this proposed legislation, an employer could lose the flexibility to simply hire additional part-time workers to satisfy its business needs as it sees fit. Instead, arguably the company would be required to offer additional hours (whether on a per shift, day, week, month or permanent basis is unclear) even to its existing employees in San Francisco who do not work at the Los Angeles restaurant. Additionally, the proposed legislation would require the company to retain documentation about how it offered additional hours to existing employees prior to hiring a new employee. If this legislation is passed, it will be imperative for employers to closely monitor such technical requirements to prevent potential litigation.
The proposed legislation simply raises more questions than answers for managers. If there is a last-minute need, can an employer give an existing employee only an hour to accept the additional hours before turning to a temporary staffing company? How many existing employees do the additional hours have to be offered to before an employer is able to hire someone new?
Employers should also be aware of the potential effects offering additional work hours to part-time employees may have on the employee’s status and entitlement to certain benefits. For instance, a change from part-time status to full-time status may impact an employee’s right to healthcare and potentially vacation or other benefits, depending on the employer’s policies.
What Happens Next?
While it is still too early to tell whether the California bill will pass, employers across the country should be on the lookout for similar local and state ordinances. The California bill was in fact modeled after the city of San Jose’s Measure E. Other cities, including Seattle and San Francisco, have also passed similar ordinances. Thus, it may just be a matter of time before other cities and states follow suit, potentially leading to the beginning of the end of part-time employment as we know it.
John Mavros is a partner in the Irvine office of law firm Fisher Phillips. His practice includes representing employers in all aspects of labor and employment law, including wrongful termination, discrimination, harassment and retaliation.
Jeff Thurrell is a partner in the Irvine office of law firm Fisher Phillips. His practice is focused on defending employment related lawsuits and administrative complaints on a variety of issues, including harassment, retaliation and discrimination.
Laurie Koscielak is an associate in the Irvine office of law firm Fisher Phillips. Her practice includes counseling and defending employers in all areas of labor and employment law.