You can find more information on the ordinance, including Frequently Asked Questions, on the city's website. You can also contact the San Francisco Office of Labor Standards Enforcement (OLSE) by phone at (415) 554-6461, or by email at frero@sfgov.org.

Covered Employers

The ordinance is aimed at “formula retailers,” which are, in general, large chain businesses meeting a specific definition.

A covered “employer” under the ordinance is one that owns or operates a “formula retail establishment” with 20 or more employees in San Francisco (the city). It does not apply to nonprofit corporations.2

To determine whether your business is covered, you must first determine if it is a formula retail establishment.

To be a formula retail establishment, your business must be located in San Francisco, fall under the city's planning code definition of “formula retail use,” and have at least 40 establishments worldwide.

“Formula retail use” can cover many types of businesses, including, but not limited to, restaurants, take-out food, movie theatres, retail and financial services. To be covered, the business must have at least two of the following features:

• A standardized array of merchandise.
• A standardized façade.
• A standardized décor and color scheme.
• Uniform apparel.
• Standardized signage.
• A trademark or service mark.3

You can find out more about the definition of formula retail use on the San Francisco Planning website.

To be a formula retail establishment, your business must also have 40 establishments worldwide.

If your business is a formula retail establishment, it will be covered under the ordinance if it has 20 or more employees in San Francisco. To determine whether you have 20 employees in the city, you must count all covered employees (see “Covered Employees” below). You must count your covered employees working in other formula retail establishments in the city that are operated by you under the same trade name.4

If your business size drops below 20 employees for any week during a calendar year, your business size will be the average number of employees per week during the previous calendar year.5

Covered Employees

An “employee" under the ordinance has the same meaning as under the city's minimum wage ordinance, i.e., one who performs at least two hours of work within the geographic boundaries of the city in a particular week, and is entitled to payment of the minimum wage under state law. A covered employee under the ordinance also includes a person who is scheduled for an “on-call shift” within the city's geographic boundaries for at least two hours in a particular week, regardless of whether the person is called in to work.6

An “on-call shift” is a shift where, less than 24 hours before the start of the shift, the employee must either contact the employer or wait to be contacted by the employer.

Executive, administrative and professional employees who are exempt from the state's overtime and minimum wage requirements are not covered employees.7

Requirements

The ordinance contains requirements relating to scheduling of employees, equal treatment for part-time employees, offering additional work to part-time employees and retention of employees in the event the business is sold.

Scheduling and Predictability Pay

Prior to the start of employment, you must provide new employees with a written good faith estimate of their expected work schedule. You are not bound by the initial estimate of minimum hours. You may include the initial estimate of hours in the Wage Theft Prevention Notice you are required to provide under state law.8

You must provide at least two weeks' (14 days) notice of employee work schedules, including on-call shifts. You may post the schedule at the workplace or transmit the schedule electronically as long as you also provide employees with access to the electronic schedule at the workplace.9

If you change an employee's schedule on short notice — such as moving the shift to another day or time, canceling a shift, or requiring the employee to come in for a scheduled shift — you will be required to pay “predictability pay” in addition to paying the employee for the hours they work. Predictability pay does not apply to situations where the employee requests the change in schedule.

Predictability pay may be from one to four hours of pay at the employee's regular rate of pay, depending on how much notice you provide the employee:10

For on-call shifts where the employee is not called into work, the employer must pay the employee:11

Exceptions to the predictability pay requirements exist where:

• Operations cannot begin or continue due to threats to employees or property, or where civil authorities recommend that work not begin or continue.
• Operations cannot begin or continue due to failure of public utilities.
• Operations cannot begin or continue due to an act of God (e.g., earthquake, flood, storms).
• Another employee previously scheduled to work provides less than seven days' notice that they are unable to work their shift because of illness, vacation, or employer-provided paid or unpaid time off.
• Another employee previously scheduled to work has not reported to work on time and/or is fired, told to stay or sent home as a disciplinary action.
• The employer requires the employee to work overtime.
• The employee trades shifts with another employee or requests the change.12

State law may additionally require reporting time pay when employees are required to report to work and are not provided the scheduled or usual day's work, or when employees are required to report to work multiple times in a day.

Equal Treatment of Part-Time Employees

You must treat part-time employees (working fewer than 35 hours per week) the same as full-time employees with respect to:

• Starting hourly wages (unless differences are based on reasons other than the part-time status of the employee).
• Access to employer-provided paid or unpaid leave (may be prorated).
• The city has stated that “employer-provided paid or unpaid time off” does not include time off that is required by state or federal law.
• Promotional opportunities.

Offering Additional Work to Part-Time Employees

You must offer additional work to part-time employees before hiring new employees or using contractors or temporary services or staffing agencies, if the part-time employee is qualified to do the work and the work is similar to the work the employee has performed at the business. You are only required to offer the number of hours to give the employee 35 hours of work in a week. You may divide the additional work hours among part-time employees.

