On April 29, 2020, the City of Los Angeles adopted the COVID-19 Right of Recall Ordinance and the COVID-19 Worker Retention Ordinance, both of which come into effect on June 14, 2020. Two weeks later, on May 12, 2020, the Los Angeles County adopted its own COVID-19 Right of Recall Ordinance and COVID-19 Right of Retention Ordinance, applying in the unincorporated areas of the County of Los Angeles, both of which became effective immediately.

These Ordinances establish a right of recall for employees working in certain industries, and provide protections to employees in the event that their employer’s business undergoes a change of ownership or control.  Both LA City Ordinances apply to Airport Employers/Businesses[1], Commercial Property Employers/Businesses[2], Event Center Employers/Businesses,[3] and Hotel Employers/Businesses.[4]  The LA City Right of Recall Ordinance expressly exempts from coverage any “non-profit institutions of higher learning that operate medical centers in the City of Los Angeles.”

By contrast, the LA County Ordinances apply to a narrower category of employers: Commercial Property Employers and Hotel Employers, and exempts from coverage non-profit entities and federal, state, and local government agencies.

Right of Recall Ordinances

The City and County Right of Recall Ordinances require covered employers to give hiring preference to laid-off employees who: (a) had performed at least two hours of work within the geographic boundaries of the city/county with a particular workweek, (b) had worked for the employer for at least six months prior to being laid off, and (c) whose most recent separation from active service occurred on or after March 4, 2020 as a result of lack of business, a reduction in workforce or other economic, non-disciplinary reasons.  Both Ordinances “create[] a rebuttable presumption that any termination occurring on or after March 4, 2020, was due to a non-disciplinary reason.”  The LA City Ordinance (but not the County Ordinance) excludes from the definition of “Laid Off Worker” any “manager, supervisor, confidential employee or a person who performs as their primary job responsibility sponsorship sales for an Event Center Employer.”

Under both Ordinances, when an employer seeks to make a new hire, the employer must first offer the position to a qualified laid-off worker, in writing, except that in the case of Commercial Property Employers, the priority hiring rules apply only to janitorial, maintenance, and security service workers.” Laid-off workers must be given at least five business days to accept or decline an offer before the employer may offer the position to someone else. A laid-off worker is deemed “qualified” for a position if the worker either:

  1. Held the same or a similar position at the same site of employment at the time of the employee’s most recent separation from service with the employer; or
  2. Could be qualified for the position if given the same training that would be provided to any new worker hired into the position.

If more than one laid-off worker is entitled to preference for a position, the position must first be offered to the worker with the longest period of service in the same or a similar position, and then to the employee with the longest period of service with the employer at the same work location. In addition, an offer must first be given to the worker who previously held the same or a similar position, followed by employees who are or could be qualified if given the expected training.

Private Right of Action

The Ordinances allow an employee to sue for violations after giving an employer written notice of the alleged violation and a 15-day opportunity to cure the violation. Remedies include requiring the employer to provide hiring and reinstatement rights; the greater of actual damages (e.g., lost pay and benefits) or $1,000; punitive damages; and costs and attorney’s fees. If an employee’s claim is deemed frivolous by the court, the employer is entitled to recover costs and attorney’s fees as well.

Worker Retention (LA City) and Right of Retention (LA County) Ordinances

The City’s Worker Retention Ordinance and the County’s Right of Retention Ordinance impose certain worker retention obligations on employers, referred to as “Incumbent Business Employers,” who undergo a “Change in Control.”  A “Change in Control” includes any “sale, assignment, transfer, contribution, or other disposition of (a) all or substantially all of the assets used in the operation of a Business,” or (b) a “discrete portion of a Business that continues to operate as the same type of Business” following the transaction, or (c) any person or entity who controls the Incumbent Business Employer.

Under these Ordinances, within five business days following the execution of the transfer documents, the Incumbent Business Employer must post a written “change in control” notice in a conspicuous place at the location of the affected business.  The notice must remain posted during any closure of the business and for a period of six months after the business is open to the public by the buyer, referred to as the “Successor Business Employer.”  The notice must include the name of the Incumbent Business Employer and its contact information, the name of the Successor Business Employer and its contact information, and the effective date of the Change in Control.

In addition, within 15 days of executing the transaction documents, the Incumbent Business Employer must provide the Successor Business Employer with a list of “Workers,” including the name, date of hire, and occupation classification of each worker that had been employed by the Incumbent Business Employer.  Under the Ordinances, the term “Worker” includes all individuals: (a) who had worked for the Incumbent Business Employer for six months or longer; (b) whose primary place of employment was subject to a change in control; (c) who were employed or contracted to perform work functions directly to the Incumbent Business Employer, or were employed by a person who contracted with the Incumbent Business Employer to provide services at the business; and (d) who worked for the incumbent business on or after March 4, 2020, and prior to execution of the transfer document.

