By Dana Peterson

Many know SFO as the code for the San Francisco airport. But to businesses employing workers in the City by the Bay, SFO has come to mean “San Francisco Ordinance.”

In this first of a three-part series on recent action by San Francisco’s labor friendly Board of Supervisors, we review two ordinances (here and here) that together have come to be known as the “Retail Workers’ Bill of Rights.”

Last August, we blogged about the initially proposed version of this legislation. The final version, as amended, was passed on November 25, 2014. Though some troubling provisions (such as giving employees and applicants the right to sue employers for violations) were removed prior to passage, the ordinances still impose burdensome new requirements on Formula Retail Employers.

But wait: I own some martial arts studios. So surely this new law doesn’t apply to me, right? 

Well, we hate to be the bearer of bad news, but yes, it absolutely could affect your business.

The ordinances cover employers with 20 or more employees in San Francisco who operate “Formula Retail Establishments.” These are businesses that engage in retail sales or services regulated as “Formula Retail Uses” under the San Francisco Planning Code, with one change: the ordinances apply only to establishments with at least 20 retail sales locations worldwide (the Planning Code definition requires fewer locations).

A “Formula Retail Use” is one that is, basically, standardized in terms of two or more of the following indicators: array of merchandise, façade, décor and color scheme, uniforms, signage, and trademark or service mark.

As outlined in greater detail here, the foregoing definition includes businesses that some may not consider to be “retail,” such as bars, health spas, dry cleaners, massage parlors, movie theatres, banks, credit unions, art studios, pet grooming establishments, and, yes, even martial arts studios. The Planning Code specifically identifies each such entity as a type of businesses considered to be engaging in “Formula Retail Use.”

Yikes, so what do I have to do to comply with these new laws?

We would need more space than we have here to fully explain each new requirement (hence the link to the more fulsome Management Alert). Suffice it here to say that covered employers:

  • will be limited in their ability to hire seasonal or part-time employees (must offer hours to existing part-time employees first),
  • must comply with onerous scheduling requirements (posted two weeks in advance) and (with limited exceptions) will be penalized (have to pay extra wages) for unilaterally changing the schedule without giving the required notice,
  • must give new hires written estimates of the expected minimum number of scheduled shifts per month, and the days and hours of those shifts, and
  • must abide by still further requirements (involving on-call shift pay, equal treatment of part-time and full-time employees, notice and record keeping, and retaining certain existing employees for 90 days upon the sale of the business, to name just a few).

Oh, and certain janitorial and security services contractors or subcontractors of a Formula Retail Establishment (“Property Services Contractors”) also got looped into the requirement that they first offer current part-time employees additional hours, in writing, before hiring new employees or utilizing subcontractors or temporary workers of a services/staffing agency. But we digress.

And I assume there’s some penalty for not complying?

Uh-huh, you really expected something else? The San Francisco Office of Labor Standards Enforcement (“OLSE”) will enforce the ordinances. If the OLSE finds a violation, it can order compliance, impose administrative fines of varying amounts, and require employers to pay lost wages and reimburse the City’s enforcement costs.

In addition, the San Francisco City Attorney may sue an employer to recover lost wages and civil penalties, and obtain reinstatement or other appropriate relief.  And if the City prevails, the ordinances entitle the City to its reasonable attorneys’ fees and costs.

How long do I have to digest the SFOs in order to get into compliance?

The Retail Workers’ Bill of Rights becomes operative 180 days after the January 4, 2015 effective date. Yes, that is just in time for the Fourth of July! But before you decide to commemorate that event by organizing your own reenactment of the Boston Tea Party in the San Francisco Bay, know that various employer groups are evaluating possible challenges to the validity of the new law, including potential constitutional challenges. So continue to monitor this space for further developments.