Hunton Employment & Labor Perspectives

Los Angeles Mayor Gil Garcetti signed into law two new ordinances that affect certain employers in the following commercial sectors: airport businesses, commercial property businesses, event center businesses, and hotel businesses.  These ordinances give recall rights and impose obligations on employers upon a change in ownership.

City of LA’s first ordinance, known as the Right of Recall, requires covered employers to offer laid off workers new positions that become available.  The second ordinance, known as the Worker Retention Ordinance, requires covered employers of a business that has had a change in ownership to rehire workers who were employed by the prior business employer.

Affected Businesses and Employees of Both Ordinances:

Both ordinances cover the following businesses that operate within the city of Los Angeles:

• Airport businesses that provide any service at an airport in Los Angeles or provides any service to any employer servicing the airport (not including airlines);
• Commercial Property Businesses, which includes only owners, operators, managers or lessees of a non-residential property in Los Angeles that employs 25 or more janitorial, maintenance or security service workers. Only the janitorial, maintenance, and security service workers who perform work for a Commercial Property Employer are covered by these ordinances;
• Event Center owners, operators or managers of a publicly or privately owned structure in Los Angeles 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. An event center includes, but is not limited to, concert halls, stadiums, sports arenas, racetracks, coliseums, and convention centers; and
• Hotel businesses include operators of residential buildings in Los Angeles 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. This includes restaurants physically located on hotel premises.

Right of Recall Ordinance (Ordinance No. 186602):

 Under the Right to Recall ordinance, covered employers within the city must offer, in writing, any new positions that become available to eligible laid off workers.  Eligible workers are those (1) with six months or more of service with the employer (including vacation/leave time), and (2) who were discharged on or after March 4, 2020, because of lack of business, reduction of workforce, or other economic, non-disciplinary reasons.  Notably, the ordinance creates a presumption that any worker discharged on or after March 4, 2020 was discharged for a non-disciplinary reason.

Offers must go out to every such worker who is “qualified” for the open position, which means that the worker (1) held the same or similar position at the same location when they separated, or (2) can be qualified for the position with the same training that would be provided to a new worker. If more than one laid off worker is qualified, priority goes to the worker with more seniority in the similar position. The laid off workers have five business days to accept or reject the offer.

Exceptions: The ordinance does not apply to employees who act as managers, supervisors, or confidential employees, or persons whose primary job is sponsorship sales for an Event Center Employer. These requirements can be waived in a collective bargaining agreement, but only if negotiated by both sides in clear and unambiguous terms.

 Penalties for Failure to Comply: After providing notice to the employer and allowing 15 days for the employer to cure an alleged violation, a laid off worker can file a lawsuit and obtain reinstatement, back pay (or $1,000, whichever is more), punitive damages, and reasonable attorneys’ fees and costs if the worker prevails.

 COVID-19 Citywide Worker Retention Ordinance (Ordinance No. 186603)

Under this ordinance, when selling or transferring a covered business, the selling business must provide the buyer with a list of its workers so that this successor business can give them priority in hiring. For the first six months after the successor business re-opens to the public, it must offer in writing any available positions first to the workers on the list.

In addition, for the first 90 days after the successor business hires workers from the list, it cannot discharge these workers without cause. At the end of the 90 days, the successor business must issue a written performance evaluation for each of these workers. If the worker’s performance is satisfactory, the employer should consider offering them continued employment. If, within six months of re-opening, the Successor decides it requires fewer workers than the selling business, it must give priority to workers in the same position with the most seniority.

Exceptions. As with the Right of Recall Ordinance, managerial, supervisory, and confidential employees are excluded. These requirements also can be waived in a collective bargaining agreement, but only if negotiated by both sides in clear and unambiguous terms.

 Penalties for Failure to Comply: After providing notice of an alleged violation and giving the employer 15 days to cure it, a worker can file a lawsuit and obtain reinstatement, front or back pay, lost benefits, and reasonable attorneys’ fees and costs if the worker prevails.

 Notice and Records Requirements: This ordinance also requires the selling business to post notice at the business about the transfer and the successor business must keep it posted for six months after reopening. Records of the performance evaluations and offers required by the ordinance must be kept for three years.

Retaliation Prohibited: Both ordinances prohibit retaliation against workers in connection with their new rights under the ordinances.