Hoteliers try to navigate Oregon’s new scheduling law
Hoteliers try to navigate Oregon’s new scheduling law
30 AUGUST 2017 7:33 AM

A new employee scheduling law going into effect in July 2018 in Oregon has hoteliers in the state trying to figure out how that law will affect their business operations.

REPORT FROM THE U.S.—Oregon is the first state to pass a law, known as restrictive or predictive scheduling, that will initially require employers to set employees’ work schedules at least one week ahead of time with penalties in place should the employer change the schedule after setting it.

Up until now, similar laws excited within some cities, but Oregon’s adoption of the practice marks the first statewide regulation of its type, leaving hoteliers to wonder if more states could follow suit.

The purpose of these laws is to give more predictability for people working in retail, hospitality and restaurants, said Bruno Katz, partner at Wilson Elser. Union groups or union-funded groups have been driving the movement to implement restrictive scheduling laws, he said.

San Francisco implemented such a law in October 2015, setting strict requirements for employers to post schedules and notify their employees. Employers who changed their employees’ schedules within the seven-day window have to pay employees extra wages if they were brought on for more work or pay half of what an employee would have received for a shift if the employee is taken off the shift.

“It encourages employers not to hire additional part-time employees when they have current employees not working a full 40-hour workweek,” he said. “Almost all of the laws have a requirement if you have employees working less than 40 hours to offer them additional hours first before hiring someone.”

Seattle passed a similar law in September 2016 that went into effect this year, Katz said, but it’s more restrictive than San Francisco’s. It sets a 14-day window and requires extra hours for existing employees first. San Francisco’s law also waives the penalty to call in a replacement employee if an employee scheduled to work calls in sick, he said, but Seattle’s doesn’t.

It’s surprising that Oregon was the first to pass statewide scheduling legislation, Katz said, as it was expected California would be the first, but that state’s legislators withdrew the bill because they felt it wasn’t the right time. However, Katz said he does expect California to bring back another bill in the coming years.

Oregon’s law applies to retail, hospitality and food service businesses with 500 or more full-time and part-time employees worldwide, Katz said. Starting July 2018, employers must provide their employees with a work schedule seven days in advance, and that increases to 14 days starting in 2020. Employees are entitled to additional pay if the employer requests to change the schedule during the seven- or 14-day window, and also requires an 11-hour break between opening and closing shifts.

The law also requires a standby list in which employees can volunteer in advance for additional shifts or to be taken off shifts, Katz said, which does not trigger a penalty. Employers are exempted from the penalty during major emergencies, he added.

What this means for hoteliers
Right now, Oregon’s scheduling law is going through a rule-making process, which will clarify certain details, said Greg Astley, director of government affairs at the Oregon Restaurant and Lodging Association. He said the state needs to clarify what counts as the same organization for the purpose of the law.

For an example, Astley wondered if a set of 10 hotel properties sharing a partial owner who doesn’t have a controlling stake and only handles would qualify as the same organization.

He noted the new rules could be particularly problematic at properties that have things like spas and golf courses because demand for those services typically fluctuates with little or no notice from guests. Astley noted if guests don’t set things up in advance, operators will be at a disadvantage when trying to figure out how to schedule employees to staff those services. Fortunately, the standby list can help in such situations, he added.

“If you as an employer need to bring in more people, you can start calling down that list,” Astley said. “They can come in, and there’s no predictability penalty the employer has to pay.”

It’s up to the employer to document when employees volunteer to come in to work extra shifts and when they leave to make sure the employee doesn’t come back with a false claim, he said.

Astley said this has created issues for both employers and employees in San Francisco. Employees don’t like it because they’re not able to pick up shifts because employers are unwilling to go through the extra documentation required.

“It’s hard to say if there are any positives because (Oregon’s law) isn’t implemented yet,” he said. “On the face of it, there are very few positive things about restricting the flexibility of employers and employees regarding scheduling.”

ORLA is putting together a guide for hoteliers in the state explaining what the law means and what options are available, Astley said. There will be training available for hoteliers, who can then go back and train their staff on the new law.

“We would hope hoteliers are engaged with us as we continue to provide updates on what the law means and who is going to be affected by it,” Astley said. “We will send out information about the rule-making process.”

Although it’s not clear in the various laws themselves, Katz said he expects there to be some effort to hook the bigger brands as franchisors to count them in the number of employees as a joint employer. The question will be whether the franchise agreements show sufficient detachment so that they aren’t all counted, he said.

“If you’re a management company, make it clear you are an independent operator and not tied (to the brand),” he said. “The less ties and the less requirements you have imposed on the franchisor and franchisee, the better chance you have to argue you fall under the threshold. The more control there is, the more likely they’ll try to lump you in.”

At this point, there aren’t any legal challenges to the laws, Katz said. There are arguments made against them, he said, but the issue has never been fully litigated to an actual appellate decision. Because of the cost of funding such a case, no one has been willing to take it yet.

An owner’s perspective
Vesta Hospitality has five hotels in Oregon, President and CEO Rick Takach said, which puts his company above the scheduling law’s 500-employee threshold.

“I’m not too excited about it,” he said.

Takach said his first goal is to figure out how to get out from under the law, which he called state overregulation. Every time the state does something like this because they want to help employees have a normal lifestyle, it ends up hurting the associates in the long run, he added.

“Owners will try to figure out a way to successfully manage their businesses to run a profitable business,” he said. “It ends up hurting them in the long run. They will try to automate to avoid back-to-back shifts.”

Although he doesn’t want to sound like he is trying to beat up on Oregon, Takach said he suppose he is.

“I have a chance to buy another hotel in Oregon, and I don’t think I’m going to,” he said.

During the summer, Vesta’s properties sometimes see 90-some percent occupancy, Takach said, and if there isn’t a lot of staff available, that means back-to-back shifts. He said he is going to be careful about who he puts on when he does, and it might require having to drop off some people.

Hoteliers have until July of next year to hammer out some of the details, Takach said, but budgeting for the next year is coming up. In Oregon on a sunny weekend, business goes through the roof, he said, and when it’s rainy, business is off.

“We have to figure out how much this will cost us,” he said. “We have to try to figure out how to operate it.”

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