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Staff scheduling software probed in national dispute

Critics admit software isn't the culprit, but say it enables abuse of on-call scheduling of low-wage workers and limits access to health insurance.

Software vendors are facing scrutiny amid a national dispute over on-call staffing of millions of mostly lower-wage retail and restaurant employees.

Staff scheduling software -- offered by companies such as ADP, Kronos, Oracle and SAP -- allows employers to limit labor costs by quickly adjusting work schedules to respond to shifts in consumer demand, according to an April report by the U.S. Government Accountability Office (GAO).

But some U.S. Congress members and city and state officials say the practice may violate laws requiring a minimum of hours per shift, ignore workers' personal scheduling needs and cause inconsistent pay.

They also say some large retailers as well as restaurant chains and hotels are using staff scheduling software to limit health insurance costs by keeping workers below 30 hours a week. Generally, under the federal health care law, when employees reach 30 hours, employers must offer them health insurance or be assessed a penalty beginning at $2,000 for each employee.

Charlie DeWitt, vice president for business development at Kronos, said on-call shifts are a staffing and policy issue for the retailer, not something the software engine schedules.

A manager might decide to send employees home if business is slow, he said, or seek last-minute help if a worker is sick, or call in a worker with only hours' notice. The software would tell a manager what workers are available but it does not schedule workers right before a shift, he said.

"We have to design for all our customers," DeWitt said. "We have to enable for the capability to track on-call shifts and ensure the people that do get called get paid properly."

DeWitt said he has looked at the databases of retailers and was surprised to find that employees are generally receiving 95 to 99% of the scheduled hours. "This does not seem to be the problem that a lot of people have been talking about."

Still, he called the controversy a healthy debate. "It's caused people to stop and think, hey, what are we doing here? Do we really want to be doing that?"

Politicians are also reacting to the issue. The labor chief for New York's attorney general sent letters warning 13 large retailers, including Burlington Stores, J. Crew, Urban Outfitters and L Brands, parent of Victoria's Secret and Bath & Body Works, that they may be using on-call shifts in a way that breaks state law.

Congress is weighing the "Schedules that Work Act," which would mandate work schedules at least two weeks in advance for retail, restaurant and cleaning employees. Under the bill, cosponsored by Sen. Elizabeth Warren, a Massachusetts Democrat, schedules could later be changed, but an hour's extra pay would be paid if they were changed with less than a day's notice. At least 10 states are considering similar bills.

Millions of temporary and on-call employees in the U.S. have variable and unpredictable work schedules and lack employer-sponsored health care or retirement benefits and rights under the Family Medical Leave Act, even if they have a traditional employer-employee relationship, according to the GAO. They are more likely to be younger, low income, Hispanic, earn less than standard workers and lack a high school diploma.

Software enables on call scheduling

Staff scheduling software isn't the culprit, but it is a tool that sometimes enables on-call scheduling, said Susan Lambert, an associate professor at the University of Chicago and expert on work scheduling practices who supports the Schedules that Work Act or other ways to give workers extra pay for being flexible.

"They are not the drivers of it," Lambert said. "The drivers of it are business models that look at workers as though they are costs to be contained, that you only need their labor when driven by enormous demand."

Lambert said some retailers use staff scheduling software to "micro link" variations in demand to store staffing levels. The software can calculate labor costs as a percent of revenue and then an employer can tell if it is over or under the number.

Workers are on call the night before a possible shift or, increasingly in the retail industry, they must call a few hours before a shift to find out if they are needed, she said.

James McGeady, senior director of product marketing at ADP, said the staff scheduling software can broadcast open shifts so they can be filled more quickly, but the scheduling of individuals, or any conditions to manage that assignment, are up to the user.

"How far in advance supervisors choose to set schedules is at their discretion," he wrote in an emailed response to questions.

Asked how he felt about the national debate over on-call scheduling, McGeady said "an organization's policies and practices around how they use software is their decision."

Stacy Reis, a spokesperson for SAP, declined comment for this story. Oracle spokesperson Diana Wong said by email that she was working on a request for an interview but then did not return follow-up emails.

DeWitt said the Kronos workforce management software begins by first generating a sales forecast for between one and four weeks based on historical sales, foot traffic and other factors at a business.

After that, the scheduling engine kicks in, he said, first scheduling the right number of shifts and the right people for those shifts to match the needed coverage.

Compliance is second in scheduling importance, he said, though compliance rules and regulations are one of the biggest reasons for automated scheduling, he said. Businesses must comply with hundreds of state, local and federal labor laws and sometimes must account for the rules in union contracts.

If the coverage can match sales and meet compliance rules, and if there is any freedom left, the engine will suggest the lowest cost schedule, he said.

Kronos invested a lot of money in its scheduling software after initially acquiring the product in 2000, according to DeWitt. More than 100 companies use the software around the world, he said, declining to identify them or arrange interviews.

One activist who is working with DeWitt, Carrie Gleason, director of the Fair Work Week Initiative at the Center for Popular Democracy in New York, said a key issue is that employers are using staff scheduling software to make sure employees work less than 30 hours a week so they don't qualify for health care under federal law.

Consumers want better and faster service, which means that enterprises need to get faster and operate faster, which requires more flexibility.
Holger Mueller

"That is part of keeping labor costs down. The software is making it easy for them to have a large workforce not covered by the Affordable Care Act," she said, adding that managers are under pressure to boost productivity amid shrinking labor budgets. Understaffing is a common practice.

"It's no longer the manager that calls the worker," she said. "Increasingly, the worker calls two hours before work without a guarantee." Workers who aren't needed don't get work for the day, while forfeiting their ability to work a different job or make other plans, she said.

The software is not to blame for all the practices, but it enables companies to employ a large workforce that is part time and to track it very closely, Gleason said.

Her group is encouraging employers to look beyond what the software is saying about customer flow. A more holistic approach might help avoid constant schedule adjustments that create a lot of instability for workers, she said.

"In spite of the role some of the technologies have played in contributing to some of the  more troubling scheduling patterns, there is a lot of potential in the technologies to deliver efficient schedules that match employers' needs and employee needs," Gleason added.

Jack Mozloom, a spokesperson for the National Federation of Independent Business, said the organization's members strongly oppose the bills, which he said would rob members of the flexibility to run their businesses the way they want.

Holger Mueller, principal analyst at Constellation Research, said just-in-time scheduling is nothing new, citing the use of the practice by airlines for flight crews.

"Consumers want better and faster service, which means that enterprises need to get faster and operate faster, which requires more flexibility," Mueller said.

Kronos plug-in tackles on-call controversy

In response to the national concerns, Kronos unveiled a plug-in to help companies determine how often the hours worked by an employee differ from the initial schedule, whether they are getting adequate hours and how often their schedule changes from week to week.

"This tool allows them to see if they have a problem," said Kronos Vice President Charlie DeWitt. "Then they can drill into it and figure out what to do about it."

"There is a configuration setting in the engine that says, for all employees of the same class -- say full-time or part-time -- the engine will strive to give them the same hours," he said. The plug-in can also determine the variability of an employee's hours and flag large swings.

A self-service option lets employees swap shifts, though the retailer would need to agree and establish policies.

The plug-in includes analytics to track adequate hours, variability, turnover and absenteeism. It can determine if unpredictable schedules are affecting the latter.

University of Chicago professor Susan Lambert said Kronos's plug-in includes metrics that could be a game changer.

"Those are the kind of markers that will allow employers to track their own practices and see how fair they are being and where they might be able to do a better job of managing," Lambert said.

--Dan Ring

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