The Los Angeles City Council adopted two ordinances on April 29 that will significantly limit changes that operators of hotels, entertainment and sports venues, and some commercial buildings will be permitted to make when they rehire employees following the COVID-19 shutdown, or in the event that one of those businesses is sold in the coming years.
The ordinances apply to: (1) hotels with at least 50 guest rooms or gross receipts exceeding US$5 million in 2019, including restaurants on hotel premises; (2) Los Angeles International Airport and businesses with contracts to provide services to LAX (not including airlines); (3) owners and operators of event centers, defined as any structure that is 50,000 square-feet or more or has seating capacity of 1,000 or more and is used for public performances, sporting events, conventions, business meetings and similar events; and (4) owners, operators, managers, lessees, including contractors, subcontractors, or sublessees in commercial properties if the property has 25 or more janitorial, maintenance, or security workers.
Under the Right to Recall Ordinance, covered employers will be required to make offers in writing to any non-supervisory employee, with a tenure of at least six months, who was laid off on or after March 4, 2020, due to lack of business, reduction in force, or another economic non-disciplinary reasons if: (i) the same or a similar position to the one they previously held becomes available or (ii) they are or “can be qualified” for a position with the same training that would be provided to a new worker in the position. The jobs must be offered in order of seniority, and the employee must be given no less than five business days to decline or accept.
Under the Worker Retention Ordinance, successor owners following a change of control would be obligated to retain the prior workforce, including some contract workers, for at least 90 days following the change of control. Employees who have worked for the prior owner for at least six months, who perform services either directly for the prior owner or a business contracted to the prior owner, and who worked for the business on or after March 4, 2020, would be entitled to: (i) 90 days of transitional employment “under reasonable terms and conditions” or as required by law, and (ii) to be retained in order of seniority in the event of a downsizing following the 90-day transition period. The employment offers, which must be kept open for 10 days, will need to be made in writing and be retained for three years. If the employee accepts the 90-day transition employment, the employer will need to give him or her a written performance evaluation at the end of the 90 days.
Both ordinances provide exceptions for employees who are covered by collective bargaining agreements (CBA). For the Worker Retention Ordinance, with respect only to a CBA that was already in place on the effective date of the ordinance, the ordinance’s provisions may be waived if the CBA contains recall and seniority rights. And for both ordinances, the ordinance requirements may also be waived if there contains an explicit waiver in clear and unambiguous terms of the provisions of the Los Angeles ordinance(s) in the CBA.
But neither ordinance permits a waiver of these rights; such waivers are void as a matter of public policy. And they give employees the right to sue following written notice and a 15-day cure period. Under the Right to Recall Ordinance, an employee-plaintiff could sue for hiring or reinstatement, actual damages, and punitive damages. Under the Worker Retention Ordinance, an employee-plaintiff could sue for hiring or reinstatement for the 90-day transition period, front and back pay, and the value of employer-provided benefits. Both ordinances say the court “shall award reasonable attorneys’ fees and costs” to prevailing plaintiffs.
The ordinances contain no official sunset date but instead require a report by March 1, 2022 on the effectiveness of the ordinances and whether they need to remain in place. Mayor Eric Garcetti has until May 11, 2020, to take action on the ordinances, but he has indicated his support in public remarks.
Employer responsibilities continue to rapidly evolve in response to the COVID-19 pandemic and the related economic fallout. All employers need to stay current on the laws and guidance applicable to their workplaces, and should regularly check on federal, state, and local developments. For more information regarding these issues or other employment law issues, please contact an author of this article or the Hogan Lovells lawyer with whom you work.