On April 16, 2021, Governor Gavin Newsom signed into law Senate Bill 93 (SB 93), which requires certain employers to offer open job positions to employees who were laid off for reasons related to COVID-19. SB 93, which takes effect immediately and runs until December 31, 2024, will be enforced by the Labor Commissioner.
What Employers/Industries Are Covered?
SB 93 covers employers who operate hotels, private clubs, event centers, or airport hospitality services. It also covers employers who provide airport services (i.e., perform functions on airport property directly related to the operation of the airport) or building services (i.e., janitorial, building maintenance, or security in office, retail, or other commercial buildings). The law defines each of these categories in further depth.
The law applies to employers even if:
- Ownership of the company changed (provided they are conducting the same or similar operations as prior to the COVID-19 state of emergency);
- The form of organization changed after the COVID-19 state of emergency;
- Substantially all of the assets of the company were acquired by another entity that conducts the same or similar operations using substantially the same assets; or
- The employer relocates the operations to a different location.
Which Employees Are Covered?
SB 93 covers any employee who worked for a covered employer for at least six months in the 12 months preceding January 1, 2020, and whose most recent separation from employment was related to COVID-19 (laid-off employee). This includes layoffs due to public health directives, government shutdown orders, lack of business, reductions in force, or other economic, non-disciplinary reasons related to the pandemic.
What Is the Recall Requirement?
A covered employer must offer all job positions that become available to qualified covered employees within five days of establishing that position. A covered employee is qualified for a position if the employee held the same or similar position at the time of the COVID-19-related lay-off.
If there is more than one laid-off employee eligible to be recalled for the position, the employer can make simultaneous conditional offers of employment to all qualified covered employees. The condition in the offer would be that the qualified covered employee with the longest length of service would ultimately get the job (if the individual wants the position).
Once a laid-off employee is offered a position, the individual must be given at least five business days to accept or decline the offer. SB 93 does not address whether an employer must continue to make offers as new positions become available to a laid-off employee who has previously declined an offer, but the Division of Labor Standards Enforcement (DLSE) may publish guidance about this in the future.
There is also a written notice component, but the language of the statute here is ambiguous. It provides that:
An employer that declines to recall a laid-off employee on the grounds of lack of qualifications and instead hires someone other than a laid-off employee shall provide the laid-off employee a written notice within 30 days including the length of service with the employer of those hired in lieu of that recall, along with all reasons for the decision.
This is ambiguous and misleading because if the term "qualifications" is consistent with the above use of "employee is qualified" (i.e., the employee held the same or similar position at the time of the COVID-19 related lay-off), this recall requirement suggests that, for example, a laid-off custodian would need to receive notice if a non-covered security guard is hired for a newly opened security guard position. We expect that the DLSE will provide further guidance on this issue.
SB 93 requires covered employers to retain the following records for at least three years for each laid-off employee (as defined above), starting from the date of the written notice regarding that employee's layoff:
- The employee's full legal name;
- The employee's job classification at the time of separation from employment;
- The employee's date of hire;
- The employee's last known address of residence;
- The employee's last known email address;
- The employee's last known telephone number; and
- A copy of the written notice(s) regarding the layoff provided to the employee and all records of communications between the employer and the employee concerning offers of employment made to the employee pursuant to this section.
The DLSE will exclusively enforce SB 93 and, to that end, the law appropriated $6 million for the Labor Commissioner for implementation and enforcement. Covered employees do not have a private right of action (i.e., they cannot file a lawsuit in court based on alleged violations of SB 93). An aggrieved employee is limited to filing a complaint with the DLSE and may be awarded front pay and back pay, lost benefits, and reinstatement if the DLSE finds in the employee's favor.
More significantly, SB 93 provides for civil monetary penalties and liquidated damages that could be massive. SB 93 subjects employers to a civil penalty of $100 for each employee whose rights are violated and liquidated damages of $500 per employee per day for each day the rights of an employee are violated and continue to be violated until the violation is cured. If, for example, an employer failed to notify 50 laid-off employees about a new job opening or failed to make them conditional job offers, the employer could, in theory, be fined $25,000 per day (50 x $500) until that violation is somehow cured.
The DLSE's enforcement of this law can include the issuance of a citation against an employer who violates it and can include filing a civil action in court.
Tips for Employers:
As covered employers ramp up re-hiring, we recommend they keep in mind the following:
- Ensure that your employee records for all employees whose separation may have been related to COVID-19 are up to date and comply with the recordkeeping requirements outlined above.
- Employers must analyze whether the role of the open job position is essentially the same or substantially similar to a role that had previously been eliminated because of COVID-19. If the role is different, employers should document differences in the job description which, in turn, may affect whether laid-off employees are "qualified" for the new job opening.
- Employers will want to ensure that everybody with hiring authority is aware of SB 93 and understands the circumstances under which a laid-off employee is eligible for an SB 93 job offer.
Because employers must provide "all reasons" for their decision not to recall a laid-off employee, employers will want to be especially mindful of the specific eligibility criteria for laid-off employees set forth in SB 93. In making and communicating the decision not to recall a laid-off employee, employers must also be mindful of adhering to best non-discriminatory hiring practices as well.
We expect the DLSE to publish FAQs or additional guidance, and we will update you as more information becomes available. In the meantime, should you have any questions about SB 93, please reach out to your DWT attorney.
The facts, laws, and regulations regarding COVID-19 are developing rapidly. Since the date of publication, there may be new or additional information not referenced in this advisory. Please consult with your legal counsel for guidance.
DWT will continue to provide up-to-date insights and virtual events regarding COVID-19 concerns. Our most recent insights, as well as information about recorded and upcoming virtual events, are available at www.dwt.com/COVID-19.