Upcoming Compliance Labor Laws in Chicago

Upcoming Compliance Labor Laws in Chicago
AJ Beltis

By AJ Beltis

Disclaimer: The information contained in this article is general in nature and businesses should consider whether the information is appropriate to their needs. Legal and other matters referred to in this article are based on 7shifts' interpretation of laws existing at the time and should not be relied on in place of professional legal advice. 7shifts is not responsible for the content of any site owned by a third party that may be linked to this article and no warranty is made by 7shifts concerning the suitability, accuracy or timeliness of the content of any site that may be linked to this article. 7shifts disclaims all liability (except for any liability which by law cannot be excluded) for any error, inaccuracy, or omission from the information contained in this article and any loss or damage suffered by any person directly or indirectly through relying on the information contained in this article.

On July 1, 2020, Chicago, Illinois will join a growing list of United States cities observing fair workweek laws.

This summer, many Chicago restaurants will need to put new scheduling and employee management policies into place, as mandated by law. Each violation of these laws could result in a fine of up to $500, meaning your restaurants could face hundreds, thousands, or even millions of dollars in fines for consistently failing to obey these laws.

Nope – that’s not an exaggeration: millions of dollars in fines. In New York City, Chipotle faces a $1.5 million lawsuit for allegedly failing to adhere to NYC’s similar set of fair workweek and predictive scheduling laws.

As these laws work their way into more cities and states throughout the country, we’re likely to see even more restaurant businesses – potentially those in Chicago – face similar fines if they willfully ignore these new laws.

In this article, we’ll provide a rundown on Chicago’s new Fair Workweek Ordinance, a bit of background on what predictive scheduling is and how it’s impacting restaurants nationwide, and some tips for how to follow these new laws without breaking your budget.

Check out the laws you’ll need to follow and the fees you could face for violating them in our ebook: Restaurant Fair Workweek Law: An Overview. Download the ebook

Chicago Fair Workweek Ordinance: An Overview

What Is It?

Chicago’s Fair Workweek Ordinance, passed in July of 2019, exists to ensure workers in eight industries across the city – including restaurants – have predictable incomes and schedules, achieve flexibility in their hours, and receive compensation for last-minute alterations to their schedules.

When Does the Law Go into Effect?

Qualifying restaurants will need to adhere to this law starting on July 1, 2020.

What Workers Does the Law Affect?

For restaurants, this law applies to employees who work:

  • In a restaurant with 30+ locations worldwide,
  • For a restaurant business that employs at least 250 people, and,
  • For an hourly wage of $26.00 or less or salaried employees earning $50,000 or less.

This means the Fair Workweek Ordinance only applies to large, multi-location restaurant groups and franchises. Single-unit restaurant businesses and smaller groups remain unaffected, meaning those restaurants are not required to follow this law–for now.

Additionally, the ordinance claims that sole franchisors who run the only locations of a franchise in the city–provided there are three or fewer locations–do not qualify and do not need to follow this law.

For example, let’s say you alone own the only three Chicago locations of a pizzeria franchise. Even if that pizzeria has 200 locations across the country, your three Chicago locations would not need to follow this law. This circumstance would change if you – or anybody else – opened another location of this same franchise in the city.

What Does the Law Mandate?

The ordinance requires qualified restaurants to provide the following benefits to eligible employees (the criteria of which are outlined above).

Predictive Scheduling

Restaurants will need to share schedules with employees at least ten days in advance. Starting July 1, 2022, schedules must be shared at least 14 days in advance.

Good Faith Estimates for New Hires

On or before a new employee’s first day, employers must provide the average number of weekly hours the new hire can expect to work, in addition to days, shift hours, and any on-call shifts the employee should be prepared to work.

Employee Input on Shifts

Employees may choose to decline an additional shift that they are asked to work if the shift had not been scheduled within the mandated 10-day threshold.

Additionally, employees must be allowed to request changes to their work schedules – such as requesting more or fewer hours, the right to swap shifts, and a reduction in work duties. There is no rule mandating these requests must be honored.

Predictability Pay

If an employee does consent to a shift change within the 10-day threshold, that employee is entitled to one additional hour’s worth of pay as compensation for the adjustment.

This rate of pay applies if an employer adds shifts or moves an employee’s shift to a new time frame of the same amount of hours. It also applies if the employer subtracts hours from an employee’s schedule with more than 24 hours of the shift’s original start time, including on-call shifts.

However, employers must pay employees no less than 50% of the wages they would have worked for when their hours are cancelled within a 24-hour time frame.

There is a list of exceptions to predictability pay, outlined in the ordinance here. Common situations where predictability pay is not required include:

  • A mutually agreed upon work schedule change.
  • Sick, vacation, or other accrued time off is used.
  • An employer subtracts an employee’s hours for a documented, just cause reason.

The Right to Work Available Hours

Your current employees must be provided the opportunity to work newly available hours before you offer those hours to an outside hire. The hours may be offered to a new hire if:

  • No current employees who are qualified to do the required work take the offer.
  • The only current employees who are interested are those who would be required to work overtime and earn premium pay for the work.

The Right to Rest Between Shifts

Employees must be allowed to refuse working a “clopen” shift (a shifted separated by less than ten hours after their previous shift ends). For example, if an employee works until 11 p.m. and is asked to arrive at 8 a.m. the next morning to help open, this shift would be optional for that employee, since it only affords the worker nine hours of rest between shifts.

If employees do consent to working the clopen, they must be paid 1.25 times their regular rate of pay for that shift.