From the date the transaction documents are executed until six-months after the business is opened  to the public under the new ownership (the “Preferential Hiring Period”), the Successor Business Employer must maintain a preferential hiring list of Workers that were identified by the Incumbent Business Employer and must hire any new employees from that list.  The Successor Business Employer must give each worker at least ten business days to accept or reject an employment offer and must retain written verification of the offer for no less than three years from the date the offer was made.

Any worker hired under the Ordinances must be retained for at least 90 days (the “Transitional Employment Period”), unless the employment is terminated voluntarily by the employee or is terminated for cause by the employer. During the Preferential Hiring Period, if the Successor Business Employer determines that it needs fewer employees than were employed prior to the transaction, the Successor Business Employer must offer positions to workers in the same occupational classification in order of their length of service.  Workers may not be discharged without cause during the Transitional Employment Period.  In addition, at the end of the Transitional Employment Period, the Successor Business Employer must “perform a written performance evaluation” for each such employee and, if the employee’s performance was “satisfactory,” must “consider” offering the worker continued employment under the terms and conditions established by the Successor Business Employer.

Private Right of Action

Both Ordinances allow employees to sue for violations after giving the employer written notice of the alleged violation and a 15-day opportunity to cure the violation. Remedies include hiring and reinstatement, front or back pay, the value of lost benefits, and costs and attorney’s fees. If an employee’s claim is deemed frivolous by the court, the employer is entitled to recover costs and attorney’s fees as well.

Provisions Relating to Collective Bargaining Agreements, Waivers and Retaliation

The City and County Ordinances contain important provisions relating to waivers of rights, the effect of collective bargaining agreements on employer obligations under the Ordinances, and retaliation.

Under the City of LA’s Right of Recall and Worker Retention Ordinances, if a collective bargaining agreement that is in effect as of the effective date contains an explicit recall or worker-retention provision, those provisions will supersede the requirements of the corresponding Ordinance. The County Ordinances do not include such provisions.

In addition, both the City and County Ordinances provide that, on a going forward basis, the requirements of the applicable Ordinances may be waived in a collective bargaining agreement if such waiver is expressly set forth in the agreement in “clear and unambiguous terms,” including through an amendment of the existing collective bargaining agreement.

Both the City and County Ordinances clarify that the rights created by the Ordinances may not be waived by a worker/employee (except as provided in a collective bargaining agreement) and that employers are barred from asking employees to waive their rights under the Ordinances (except in the context of bona fide collective bargaining negotiations). In addition, the Ordinances bar employers from retaliating against persons who seek to exercise their rights under the Ordinances, who lawfully oppose any practices prohibited by the Ordinances, or who participate in proceedings relating to the Ordinances.

*****

Employers in LA City and County should carefully assess whether these Ordinances may have an impact on their future operations and business plans. The Ordinances currently do not include an end date.  Employers should monitor subsequent developments with respect to these Ordinances, as the Ordinances currently do not include a formal end date.  The City’s Chief Legislative Analyst and the County’s Chief Executive Office are required to report, inter alia, on whether the Ordinances are still necessary based on the recovery from the impacts of the COVID-19 pandemic.  In addition, the LA City Ordinances charge the Office of Wage Standards of the Bureau of Contract Administration to promulgate implementing rules and regulations.

[1] “Airport Employer” and “Airport Business” are defined as a business/employer “that provides any service at the Airport or provides any service to any employer servicing the Airport, and is required to comply with the Los Angeles Living Wage Ordinance,” excluding airlines or any employer “that is party to an agreement with the Airport that contains a worker rehire requirement.”

[2] “Commercial Property Employer” and Commercial Property Business” are defined as an “owner, operator, manager, or lessee, including a contractor, subcontractor or sublessee, of a non-residential property in the City that employs 25 or more janitorial, maintenance or security service workers.”

[3] Event Center Employer” or “Event Center Business” are defined as an “owner, operator or manager of a publicly or privately owned structure in the City of more than 50,000 square feet or with a seating capacity of 1,000 seats or more that is used for public performances, sporting events, business meetings or similar events,” including, but not limited to, “concert halls, stadiums, sports arenas, racetracks, coliseums, and convention centers.”

[4] “Hotel Employer” or “Hotel Business” are defined as an “owner, operator, or manager of a residential building in the City designated or used for public lodging or other related service for the public and either contains 50 or more guestrooms or has earned gross receipts in 2019 exceeding $5 million” including any “owner, operator, manager or lessee of any restaurant physically located on hotel premises.”

***

If you wish to receive periodic updates on this or other topics related to the pandemic, you can be added to our COVID-19 “Special Interest” mailing list by subscribing here. For any other legal questions related to this pandemic, please contact the Firm’s COVID-19 Core Response Team at [email protected].

The post COVID-19 Related Worker Retention and Right of Recall Protections Adopted for Airport, Event Center, Hotel, and Commercial Property Employees in Los Angeles City and County appeared first on COVID-19 Response Blog.