Anything that shifts risk away from a small business appeals to the business owner, and three employment practices seem to do just that:
- on-call employment,
- flexible shift changes and
- part-time employment.
But these practices shift economic risk toward employees who are also consumers, so are these moves a good idea or not?
Tomatoes and sweet corn are rolling in, so the mind turns naturally to agriculture. An employer who relies heavily on these staffing approaches is like the farmer who produces a bumper crop by relying heavily on pesticides and herbicides. In employment law as in environmental law, there are limits on what may be done, but even operating within the limits of the law may be too much in the long term. The farmer may risk poisoning the environment, the ultimate source of wealth. The small business person may risk poisoning the market.
Shifting economic risk toward employees through on-call employment, short notice changes in work hours and part-time staffing, unless used sparingly, is bad long term policy for business and workers.
The Fair Labor Standards Act Sets a Baseline
The minimum requirements for wages and hours are set by the FLSA. Many salaried and administrative employees (termed “exempt) are not covered by these protections. However, for non-exempt employees, the general rule is that if the employee is required to be at the employer’s location, he or she is entitled to at least minimum wage for those hours, even if no work gets done because of an equipment failure, for example.
Things become more complicated when the employee is not required to be on location, but is asked to stand by, or to be on-call. Then what matters is how restricted the employee’s free time is. If all the employee has to do is keep her phone on, she probably needn’t be paid. If the employee cannot go further than the coffee shop adjacent to the employer’s place of business, then she might be entitled to wages. If she can go anywhere or do anything, but actually ends up spending a lot of time on the phone answering her employer’s work questions, she should be paid.
States and localities may set higher standards. The California Division of Labor Standards Enforcement, for example, looks at
- geographical restrictions on the employees’ movements,
- required response time,
- the nature of the employment, and
- the extent the employer’s policy impacts personal activities during on call time.
States also have rules that apply to particular professions. In New York, nurses must be compensated for pre-scheduled on-call time.
The FLSA, however, does not specifically address the practice of giving employees short notice shift changes or part-time employment.
Schedules that Work Act
Sudden shift changes or cancellations cause huge headaches for workers in retail, restaurant and janitorial jobs who may juggle child care, school, commuting and other responsibilities and jobs. Recognizing the burden this practice places on low wage workers, Representatives George Miller and Rosa L DeLauro have introduced the Schedules that Work Act.
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The Act would give workers the right to request predictable schedules, a minimum number of hours of pay per shift, pay for waiting time during split shifts, and advance notice of the number of hours per week. It’s a matter of predictability, and realistically, it has no chance of passing in Congress.
Vermont and San Francisco, however, have passed similar measures, and New York City may consider one soon. Two million federal workers are covered by the provisions of an Executive Order giving them the “right to request.” As with the minimum wage, states, cities and individual employers have moved to protect vulnerable workers.
Part-Time Work is the Elephant in the Room
The Wall Street Journal reports that small businesses added 15,000 jobs in July, bringing the number of new jobs added over the last six months to more than 90,000. However, pay and hours declined slightly. In fact, the average number of hours worked in July was less than 25. These are part-time jobs.
People who want to work full time, but can only get part-time jobs or who string together several part-time jobs are probably not doing well financially. No one would argue that it makes sense for businesses to staff beyond their needs, but the practice of hiring more part-time or temporary workers when existing workers want more hours raises serious questions.
Is the short term goal of avoiding benefit payments worth the long term harm to consumers’ ability to participate in the economy? This is not just an issue for Wal-Mart or fast food workers. It cuts across the economic spectrum; it just does more harm at the lower wage end.
Entrepreneurs are not new to the business of balancing long term and short term risk and reward. The long term risk to the economy of on-call employment, short notice shift changes and the widespread use of part-timers may outweigh the short term reward of business flexibility.