Just about a year ago, in the early weeks of the COVID-19 pandemic, economic activity in many sectors went from red hot to nearly frozen, seemingly overnight. The hospitality industry was particularly hard hit, as business and leisure travel evaporated. Many businesses were forced to lay off workers, and California's unemployment soared.
Now that the shelter-in-place orders have mostly been lifted, customers are returning, and businesses are hiring, or rehiring previously laid-off workers. Up until the time of the pandemic, any business in California that was recalling employees from a layoff had complete flexibility to pick and choose which employees to bring back, the order in which workers would be recalled, and even the flexibility to decide not to recall particular workers, based on their prior job performance.
That all changed last summer, as several California cities adopted "right to recall" ordinances. The ordinances eliminate the discretion of a business to decide which employees to recall from a layoff, or not to recall any prior workers at all. Instead, they give to workers the right to be recalled in order of seniority. Generally, the most senior qualified employee has a right to be recalled first to their former job.
Long Beach, Los Angeles and San Francisco led the way, but eventually the trend was picked up by other cities in the Golden State, including Carlsbad, Oakland, Pasadena and Sacramento.
Other cities outside of California have also adopted such laws, including Baltimore, Minneapolis and Philadelphia.
In the summer of 2020, a bill was introduced in the California legislature that would have applied the right of recall to specified industries on a statewide basis. Governor Newsom vetoed that bill (AB 3216). Validating the principle that "no idea ever goes away in government," the concept has been floated again this year in California, in the form of SB 93, which now has been signed into law.
SB 93 was couched as a budget bill, meaning that it bypassed early policy committee hearings and proceed directly to the floor of each chamber. California businesses must prepare now to comply with the new obligations imposed by SB 93.
Covered Employers and Employees
The law does not apply to all California employers. Rather, it applies generally to hotels, private clubs, event centers, airport hospitality operations, and airport service providers, while also applying specifically to janitorial, building maintenance and security services provided to office, retail and other commercial buildings.
The law affords rights to "laid-off employees" of such businesses. "Laid-off employees" are defined as those who were employed by the employer for 6 months or more in the 12 months preceding January 1, 2020, and whose most recent separation from active service was due to a reason related to the COVID-19 pandemic.
If a covered employer is going to hire a worker, it must first offer the position to its laid-off employees who are "qualified" for the position. A laid-off employee is qualified for a position if the employee held the same or similar position at the business at the time of the employee's most recent layoff from the employer. Laid-off employees must be offered the position in order of seniority with the employer.
Rights of Recall
Laid-off employees must be given at least five business days to 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.
Under SB 93, the obligations to recall laid-off employees survive various types of changes in business structure and operations. For example, say a covered business lays off employees due to COVID-19. The business is then sold. The new owner has an obligation to recall the employees of the former owner. The obligations also remain in effect if an employer relocates its operations to a different location in California.
The bill also contains anti-retaliation provisions and recordkeeping requirements; detailed records relating to offers of recall must be kept for three years.
Enforcement and Remedies
On its surface, the bill does not create a private right of action. Rather, enforcement is limited to claims brought by the California Division of Labor Standards Enforcement. Remedies for violation include reinstatement and back pay and benefits, and injunctive relief. Civil penalties may also be imposed: $100 for each employee whose rights are violated, plus an additional $500, per employee, for each day the rights of an employee are violated.
Now, recall that several cities in California have already adopted right-to-recall ordinances. SB 93 does not preempt those laws. Rather, the bill specifically states that any local government agency can adopt its own ordinances that create greater employee rights or additional enforcement provisions.
The law also contains a collective bargaining agreement waiver provision – any such waiver of statutory recall rights must be explicitly set forth in that agreement in clear and unambiguous terms.
Notably, SB 93 does not contain a provision found in both the Los Angeles and Long Beach ordinances – the "right to cure." Before bringing a lawsuit to enforce rights under either ordinance, a worker must provide written notice to the employer of the alleged violations and a statement of facts to support the claimed violation. The employer then has 15 days from receipt of that notice to cure any alleged violation. If no such cure is implemented, then and only then may a lawsuit proceed.
Many in the business community applauded these cure provisions, noting that workers and businesses do not want or need lengthy courthouse battles, and that the vast majority of business owners just want to comply with their legal duties and obligations. The right to cure provisions in these local ordinances were touted as a win-win for both sides. The right to cure is not a part of the framework of SB 93.
These new obligations became effective immediately. Covered employers therefore should take stock of their current situations and evaluate their options for compliance.
Perhaps in a nod to the hope that COVID-19 pandemic will not be with us indefinitely, the bill has a sunset date: December 31, 2024.
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