You must notify employees of the offer of additional hours in writing or by posting a notice in a conspicuous location in the workplace. You must provide part-time employees with three days (72 hours) to accept any additional hours. Employees must accept the hours in writing.13

Responsibilities When the Business Is Sold

If a covered formula retail establishment experiences a “change in control,” e.g., a sale, the successor employer must retain “eligible employees” for a minimum of 90 days. “Eligible employees” are those who have worked at the formula retail establishment for at least 90 days prior to the date the purchase agreement is fully executed. Managerial, supervisory or confidential employees are not eligible employees. Offers of employment must be made in writing. If an eligible employee declines the offer, the retention obligations are satisfied.14

The incumbent employer must post a notice of the “change in control” within 24 hours of when the purchase agreement is fully executed, and the notice must remain posted for 30 days. Following the change of control, the successor employer must provide eligible employees with a city “notice of rights” with the first paycheck. See “Posting and Recordkeeping Requirements” below.

Application to Janitorial and Security Contracts

If you are a covered employer and you contract for janitorial or security services at a formula retail establishment, the contractor must comply with the requirements of offering additional work to part-time employees, equal treatment of part-time employees, and scheduling and predictability. You are required to include a provision in your contract requiring the contractors' compliance with the ordinance and a copy of the ordinance. You must retain copies of the contracts for three years.15

Waiver in Collective Bargaining Agreement

The requirements of the ordinance may be waived in a bona fide collective bargaining agreement.16

Posting and Recordkeeping Requirements

The ordinance requires covered employers to post a required “Formula Retail Employee Rights Notice” at any workplace or jobsite where any covered employees work. Employers are required to post the notice in English, Spanish, Chinese, Tagalog and any other language spoken by at least 5 percent of the employees at the worksite. The notice is mailed to employers annually with the city's business registration mailing, and it may be downloaded from the city's website.17

The ordinance requires employers to keep the following records for three years:

• Work schedules and employment and payroll records relating to current and former employees.
• Copies of written offers to current and former part-time employees for additional work hours.
• Copies of contracts with security and janitorial contractors.
• For successor employers after a change of control, they must keep a copy of the retention list of eligible employees and all offers of employment to eligible employees following a change of control.18

Enforcement

The OLSE enforces the ordinance. If the OLSE determined that the employer violated the requirements relating to offering additional hours to part-time employees or retaining eligible employees following a change in control, it may order you to offer additional hours of work to these employees, reinstate these employees, pay any lost wages and pay an additional sum as an administrative penalty that does not exceed the amount of the award for lost wages. The employer, or successor employer, may also be required to pay the city an amount that does not exceed enforcement costs. The OLSE may also impose fines of up to $500 per eligible employee for violations of:

• Posting requirements or requirements relating to creating a retention list;
• Posting a notice of change in control;
• Providing notice of rights with the first paycheck following a change of control;
• Failing to make the offer of additional hours to part-time employees in writing; or
• Failing to make records available to the OLSE.19

If the OLSE determines that the employer violated the advance notice of work schedules or predictability pay requirements, it may order lost wages, as well as an additional administrative penalty in the amount of $50 to each employee or person whose rights were violated for each day of the violation. The OLSE may also require the employer to pay its enforcement costs.20

The city attorney may also bring a civil lawsuit for violation of the ordinance.21

Retaliation

Employees who assert their rights under the ordinance are protected against retaliation.22

If an employer takes adverse action against an employee within 90 days after the employee asserted rights relating to offering additional work to part-time employees or employee rights following a change of control, it will be presumed this action was retaliatory. The employer will have to offer evidence to rebut this presumption.23

1. San Francisco Labor and Employment Code (L.E.C.) articles 41 and 42

2. San Francisco L.E.C. secs. 41.2, 42.3

3. Formula Retail Employee Rights Ordinance Frequently Asked Questions (FAQs), August 5, 2015, FAQ No. III (1)

4. San Francisco L.E.C. secs. 41.2, 42.3; Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. III (4)

5. Final Rules Implementing the Formula Retail Employee Rights Ordinance, January 29, 2016, Rule 1

6. San Francisco L.E.C. secs. 41.2, 42.3

7. Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. IV (1-2)

8. San Francisco L.E.C. sec. 42.4(a); Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. VII(a)

9. San Francisco L.E.C. sec. 42.4(b); Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. VII(b)

10. San Francisco L.E.C. sec. 42.4(c); Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. VII(d)

11. San Francisco L.E.C. sec. 42.4(d); Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. VII(d)

12. San Francisco L.E.C. sec. 42.4(e); Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. VII(d)

13. San Francisco L.E.C. sec. 41.3; Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. V

14. San Francisco L.E.C. sec. 41.4; Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. VI

15. San Francisco L.E.C. secs. 41.3(e), 42.4(g). 42.5(d); Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. XII

16. San Francisco L.E.C. secs. 41.19, 42.18

17. San Francisco L.E.C. secs. 41.7, 42.6; Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. IX

18. San Francisco L.E.C. secs. 41.8, 42.7; Formula Retail Employee Rights Ordinance FAQs, August 5, 2015, FAQ No. X

19. San Francisco L.E.C. secs. 41.10, 41.11

20. San Francisco L.E.C. sec. 42.10

21. San Francisco L.E.C. secs. 41.12, 42.11

22. San Francisco L.E.C. secs. 41.9, 42.9

23. San Francisco L.E.C. sec. 41.9