Employers in the hotel, event center, airport and private club sectors and those providing services to commercial buildings must now give employees who were laid off due to the COVID-19 pandemic preferential recall rights over other applicants. The requirements became effective last Friday, April 16, 2021, on California Governor Gavin Newsom’s signing of Senate Bill 93 into law.
The Covered Employers
The hotel operations subject to the new statewide requirements are those consisting of 50 or more guest rooms or suites. The number of rooms or suites that determines coverage under the new law is the number as of December 31, 2019 or on the opening of the hotel, whichever number is greater.
Covered event centers under the new law are publicly or privately owned structures of more than 50,000 square feet or 1,000 seats that are used for “public performances, sporting events, business meetings, or similar events.” Examples of covered centers include “concert halls, stadiums, sports arenas, racetracks, coliseums, and convention centers.”
The new law also covers airport hospitality operations. The covered businesses are any provide “food and beverage, retail, or other consumer goods or services to the public at an airport.” Perhaps even more broadly, covered hospitality operations also include any “business that prepares, delivers, inspects, or provides any other service in connection with the preparation of food or beverage for aircraft crew or passengers at an airport.” The language suggests that it may encompass, for example, a food manufacturer located off airport grounds that makes components such as salsa or black beans that are then used by a restaurant in an airport food court. Interpretive guidance on this and other provisions is needed from the California Department of Industrial Relations (DIR).
Airport service providers are subject to the law and consist of businesses that load or unload passengers, property or mail on and off planes or provide services such as airport security, ticketing, and ground handling of aircraft.
The private clubs covered by the new law are private, membership-based businesses and nonprofits that operate a building or group of buildings that contain 50 or more guest rooms or suites of rooms offered as overnight lodging to members. As with hotels, the number of rooms or suites that determines coverage is the number as of December 31, 2019 or the opening of the club, whichever is greater.
Finally, businesses providing janitorial, building maintenance or security services to office, retail or other commercial buildings are also subject to the new law.
SB 93 imposes the new obligations on not only the businesses that own or operate covered enterprises, but also their officers and executives who exercise control over wages, hours of work or working conditions.
Certain successors to employers bear recall obligations under the new law as if they were the original employer. For example, where, after an employee is laid off, ownership of the employer changes and the business continues the same or similar operations as before the COVID-19 state of emergency was declared; the employer changes form from, say, a limited liability company to a corporation after the state of emergency; another entity buys substantially all of the assets of the employer and conducts the same or similar operations as the employer; or, the employer relocates the operations where the laid-off employee worked before the state of emergency, the entity as it exists at the time it is ready to hire employees will be obligated to the laid-off employee under SB 93 as if it were the original employer.
SB 93 enacts new California Labor Code section 2810.8.
The Recall Procedure Covered Employers Must Follow
Laid-off employees who may be owed recall rights under the new law are employees who were employed by a covered employer for six months or more in 2019 and were most recently separated from active service “due to a reason related to the COVID-19 pandemic,” such as a government shutdown order, a lack of business or a reduction in force.
Going forward, whenever a position becomes available with a covered employer, the employer must, within five business days, offer the position to all laid-off employees who are qualified for the position. If a laid-off employee “held the same or similar position” with the employer at the time of their most recent layoff, the employee is considered qualified for the position for purposes of the new recall scheme. Offers must be delivered in hardcopy and by email or text, to the extent the employer has email addresses or cell phone numbers. Where more than one laid-off employee is qualified for a position, the employer must give preference to the employee with the greatest length of service.
Employers must give laid-off employees at least five business days from their receipt of an offer in which to accept or decline the offer.
Where 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 certain information in writing within 30 days. The information the employer must give includes “the length of service of those hired in lieu [of the laid-off employee not hired], along with all reasons for [the employer’s] decision.” This provision, as well, is unclear for several reasons and needs to be clarified by guidance from the DIR.
Labor Code section 2810.8 remains in effect until December 31, 2024, at which time it is repealed.
Enforcement – What’s at Stake for Employers
Laid-off employees may file complaints for violations of the new recall requirements with the California Division of Labor Standards Enforcement (DLSE). The DLSE is given authority to award prevailing claimants reinstatement, lost earnings and the value of benefits the laid-off worker did not receive because they were not recalled.
The Labor Commissioner is also given authority to seek civil penalties accruing on a daily basis for each day an employee’s rights under the new law are violated, to issue citations and file civil suits against employers who violate the new recall system and to seek relief including injunctive relief.
The DLSE is given “exclusive jurisdiction to enforce” section 2810.8, apparently meaning that, while laid-off employees may file complaints with the DLSE, they may not file suit in court against employers allegedly in violation of the recall system.
As the pandemic wanes in California, new Labor Code section 2810.8 further complicates employers’ challenges in rebuilding their workforces. The new statewide recall system is in addition to local recall ordinances in effect in jurisdictions including the Cities of Long Beach and Los Angeles, summarized in our prior post here. The text of section 2810.8 may be found here.
In light of SB 93, covered employers in California will need to build more lead time into their hiring processes in order to provide, for example, the time needed to identify laid-off employees who may be qualified for positions to be opened and to perform the required notice procedure.
For help with questions on this development, please contact your Fox Rothschild LLP counsel or the author.
This post provides general information and does not constitute legal advice to any person with respect to any circumstance. This post does not create an attorney-client relationship with any person.