Seyfarth Synopsis: The City of Chicago recently published a few guidance updates to the Chicago Fair Workweek Ordinance: (1) The City published its new annual Notice – effective July 1, 2023 – increasing the earnings threshold that defines a “covered” employee; and (2)issued new guidance regarding predictability pay exceptions for “mutual” schedule changes.
Refresher On The Basics Of The Fair Workweek Ordinance:
- Covered Employers (“Employers”) include employers engaged in any of the covered seven industries in Chicago with 100 or more employees (private employers) and 250 employees (non-profit employers). (Additional industry-specific requirements also apply).
- Covered Employees (“Employees”) are those performing the majority of their work in Chicago as employees, who earn more than the Ordinance’s minimum hourly and salary rates.
- Upon hire, Employers must give Employees an initial good faith estimate of their work schedule, in writing, for the first 90 days of employment.
- Employers must provide Employees with work schedules at least 14 days in advance.
- If an Employer changes an Employee’s schedule after the 14-day window, it must provide “predictability pay,” subject to certain exceptions. One of those exceptions is a “Work Schedule change that is mutually agreed to by the Covered Employee and Employer and is confirmed in writing.”
The Ordinance also has requirements relating to offering work to existing employees before hiring externally, and providing employees with a “right to rest” between shifts.
Update On Covered Earnings Threshold Increase For Covered Employees:
The Ordinance initially provided a wage threshold for Covered Employees of $26 per hour or $50,000 annually, but noted that it would increase annually “in proportion to an increase in the CPI.” Accordingly, as of July 1, 2023, the wage threshold for a Covered Employee has now increased to $30.80 per hour or $59,161.50 per year for salaried employees. The updated amounts are reflected on the City’s new Fair Workweek Notice. This is an important note for covered Chicago employers, who should review their employee rosters to ensure that they are including any employees who may now be considered a “Covered Employee” by virtue of this wage increase.
New FAQ Guidance Issued By The City:
The City also recently published a new FAQ (“FWW Mutual Agreements Clarification FAQ”), separate from their previously-published Frequently Asked Questions. In the new FAQ (which is not dated), the City stated its intent to provide clarification on “issues related to consent and mutual agreements[.]”
The City makes clear that an “Employee initiated change” does not merit predictability pay. This is consistent with the Ordinance’s exception for situations in which a “Covered Employee requests a shift change, that is confirmed in writing.”
Regarding “Employer initiated changes,” the City states that a “mutual agreement must be executed pursuant to an informed consent process whereby the Covered Employee knows that they have a right to decline and knows that they could have been paid predictability pay.” It provides an example – in which a manager, in response to employees calling off, walks around and asks employees “can anyone stay late?” – and concludes that this is an “employer-initiated change,” even if employees agree to stay late. Per the City, this scenario would not be considered a mutual schedule change, despite the employee’s agreement.
This interpretation of a mutual agreement suggests an additional compliance layer, of obtaining “informed consent,” if an employer is to apply this exception to predictability pay. This is critical for employers who rely on this exception to take note of, including how the City intends to interpret the terms of the Ordinance, as an employee’s assent (confirmed in writing) may not be deemed sufficient if the schedule change was initiated by an employer. This also raises questions about the practical distinctions between the predictability pay exceptions for an employee-requested change and a “mutual” schedule change.
As always, please feel free to reach out to us or to your favorite Seyfarth attorney if you would like to discuss the changes of this Ordinance and any questions you might have.