Overview
For additional guidance, please refer to Steptoe's COVID-19 Resource Center.
The City of Los Angeles and Los Angeles County recently adopted ordinances to protect employees working in certain industries. On April 29, the City of Los Angeles adopted the COVID-19 Right of Recall Ordinance and the COVID-19 Worker Retention Ordinance (LA City Ordinances); both will become effective on June 14, 2020. On May 12, Los Angeles County adopted its own COVID-19 Right of Recall Ordinance and COVID-19 Right of Retention Ordinance (LA County Ordinances), applying in the unincorporated areas of the County of Los Angeles, both of which became effective immediately.
The LA City Ordinances apply to Airport Employers/Businesses,[1] Commercial Property Employers/Businesses,[2] Event Center Employers/Businesses,[3] and Hotel Employers/Businesses.[4] Both Ordinances exempt individuals covered under collective bargaining agreements and the LA City Right of Recall Ordinance exempts from coverage any "non-profit institutions of higher learning that operate medical centers in the City of Los Angeles." 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. The LA County Ordinances allow for an express waiver under collective bargaining agreements.
Right of Recall Ordinances
Under the City and County Right of Recall Ordinances, an employer seeking to make a new hire must first offer the position to a qualified laid-off worker, in writing.[5] 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) is or could be qualified for the position if given the same training that would be provided to any new worker hired into the position.
The Ordinances also provide guidance on how to deal with multiple laid-off employees who are entitled to a preference.
The City and County Right of Recall Ordinances specify who qualifies as a laid-off employee and both have created "a rebuttable presumption that any termination occurring on or after March 4, 2020, was due to a non-disciplinary reason." The LA City Ordinance also 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."
The Ordinances provide a private right of action for employees, who can 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 or $1,000; punitive damages; and costs and attorney's fees. Employers may be entitled to recover costs and attorney’s fees if a court determines that an employee's claim is frivolous.
Retention Ordinances
The City and County Retention Ordinances impose obligations on "Incumbent Business Employers," who undergo a "Change in Control." A "Change in Control" is defined to include 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 15 days of executing the transaction documents, the Incumbent Business Employer must provide the Successor Business Employer with a list of workers, which is defined to include 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.
The Ordinances define a "Preferential Hiring Period" – the date the transaction documents are executed until six months after the business is opened to the public under the new ownership – during which the Successor Business Employer must maintain a preferential hiring list of workers who 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 10 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.
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, although neither Ordinance defines cause.
In addition, at the end of a defined transitional employment period, the Successor Business Employer must perform a written performance evaluation for each 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.
Both Ordinances also provide a private right of action, allowing 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. As with the Right of Recall Ordinances, employers may be entitled to recover costs and attorney's fees for frivolous actions.
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LA City and County employers should assess whether these Ordinances may have an impact on their operations and should consider them as they take employment actions. These Ordinances also contain important provisions relating to waivers of rights, the effect of collective bargaining agreements on the obligations of employers, and retaliation. It is worth noting that the Ordinances are in effect due to COVID-19 and there are no expiration dates. Moreover, it is anticipated that the Office of Wage Standards of the Bureau of Contract Administration will issue implementing rules and regulations for the LA City Ordinances, so it will be important to continue to monitor developments.
[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."
[5] The exception is that for Commercial Property Employers, the priority hiring rules apply only to janitorial, maintenance, and security service workers.
