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Testimony to:

Senate Standing Committee on Commerce, Economic Development, and Small Business, Senator Phil Boyle, Chair
And
Senate Administrative Regulations Review Commission, Senator Chris Jacobs, Chair

NYS Department of Labor Proposed Rule Making-Employee Scheduling (Call-In Pay)

Presented by
Frank Kerbein
Director, Center for Human Resources

January 4, 2018

As the state’s largest statewide employer advocacy organization, we represent more than 2,300 employers – large and small – across the entire state. These businesses employ in excess of one million New Yorkers. The Business Council often addresses issues impacting the state’s economic competitiveness, including business costs driven by state policy actions. We are here today to convey our concerns regarding any expansion of Department of Labor rules that would impose new mandates or restrictions on employer’s scheduling practices.

Today you will hear testimony from advocates for industries that will be hardest hit by the Department of Labor’s proposed regulations, including but not limited to car washes, landscapers, marinas, healthcare providers, manufacturers, and transportation companies. These regulations will impose new financial penalties and administrative burdens on employers already struggling to deal with New York’s highly-taxed, highly-regulated business environment.

The Business Council holds a unique position in that we represent both the largest employers in the state and some of the smallest. In my position with The Business Council, I provide human resource consulting services to many of our small business members, who have no, or limited, in-house HR expertise. As such, I – to a degree – serve as their HR department. I hear in their voice the frustration and struggle of doing business in New York State. Many view these proposed rules as a “piling on” by the Department of Labor – another hurdle putting the survival of their business in jeopardy.

And this is no small thing. According to a report by Comptroller DiNapoli, of the 455,000 businesses in New York, 451,000 are considered “small businesses,” and three quarters of all businesses in the state have fewer than 20 employees.

Now I’m sure the Department believes that their proposed rule includes provisions that would allow employers to avoid  the financial penalties associated with scheduling changes. Specifically, part C, paragraph 3 where there is a discussion of “regularly scheduled employee” who “volunteers to cover” for missing or cancelled shifts – referring to those employees that receive 14 days advance notice of schedule and who is provided a good faith estimate of hours provided at the time of hire. But these provisions are simply inadequate to address the real world scheduling factors faced by many employers.

To some degree, large employers will be able to mitigate some of the worse aspects of these proposed regulations by using “big data,” algorithms, scheduling apps, and other technologies applicable to manage employee scheduling. But these tools are not practical for those 451,000 business referenced by the Comptroller. In their case, business owners will wake up (if they’ve slept at all) and find rain, snow, equipment not delivered on time, new unexpected orders arriving, orders cancelled, or key employees calling in sick – or taking unscheduled intermittent leave under New York’s new paid family leave act. These are the businesses – these are the business owners - who will struggle to stay open, and are the business owners who, when business is slowed due to any of those factors beyond their control, would incur additional operating costs at a time of reduced revenue.

Speaking of paid family leave, these small employers are already dealing with implementation of the most administratively burdensome law affecting employee scheduling in the history of New York State. In fact, it just went into effect on Monday - hence the feeling of “piling on.”

Under the state’s new PFL law, all employers, including our small businesses, are looking at up to 40 days of unscheduled intermittent leave for each full time employee in 2018. Employers were told repeatedly that there would be no cost to them for paid family leave. These new proposed regulations betray that promise. Under these rules, there will be financial penalties to employers as they look to fill in shifts for those employees who use paid family leave benefits.

While we appreciate that employees in some sectors have raised concerns about scheduling practices, this proposed rule applies to all employees in all sectors covered by the Wage Order, and may run contrary to the interest of many employees. According to a Gallup poll, one in six employees’ works in non-salaried jobs where hours vary from week to week. Most said they preferred the variable schedule and more than two-thirds said it did not impose a financial hardship. The world of work is changing. According to a survey by Bentley University, 77 percent of Millennials, the largest generation in a hundred years - and 30 percent of today’s workforce - value and desire flexible working hours. This forward thinking approach to work and scheduling is not conducive to posting schedules 14 days in advance – or to applying financial penalties to employers who accommodate these employee-driven changes.

In fact, most of the positions we’re talking about here today are low-wage, lower-skilled labor. Continuous use of Department of Labor wage orders to increase the cost and administrative burden of employing these categories of workers – jobs that make up the bulk of any recent state job growth numbers – will inevitably lead to the increased use of automation and a reduction in the number of those jobs.

A similar law was passed by the City Council of New York and signed by Mayor DeBlasio that took effect this past fall. That law focused exclusively on large retail and fast food employers, as does the recently enacted state-wide Oregon law which applies to retail, hospitality and food service providers with 500 or more employees worldwide. I would argue that those industries have substantial systemic differences to the 451,000 small businesses most affected by these proposed regulations.

[By the way…just last week the City Council of New York passed, and the Mayor is expected to sign, a bill that would allow employees to make two work schedule changes per year. Would the Executive consider this as a next step?]

In Senate Majority Leader Flanagan’s recent statement on the State of the State, he emphasized three main components – one of which was “Opportunity.” The Leader wants to focus on removing “unnecessary obstacles to growth and success.” To “stop the exodus of businesses that once provided New Yorkers with jobs, economic security and the hope for a better future.” To make New York an, “advocate for businesses, not an adversary.” And that “too many small businesses are buried under a mountain of red tape and regulations that make it difficult to create new job opportunities and hire additional workers.” The Leader says that needs to change. We agree. Let’s start by halting implementation of these proposed regulations and, if so desired, pursue a legislative solution.

As a final note, I urge Senate ARRC to review and comment on the applicability of Chapter 455, laws of 2017, on this DOL proposal and other rules proposed after October 1. That bill, sponsored by Senator Jacobs, was approved by the legislature in June, but not signed by the Governor until December 13th. It requires a 60-day, rather than 45-day, public comment period on proposed rules, takes effect October 1, 2017, and applies to “all notices of proposed rulemaking published in the state register . . . on or after such date.”  We have asked the Department whether they are extending the comment period for this rulemaking, but have heard nothing back.

We also urge Senate ARRC to consider revisions to statutory provisions regarding so-called “wage orders.” While the Legislature has adopted no specific directive to regulate employee scheduling, the DOL is using the Labor Law’s minimum wage board provisions as the legal basis for this expansive new rule. State Labor Law §655 provides overly broad and vague authority for DOL rulemaking relative to the state’s minimum wage. For example, it directs minimum wage boards to recommend any regulations it deems appropriate to carry out the state’s minimum wage law, including but not limited to “waiting time and call-in pay rates” – it contains no specific mandate for DOL to regulate employee scheduling. Moreover, Labor Law §659 – cited by DOL in the November 22, 2017 State Register as the statutory basis for this rule, allows the DOL Commissioner to modify any wage order in any way he [or she] “deems appropriate” after the formal wage board process has concluded, with no additional findings or recommendations. Major policy actions such as this rule should have a specific statutory basis, developed through the legislative process, with input from all stakeholders.

Thanks you for the opportunity to speak with you today. I welcome any questions you may have.