DavidsTea faces simmering challenge over labour practices in the United States

MONTREAL – Canadian beverage chain DavidsTea is facing a simmering challenge in the United States over alleged use of “on-call” shifts to control labour costs.

Attorneys general in New York and eight other jurisdictions have sent letters to 15 retailers, including Montreal-based DavidsTea (Nasdaq:DTEA), seeking information about their alleged use of a scheduling practice that requires employees to call before a shift to find out if they are required to work.

The letter asks DavidsTea to confirm whether it uses the controversial scheduling practice and submit information and documents by April 25.

“Such unpredictable work schedules take a toll on employees,” said the letter dated this past Tuesday.

New York Attorney General Eric Schneiderman said that on-call shifts are unfair because unpredictable work schedules make it difficult for employees to arrange reliable childcare or other pursuits while adding to stress and strain on family life.

DavidsTea didn’t respond to several requests for comment.

During a conference call Tuesday to discuss its quarterly results, company executives acknowledged they were working to offset wage pressures in Canada and the U.S. — particularly in California and New York — from market forces and legislative changes.

“We’re obviously looking to continue to have scheduling effectiveness and to improve and refine our staffing model but we’re not able to completely offset it,” chief financial officer Luis Borgen told analysts.

DavidsTea was reminded by officials that some U.S. states have call-in pay laws. New York state, for example, requires employers to pay at least four hours or the number of hours in the regularly scheduled shift if it is less, at the minimum hourly wage.

“The results of this inquiry to date strongly indicate on-call shifts are not a business necessity, given that operations can be, and successfully have been, structured to address unexpected absences and unanticipated fluctuations in business volume in other ways,” added the six-page letter.

Letters were also sent to American Eagle, Aeropostale, Payless, Disney, Coach, PacSun, Forever 21, Vans, Justice Just for Girls, BCBG Max Azria, Tilly’s, Zumiez, Uniqlo, and Carter’s, many of which have operations in Canada.

On Thursday, Payless, Coach, Forever 21 and Vans said they don’t allow on-call scheduling. Carter’s said it was reviewing the letter and had no further comment.

Following a similar effort last year, several companies, including Abercrombie & Fitch, Gap, J.Crew, Urban Outfitters, Pier 1 Imports and the parent company of Bath & Body Works and Victoria’s Secret ended the use of on-call shifts.

In Canada, there is not a lot of data about the prevalance of on-call scheduling, said Elizabeth Kwan, senior researcher at the Canadian Labour Congress. She said it falls under the so-called “fairness issue” that’s being examined by provincial governments.

The Ontario government is reviewing its labour relations and employment standards laws and is considering challenges facing workers who struggle to string together several part-time jobs to earn a living.

“People are working more and more precariously and even if it’s not on-call shifts … there are many people working in Canada that get called with very, very short notice,” Kwan said.

Unifor said it is not aware of on-call provisions in unionized workforces and believes they are uncommon overall in Canada.

The private sector union said it tries to tackle scheduling issues in each of the collective agreements it negotiates and has worked to require employers to give retail workers more notice on shifts.

“It’s quite a step forward so people can plan their lives,” said Keith Osborne, the union’s director of retail and warehouse.

Note to readers: This is a corrected story. A previous version had incorrect spellings for Uniqlo and BCBG Max Azria.