Fines for Violating These Laws

Restaurants face a potential fine of $300 to $500 for each individual violation of this ordinance, meaning multiple violations result in the threat of multiple fines.

Download the ebook

The Importance of Fair Workweek and Predictive Scheduling Laws

If your restaurant is required to abide by fair workweek laws, you’re probably thinking to yourself: what the heck? Do we really need to risk paying fines, schedule farther in advance, and even change our hiring practices?

Yes, you do. But keep in mind, fair workweek laws benefit restaurants in addition to employees.

Fair Workweek Benefits to Restaurants

When employees feel better about their schedules, it’s a benefit to them and to the business they work for.

One study outlined in Harvard Business Review found that by offering predictive scheduling benefits–like scheduling employees for consistent hours and times week-over-week and allowing them to swap shifts with fellow employees without manager approval–increased store sales by 7% and employee productivity by 5%.

This makes sense if you think about it–when employees are less stressed about their hours and more confident in their future in the company, they tend to be more efficient and productive.

Fair Workweek Benefits to Employees

Turnover rate in the restaurant industry sits at 73% (and closer to 150% for fast food restaurants), and restaurants are doing whatever they can to keep staff around. Taco Bell is even experimenting with paying store managers $100,000 a year.

While adopting predictive scheduling policies will certainly be an adjustment for restaurateurs, this change will ultimately lead to happier, more satisfied workers, who will now comfortably know:

  • How many hours they’ll have to work each week.
  • When those hours will be worked.
  • How much they can expect in income.

This change provides a newfound sense of stability for restaurant employees, who traditionally have had to deal with unpredictable shifts, hours, and pay.

Additionally, employees will now be compensated for last-minute schedule changes. Employees who were counting on a shift–or were planning on a day off–must be compensated when the alteration is made by the employer.

How to Adapt to Chicago’s Fair Workweek Ordinance

Nervous about adapting to the new rules? Totally understandable–here are a few tips for navigating these new waters of Chicago restaurant labor law compliance.

Use Employee Scheduling Software

Save time, money, and effort on scheduling with a labor complaint employee scheduling software. This type of technology not only makes it easier to plan and distribute staff schedules, it ensures you’re not violating any of Chicago’s Fair Workweek Ordinance laws in the process.

We recommend using 7shifts for your labor compliance software. It’s built for the restaurant industry and has built-in features that make it easy for restaurateurs to stay compliant. For example, with 7shifts, you can:

  • Receive clopen alerts to avoid violating the 10-hour right to rest window.
  • Send schedules electronically to staff in advance.
  • Allow employees to voluntarily swap shifts with their own accounts–meaning you won’t have to provide premium pay for scheduling changes within the predictive scheduling threshold.
  • Run labor reports and store records to document your compliance.

In addition, 7shifts is easy-to-use and comes with an abundance of other features for staff scheduling and management, like overtime alerts and simple time off requests. You can get a demo here.

Work With Corporate and Franchisors

This ordinance predominantly impacts franchises and large restaurant groups, and franchisors and corporate do not want to lose money or face a seven-figure lawsuit for failing to comply with Chicago’s new laws.

The good news is fair workweek laws have been in place for years in other cities like New York and Seattle, so if the restaurant you’re franchising has locations in an area of the country that already has these laws, your corporate office likely has best practices mapped out and available resources.

Open up the line of communication with corporate and/or your franchisor to see what advice, resources, or systems they have in place for you to manage your scheduling in the face of these laws.

If corporate or your franchisors do not have systems in place, use the remaining time you have before the ordinance goes into practice to collaborate with them. Send them documentation about the new rules and see if they would be willing to help you through this adjustment period with any training or resources.

While adherence to these laws ultimately comes down to owners and managers, your franchisors do not want your business to fail, so it won’t hurt to ask if there’s any chance they could help you out however they can.

Additionally, if it is available, consider working with your franchise’s or group’s general counsel or legal team to reduce legal expenditures and get a professional’s input on how to handle the new laws.

Source Time Off Requests as Soon as Possible

One of the intangible benefits of fair workweek is an increase of open communication between you and your employees. Because you’re required to give staff ten-days notice of their schedules, you should ask them to come to whoever creates the schedule as soon as possible with vacation or time off requests.

Setting this standard will result in your employees coming to you with time off requests two to three weeks ahead of time, rather than last-minute asks (barring any emergencies).

Document Everything

Not only is keeping employee records for three years required by law–it’s also best practice for staying organized and protecting yourself.

If your restaurant comes under investigation for violating fair workweek laws, these records will expedite the process and–if you’ve obeyed the rules–prove your innocence, potentially saving your restaurant thousands of dollars in fines.

Recordkeeping is much simpler with a restaurant reporting and analytics platform that automatically tracks and stores employee records. Click here to learn more about 7shifts’ compliant recordkeeping feature.

Surviving Chicago’s Fair Workweek Ordinance

Although it will be a big change, remember that Chicago’s new Fair Workweek Ordinance was passed unanimously by Chicago’s City Council.

The new law provides workers with the stability they need to plan for their futures and achieve a healthy work-life balance. The law also has also produced positive results when initially tested, suggesting your worker productivity and store sales can increase with the process.

All that said, the July 1, 2020 deadline is almost here–so make sure your scheduling software is compliant and you’re in place to follow this new law.

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AJ Beltis
AJ Beltis

AJ Beltis is a freelance writer with almost a decade of experience in the restaurant industry. He currently works as a content manager at HubSpot, and previously as a blogger at Toast.