What is predictability pay, and how does it affect you?

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Have you been hearing people talk about predictability pay lately? This is a relatively new term, but it is becoming more and more prevalent in the US. Whether you operate in an area with predictability pay rules or not, it can be helpful to understand what it is and how it affects business. This is especially true because this form of pay is gaining more popularity among lawmakers. Even if your city or state doesn’t have predictability pay rules right now, it doesn’t mean you won’t have to follow them in the future.

What is predictability pay?

Predictability pay is a form of compensation similar to overtime pay but with a key difference. Instead of being paid to employees when they work extra hours, predictability pay is awarded when the employer does something to make the employee’s schedule less predictable. The exact rules around “when” and “how much” vary based on location and other circumstances. We’ll get to those in a bit. In areas where these types of pay rules are in effect, employees are generally eligible for premiums when their employer changes the schedule with little advance notice. Other situations include: when the employer reduces employee hours, changes a scheduled work location, or adds additional hours after the schedule has been posted.

Why are laws around predictability pay becoming more common?

Predictability pay is a consequence of fair workweek legislation. As we explained previously, fair workweek laws have been gaining momentum in recent years and are here to stay. In general, these laws are aimed at making work more predictable for workers. However, this is typically achieved by requiring employers to pay premiums (i.e. predictability pay) when they do things that cause the schedule to be less predictable for employees, such as making last minute changes.

Does predictability pay apply to you?

Whether or not you need to pay out this type of premium will depend on A) your location, and B) the size and type of your business. Below are some guidelines to help you determine whether you may be affected by predictability pay rules.

Which areas have predictability pay rules?

Predictability pay is not a federal requirement. Instead, it is typically mandated at the city or state level. Different cities, even within the same state, may have different rules. The following locations have laws that require employers to pay premiums for certain changes to the schedule:

  • San Francisco, CA
  • Emeryville, CA
  • Chicago, IL
  • New York City, NY
  • Philadelphia, PA
  • Seattle, WA
  • All of Oregon

Laws are always changing, though, so you’ll want to check with your city and state to be sure. Or, feel free to give us a call, and we’d be happy to walk you through the latest legislation for your area.

What sorts of businesses have to give out predictability pay?

Generally, laws around predictability pay do not apply to industries with very uncertain work times. Instead, these laws affect industries, such as grocery and fast food chains, that could offer regular scheduling but may prefer not to. Some of the industries that must follow predictability pay laws in applicable cities or states include:

  • Retail stores
  • Banks
  • Fast food restaurants
  • Grocery stores
  • Casual dining businesses
  • Hotels

How many employees you have and your number of locations may affect whether or not your employees are eligible for predictability pay. If you’re in doubt over whether or not the laws apply to you, check your city and state government websites. You can also give us a call; we’d be happy to go over the rules of your area with you.

How much do you have to pay?

Again, this will depend on where your business operates. Different regions have different rules for how to calculate predictability pay. For example, in San Francisco, employees get an extra hour of pay for each shift change made with less than 7 days’ notice. Meanwhile, in nearby Emeryville, workers get an extra hour of pay for a shift change made with less than 14 days’ notice. In both cities, employees also get 4 hours of pay for each change made with less than 24 hours’ notice.

Not all areas calculate pay based on an employee’s hourly rate, either. New York City attaches specific monetary penalties to different changes. For a schedule change that removes hours with less than 14 days’ notice but more than 7 days’ notice, the employer pays $20. If there is less than 24 hours’ notice for cancellation, the employee gets $75. With less than 7 days’ notice for any other change, the penalty is $15.

How Predictability Pay Laws May Affect You

With predictability pay laws, you will be penalized for making changes to the schedule without sufficiently advance notice. (Remember, each law defines what counts as sufficient.) If a manager makes a last-minute change that adds time to one employee’s schedule and reduces the hours of another, for example, that’s two penalties, one for each employee, that could total over a hundred dollars in premiums. So you can imagine how multiple changes, over the course of a week, month, or year, could add up to hundreds of thousands of dollars owed to employees. And what happens if you don’t pay these premiums? Or if you can’t prove that you paid these premiums? You can be hit with a lawsuit for millions more.

One key thing to remember is that compensation is typically only owed when the employer is the one who initiated the change. If the employee requests the change, or if employees swap shifts, predictability pay laws generally don’t apply. Giving employees more options to modify their own schedules can be a great way to avoid getting “nickeled and dimed” by these laws.

If predictability pay laws apply to you, or if you think they will apply to you soon, don’t wait. Start reading up on fair workweek (we recommend our Fair Workweek eBook) and begin preparing for change. TimeForge can help. Our sales forecasting and scheduling systems work hand in hand to create great schedules in advance. Our built-in labor compliance tools then ensure that your employees stick to the plan.

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