Seyfarth Synopsis: In a surprise move, and despite vetoing a strikingly similar measure only months ago when the pandemic was closer to its zenith, Governor Newsom on April 16, 2021 signed a measure requiring hospitality employers to give preference in hiring to workers previously laid off due to the pandemic.

Last year, large swaths of employers breathed a big sigh of relief when Governor Newsom vetoed AB 3216, which would have required certain hospitality employers—hotels, private clubs, event centers, and airport hospitality services—to offer preferential hiring to employees laid off because of the pandemic. We followed the legislative journey of AB 3216 here and here. Governor Newsom vetoed the measure despite some last-minute lobbying that convinced the bill’s authors to remove a troubling private right of action, making the measure slightly more palatable for employers. In his veto message, the Governor noted that the “requirements of this bill place too onerous a burden on employers” and found that “[t]ying the bill’s provisions to a state of emergency” was problematic.

Apparently changing his perspective in this new legislative year, on April 16, the Governor—in a surprise move that prompted a celebratory tweet from Lorena Gonzalez—signed into law SB 93, which is strikingly similar to the bill he recently vetoed AB 3216. This new statewide recall mandate, which takes effect immediately, joins a number of similar local ordinances. And the bill even states that it does not prohibit a local government agency from enacting ordinances that impose greater standards.

What Does The New Law Require of Employers?

Adding a Section 2810.8 to the Labor Code, the new law requires certain employers to offer vacant positions to laid-off employees who are qualified for those positions based on a preference system. Notably, all of the provisions of the new law may be waived through collective bargaining.

How Is This Ordinance Different Than The One Vetoed?

Perhaps the biggest difference between the vetoed AB 3216 and the enacted version SB 93 (2021) is that the obligations are less tied to a “state of emergency,” reflecting Governor Newsom’s technical concern. Despite these technical changes in language, the right to recall obligations are essentially the same. For example, both measures would add Section 2810.8 to the Labor Code, with the vetoed version defining “laid-off employee” as “any employee who was employed … in the 12 months preceding the state of emergency, … and whose most recent separation from active service was due to a … reason related to the state of emergency,” while the enacted version substitutes “COVID-19 pandemic” for “state of emergency”—a distinction without a real difference.

Which Employers / Employees Are Covered?

Employers who operate hotels, private clubs, event centers, or airport hospitality services are all subject to the bill’s rehire requirement, as are providers of “building services” to office, retail, or other commercial buildings. The law also applies to successor employers where there has been a change in control.

Neither the bill nor the legislative analyses define “other commercial buildings,” but the law does define “building services” as applicable to janitorial, building maintenance, or security services. This is similar to right to recall ordinances passed by the City and County of Los Angeles, the City of Long Beach and the City of San Diego during the pandemic, which also encompass commercial properties employing janitorial, maintenance, or security service workers—these ordinances generally define “commercial properties” as simply “non-residential properties.”

Eligible employees are those who were laid off due to COVID-19, and who were employed for at least six months during the 12 months preceding January 1, 2020. A laid-off employee is qualified for a position if the employee held the same or similar position at the employer at the time of the employee’s most recent layoff with the employer. If more than one employee is eligible for a position, the employer must offer the position to the employee with the greatest length of service based on the date of hire.

What About Enforcement?

One piece of good news for covered employers is that the Division of Labor Standards Enforcement (DLSE) has exclusive jurisdiction to enforce the measure and recover lost wages, benefits, and reinstatement for aggrieved employees. Indeed the Assembly Floor Analysis of the measure specifically highlights that the law cannot be enforced through a private right of action or the Private Attorneys General Act.

The law lays out a process for filing a complaint with the DLSE through the procedures set forth in Section 98.3, 98.7, 98.74, or 1197.1 of the Labor Code. The law also provides for a civil penalty of one hundred dollars for each employee whose rights are violated under the new law, and an additional five hundred dollars per employee per day as liquidated damages until the violation is cured.  Employers should expect the DLSE to actively enforce this new law, as it appropriates six million dollars through June 30, 2025, from the Labor and Workforce Development Fund to implement and enforce the provisions of the law.

The bill also prohibits an employer from refusing to employ, terminating, reducing compensation, or taking other adverse action against any laid-off employee seeking relief under this new law.

Recordkeeping and Notice Requirements

The law requires covered employers to offer laid-off employees all job positions that become available after April 16, 2021, and for which the employees are qualified. The offers must be made in writing by hand or home delivery, and email and text. An employer that declines to recall a laid-off employee for lack of qualifications, and hires someone other than a laid-off employee, must provide the laid-off employee a written notice within 30 days explaining the reasons for the decision and the length of service of those who were hired instead.

Covered employers must also retain the following records for at least three years: (1) employee’s full legal name; (2) employee’s job classification at time of separation; (3) employee’s date of hire; (4) employee’s last known residence address; (5) employee’s last known email; (6) employee’s last known telephone number; and (6) a copy of the notice of layoff.

How Long Will This Law Be In Effect?

This new law’s mandates last through December 31, 2024.

Workplace Solutions

Because this law went into effect immediately, employers should promptly and carefully review all employees whose separation since January 1, 2020, may have been related to the pandemic, especially as they look to recall employees as the Golden State reopens and the newly vaccinated flock to the friendly skies and their favorite hotels. Employers should ensure accurate record keeping for those laid-off employees and ensure that they receive preferential consideration before filling any vacancy. And, as always, should you have any questions, please reach out to your favorite Seyfarth counselor.

Edited by Coby Turner and Elizabeth Levy