Flexibility is considered a virtue and an essential component of an agile organization that can respond to changing needs in real-time. However, when that type of flexibility comes at the expense of employees, the company may not only be crossing the line of ethics but of law.
Last month, New York Attorney General Eric Schneiderman directed his office to send a letter (posted by the Wall Street Journal) to 13 major retailers. What Gap Inc., Abercrombie & Fitch, J. Crew Group Inc., L. Brands, Burlington Coat Factory, TJX Companies, Urban Outfitters, Target Corp., Sears Holding Corp., Williams Sonoma Inc., Crocs, Ann Inc., and J.C. Penney Co. Inc were all asked to account for questionable scheduling practices known as “on-call” shifts.
Schneiderman’s move is consistent with his reputation for defending the rights of New York workers. He has said that he's won over $17 million in restitution for nearly 14,000 workers and recovered over $2 million in restitution and penalties for the state in cases against retailers, contractors, and others for cheating employees out of wages or otherwise violating state labor laws.
The law that might be violated by “on-call” shifts, as quoted in the letter, is 12 NYCRR 142-2.3. It stipulates that “[a]n employee who by request or permission of the employer reports for work on any day shall be paid for at least four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the basic minimum hourly wage.”
While retail workers have always been subjected to seasonal and holiday shifts, the advance of technology has made it even more common as retailers use predictive analytics systems to try to optimize shifts that can change weekly or even daily. Last year NBC investigated the issue in, Shift Change: Just-in-Time Scheduling Creates Chaos for Workers. Retailers rely on predictive analytics to come up with the optimal staffing schedule. But what optimizes results for retailers can make life much more unpredictable for workers. Under “on-call” shifts their schedules and pay are always subject to change.
The NBC report referred to the findings of The Retail Action Project (RAP) in 2011. It highlighted the problem of Erratic Scheduling that emerged from its research in partnership with the City University of New York's Murphy Institute and was reported in Discounted Jobs: How Retailers Sell Workers Short.
RAP lists five practices within erratic scheduling, some of which they label as “inconvenient” or “abusive” even if they are not technically illegal because they interfere with a employee’s options for a second job or make childcare arrangements nearly impossible. What is clearly illegal, though, is the violation of mandated pay stipulated in the letter sent to the 13 New York retailers, according to RAP, which said that more than 70 percent of workers surveyed in NYC were not given the four hours or shift time pay required by law for workers who check in for work and are sent home early.
Some of the retailers sent the letter have offered a defense. According to Reuters, Sears, Ann Inc, and JC Penney said they do not use “on-call” shifts. Target conceded that it does modify worker schedules but said it gives them 10 days advanced notice. Gap was less definitive, declaring it maintains “sustainable scheduling practices” and will look into it.
There were also rather vague assurances from TJX, the corporation behind TJ Maxx and Marshalls stores in IBJonline. The company said that “it has always taken into consideration what's best for its staff and the company, and that managers work to develop schedules that serve the needs of both.” All 13 companies were asked to send in an official response to the letter and requested documents.
Do the legal questions mean that retailers should scrap the technology designed to optimize their workers’ schedules? Not necessarily. As Scott Knaul, CEO at SMK Workforce Solutions said in an interview with Retail TouchPoints, the problems of on-call staffing were due to predictions that only worked with daily input. They can be eliminated by “better forecasts and predictors” that enable retailers to “set their schedules more in advance.”
Considering that the data for the negative effects of such systems is based on studies from 2011, it is possible that the technology now in use has already advanced to that point. That would be consistent with what Target said about being able to give its workers 10 days notice. That does solve the problem of legal notice and possibly of arranging childcare, though it may still not allow the worker to take on a second job when hours can change regularly.
While better technology can help with longer-range forecasts, companies also have to take the employees experience into consideration when figuring out the optimal balance for the business. It’s not only a matter of law or ethics but of good business practices to raise morale and productivity. Predictive analytics should not be applied to just being penny-wise but to avoiding being pound-foolish.