Retailers end on-call scheduling, giving workers more stability

This Labor Day weekend marks a year in which reforms on behalf of the country’s low- and middle-income workers have come at a steady clip. Some, like minimum pay raises, were largely the doing of individual companies; others, including updated overtime pay rules, came from government regulators.

This one is a little bit of both. Late last month, Gap, Inc. announced that it will phase out on-call scheduling, which requires hourly workers to call in for shifts they may or may not be paid for (sometimes with as little as 30 minutes advance notice), by the end of September.

The company, which also owns the Banana Republic and Old Navy brands, is just the latest major retailer to end the practice. In April, New York attorney general Eric Schneiderman requested scheduling information from 13 retail companies, under suspicion that the chains’ policies violated New York’s state labor laws. Since then, Abercrombie & Fitch and Victoria’s Secret have announced that they would end on-call scheduling; Starbucks phased out the practice last year. 

So far, the change is limited to just a few big companies, but the combination of local government actions and market forces (like tighter competition for workers) could make for the beginning of an industry-wide shift.

Also nicknamed "just-in time" scheduling, on-call shifts have long been common in service industries like retail and food service as a way to reduce unnecessary labor costs. In recent years, the rise of sophisticated scheduling software and real-time sales data has made it possible for companies to pinpoint exactly how many people they need working at a moment’s notice. 

For retailers in particular, that agility has become more and more crucial as customer habits have changed, according to Susan Scafidi, a law professor and the founder of Fordham’s Fashion Law Institute in New York, NY. “More people are shopping online, and they don’t have to be in the store the same way,” she says. That makes staffing needs much harder to anticipate. “Stores can no longer rely on past projections like, ‘we’re a florist and Valentine’s Day is coming,’” she notes. 

But it has come at the cost of employees, and labor advocates argue that this feeds into a variety of longer-term problems. Parents who work erratic schedules are more likely to have children with cognitive and behavioral issues, according to an August study from the Economic Policy Institute, a left-leaning Washington think tank.

It also can be a hindrance to upward mobility, critics say, because employees can’t organize their lives adequately to coordinate childcare, get through school, or save extra money by taking a second job; it also prevents some workers from getting all of the hours they want.  “’Just-in-time employment’ may make business models more efficient, but it may also create uncertainty that undermines the best laid plans of low-income Americans,” Brookings fellow Richard V. Reeves wrote in 2014.

Beyond New York, efforts are underway across the US to address those problems. In July, a set of laws went into effect in San Francisco requiring large retailers to give workers at least two weeks’ notice of their schedules. The provisions also require that the chains give existing workers more hours when they want them, in lieu of hiring more people. Labor groups are working on bills in New York, Minnesota, and Washington, D.C.

As the issue has gained attention, some retailers also have taken it up as the next step in burnishing more worker-friendly reputations. In April, Wal-Mart launched a pilot program allowing associates to look at a store’s scheduling slots and choose their own hours. According to a company blog post, the aim is to allow workers who need more consistent schedules to “work the same hours on the same days based on business needs.”

As with any labor reform, there is some worry that retailers could compensate for the higher cost in ways that are ultimately harmful to workers, like reducing pay or cutting back hiring. But Ms. Scafidi argues that especially in service-based industries, the shift could come with long-term financial benefits. In addition to avoiding costly employee turnover, working toward happier employees can lead to better customer service and, in many cases, better sales. “If employees are distracted that they’re missing classes or worried about who’s picking up their kids, they’re not paying attention to the customer,” she says.

Furthermore, she suggests that in finding a way to move away from on-call scheduling, employers look to what enabled it in the first place – by looking at micro data and pinpointing staffing needs over the course of a month or year, rather than hour by hour. “This is a problem created by technology, and I think it’s a problem that can be solved by it.”