What Predictability Pay Means for Employee Scheduling

June 23, 2021 | 448 views

What Predictability Pay Means for Employee Scheduling
What Predictability Pay Means for Employee Scheduling

Wage and labor laws constantly change—usually for the benefit of hourly workers. The latest pay advantage for workers is predictability pay. It is a legal mandate designed to penalize employers whose scheduling is not as predicted, making it difficult for employees to plan their shifts. Starting this month, predictability pay requirements will be enforced in the city of Philadelphia, and it is likely to spread to cities soon.

The penalty is imposed on those organizations that are most likely to use large numbers of hourly workers:  retail, franchises, hotels, and service establishments. The penalties vary by locale, but the financial impact on business could be substantial. As part of the fair workweek movement, predictive scheduling seeks to reduce the negative impact on employees when an employer changes a schedule within 10-14 days of the expected work date.

The predictive pay requirement is a penalty to employers who initiate scheduling changes after employees have accepted the original schedule. Since wages represent the highest expense for most businesses, reducing penalties by scheduling employees well is critically important. So let’s look at the situations that would cause predictability pay penalties and how to avoid them.

  1. Not providing a schedule with enough lead time. Whether it’s a 10-day or 14-day requirement, once a schedule is posted, changes will have penalties. A schedule is a prediction, after all, of your anticipated staffing needs. So first, schedules must be posted on time. Of course, the more accurate the better to avoid penalties. Good management means knowing when you are more likely to need staffing. Based on revenue, busy seasons, and customer patterns, schedules can be more predictive and have fewer changes. Still, get ‘em posted on time.
  2. Reducing hours. Things change, and every day is different. If you have a retail business experiencing a slower shift than expected, you often let an employee go home early. But if you must pay a half-hour penalty, it might be better to put them to work on side projects rather than to pay a wage that produces nothing for your business.
  3. Increasing hours. Increasing hours will be more painful in a retail business where wages contribute to margin loss. No one wants to pay last-minute overtime nor extra penalty hours. To reduce these occurrences, it is better to schedule more hours than expected and reduce them if needed than the other way around. If you must. Having enough employees helps, too. Even if you have to call someone in, you can avoid overtime payments to another employee. Finding that balance is the challenge.
  4. Changing the work location. Contractors and mobile businesses operate at multiple locations. Sometimes, change is unavoidable, but it will cost an extra hour of pay for the day for each employee. Project management is no easy task—perhaps it is better to delay progress and stay predictable rather than shift work locations at the last minute. It will impact customers, but it will be kinder to your wallet.
  5. Cancelling a whole shift. If an employee unpredictably loses a regular shift (on-call shifts included), the penalty is at least half of the originally scheduled shift. Every hour not worked gets paid at half-rate or more. It would be better to schedule fewer hours for these employees and then add more hours at the last minute (for a smaller penalty) than to pay for half of a whole shift that provides no economic value to your business.
  6. Poor Contracts. You won’t pay legal penalties for poor contracts. However, if  you schedule staff based on customer contracts, then build in penalties for last-minute changes that impact staffing needs. If you pass through the cost of penalties, customers will learn to plan better, and you will not pay for planning errors. And that adds predictability to your employee scheduling.

Perfect scheduling scenarios would result in no penalties. That will be nearly impossible for most organizations. However, by collecting good data to govern your scheduling predictions and strategically strategizing to reduce penalties, you will adapt to fair workweek legislation and avoid unnecessary predictability pay penalties.

Author Profile Jon Forknell is the Vice President and General Manager of Atlas Business Solutions, Inc., a software marketing company specializing in employee scheduling software, including ScheduleBase employee scheduling software, and other business software solutions. In the past, Jon has been recognized by the U.S. Small Business Administration as a SBA Young Entrepreneur of the Year. For many years, Atlas Business Solutions has been named one of Software Magazine’s Top 500 Software Companies.

This entry was posted in Small Business Tips and tagged , . Bookmark the permalink.

Comments are closed.