Rock, Paper, Scissors: Who Must California Employers Rehire Following A Layoff Related to the COVID-19 Pandemic?

With the loosening of a variety of restrictions imposed by shelter-in-place orders, many employers who were forced to lay off workers during the pandemic are ramping their workforce back up. Prior to the pandemic, California businesses without a collective bargaining agreement were generally unrestricted in their discretion to pick and choose which, if any, employees would be recalled to work following a layoff. During the pandemic, however, many cities adopted “right to recall” ordinances that restricted employer hiring discretion after a layoff. California has now also followed suit by enacting its own legislation that imposes recall rights in certain industries throughout the state. 

Senate Bill (SB) 93 requires covered employers to offer to rehire employees who were laid off due to a reason related to the COVID-19 pandemic, including public health directive, government shutdown order, lack of business, a reduction in force, or other economic, nondisciplinary reason due to the COVID-19 pandemic. The law went into effect on April 16, 2021, and does not expire until December 31, 2024. Below are the key takeaways about who is covered by SB 93 and how the new law works.

Covered Employers

Covered employers generally include hotels, private clubs, event centers, airport hospitality operations, and airport service providers. The law also applies specifically to janitorial, building maintenance, and security services provided to office, retail, and other commercial buildings.

Covered Employees

The law affords recall rights to "laid-off employees" of such businesses. "Laid-off employees" are defined as those (i) who were employed by the employer for 6 months or more in the 12 months preceding January 1, 2020, and (ii) whose most recent separation from active service was due to a reason related to the COVID-19 pandemic.

Recall Rights and Procedure

Within five business days of establishing a position, a covered employer is required to offer its laid-off employees in writing all job positions that become available for which the laid-off employees are qualified. A laid-off employee is “qualified” for a position if the employee held the same or similar position at the enterprise at the time of the employee’s most recent layoff with the employer. Laid-off employees must be offered the position in order of seniority with the employer.

A laid-off employee who is offered a position must be given at least five business days to either accept or decline the offer. Simultaneous, conditional offers of employment may be made to more than one laid-off employee, with the final determination of which laid-off employee gets the position determined, again, by seniority.

In the event that an employer declines to recall a laid-off employee on the grounds of lack of qualifications and instead hires someone other than a laid-off employee, the employer must provide the laid-off employee with written notice within 30 days. The notice must specify the length of service with the employer of those hired in lieu of that recall and all reasons for the decision.

SB 93 also contains anti-retaliation provisions and recordkeeping requirements. 

Impact of Changes in Business Structure and Operations

The obligations to recall laid-off employees survive various types of changes in business structure and operations. In particular, SB 93 applies under any of the following circumstances: (i) the ownership of the employer changed after the separation from employment of a laid-off employee but the enterprise is conducting the same or similar operations as before the COVID-19 state of emergency; (ii) the form of organization of the employer changed after the COVID-19 state of emergency; (iii) substantially all of the assets of the employer were acquired by another entity that conducts the same or similar operations using substantially the same assets; or (iv) the employer relocates the operations at which a laid-off employee was employed before the COVID-19 state of emergency to a different location.

Enforcement and Remedies

Enforcement of SB 93 is within the exclusive jurisdiction of the Division of Labor Standards Enforcement (DLSE). Although there is no private right of action, laid-off employees may file a complaint for a violation of the recall law with the DLSE, and the DLSE may bring a civil action in court. Remedies for violations include reinstatement, back pay, benefits, interest, and injunctive relief. Civil penalties may also be imposed, including $100 for each employee whose rights are violated, and liquidated damages of $500 per employee, for each day an employee’s rights have been violated. 

Local Ordinances

SB 93 does not preempt right-to-recall ordinances adopted by multiple cities throughout California. Thus, in addition to the state law, California employers must also be sure to review and comply with any local right-to-recall ordinances, which may impose greater standards than, or establish additional enforcement provisions to those prescribed by the state law. Some of the cities which have enacted such ordinances include Los Angeles, Long Beach, Monterey, Oakland, Pasadena, San Francisco, Santa Clara, and San Diego. 

What should employers do? 

  • If you are hiring after a layoff, determine whether your business is covered by SB 93 or a local right to recall ordinance: Because SB 93 does not apply to everyone, it is important to determine whether you are a covered employer. If you own or operate an enterprise consisting of a hotel, private club, event center, airport hospitality operation, airport service provider, or a building service provider, review the specific definitions of such businesses to determine if SB 93 applies to you. This is important because not every hotel, for example, falls within the statutory definition. Further, regardless of whether SB 93 applies to you, be sure to determine whether a local ordinance has been adopted and applies to your business.

  • Develop an employee notice and compliance plan: If you are a covered employer, it would be prudent to develop a plan to notify laid-off employees of open positions that hiring managers and human resource personnel can follow that complies with the legal requirements of SB 93. Covered employers must also retain certain records for each laid-off employee for at least three years, so developing a record keeping system that complies with SB 93’s mandates is also important. Also be sure that your notice and compliance plan satisfies any applicable local right-to-recall local ordinances that may have been adopted in your area.
  • Effectively train managers: Effectively train managers about the anti-retaliation provisions in SB 93 and any applicable local ordinance to help reduce the risk of employer liability for violations of the law. For example, SB 93 prohibits a covered employer from terminating or taking an adverse employment action against any laid-off employee for seeking to enforce their rights under SB 93 or opposing any practice proscribed by SB 93.

If you have questions about SB 93, or any other issues relating to employment law, please contact one of our attorneys.

Shareholders Associates
Eric C. Bellafronto Ernest M. Malaspina Sean Bothamley
Karin M. Cogbill Richard M. Noack Jonathan Heller
Jennifer Coleman Daniel F. Pyne III Shirley Jackson
Michael Manoukian
Elaisha Nandrajog

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