Certain California Employers Face Hurdles When Recalling Laid-Off Workers

Although Californians must continue to follow COVID-19 safety protocols, the Golden State has reopened its economy and hotels, airports and other businesses have experienced a surge in demand. This brings complications for some employers that must recall laid-off employees.

A new California law, SB 93, that went into effect April 16 requires some employers in the hospitality industry to prioritize, through Dec. 31, 2024, recalling workers who were laid off due to the COVID-19 pandemic.

"A law like this can be easy to miss," said Holly Sutton, an attorney with Farella Braun in San Francisco. "There's been such a deluge of new information for employers to track. Many employers are just focused on what needs to be done to bring employees back to work and customers into facilities, and those requirements are changing weekly."

The new law applies to certain hotels and membership-based accommodations, event centers, airport restaurants and shops, and other airport hospitality operations and service providers. The law also applies to enterprises that provide building services—such as janitorial, maintenance or security—to office, retail or other commercial buildings.

Here's what covered employers need to know as they start hiring—and rehiring—workers.

Requirements Create Challenges       

The new law requires covered employers, when reopening, to give each former employee five days to respond to a written job offer sent by mail to the employee's last known address, as well as by e-mail and text, if the employer has that information. Some attorneys believe it could slow reopening for covered businesses as they wait for employees who qualify for a particular vacancy to respond to the hiring offer.

The hospitality industry is already struggling to find enough workers to return to their jobs. Many California restaurants, for example, are chronically short-staffed and are finding they need to increase pay to entice workers back. Workers may want to return, but without summer camps, steady day care and predictable in-person school routines, those with children face unprecedented uncertainty. And the surge in COVID-19 Delta variant cases can make returning to certain public-facing jobs that much more of a gamble, particularly for people who aren't vaccinated.

If more than one former employee qualifies for a particular position, the company must send out conditional offers and rehire the employee with the greatest seniority based on chronological, not cumulative, service. So part-time workers hired earlier than full-time employees would have priority. Sutton said the law is "riddled" with impracticalities like this for both employers and employees. 

The law creates a presumption that anyone who was let go during the pandemic was let go because of the pandemic, noted Heather Sager, an attorney with Perkins Coie in San Francisco. "The unknowns and hypotheticals run from A to Z," she said.

The law is enforced by the California Division of Labor Standards Enforcement, and the California Labor Commissioner's office recently posted a FAQ page. Notably, as new positions becomes available, the employer must notify and offer opportunities to "all qualified laid-off employees who worked at the same or a similar position, including laid-off employees who have previously declined an offer to be re-hired for a prior position," according to the FAQs.

Employers should note that noncompliance could be very expensive—with potential damages for violations reaching $500 per employee per day. "There are some real teeth in this," Sutton said. "An uninformed employer who is not aware of this new law could have substantial liability."

How Should Employers Respond?

First, employers should determine if they are covered by the law. For instance, hotels and membership-based accommodations (which SB 93 refers to as "private clubs") are covered if they have 50 or more guest rooms.

Next, covered employers should ensure their procedures for keeping track of employees and former employees are up-to-date. Employers need to keep the following records for three years from the date of layoff for each employee:

• Full legal name.
• Job classification.
• Date of hire.
• Last known address.
• Last known e-mail address.
• Last known phone number.
• A copy of the written notice of the layoff.
• All communications on offers of employment.

Employers might be tempted to rehire strong performers first, but the law does not give them that flexibility, Sutton said. Covered employers should create recall templates and very specific processes to help achieve compliance.

[Want to learn more about California employment law? Join us at the SHRM Annual Conference & Expo 2021, taking place Sept. 9-12 in Las Vegas and virtually.]

"As far as recent legislation goes, this is one of the more difficult ones to comply with," said Nancy Inesta, an attorney with BakerHostetler in Los Angeles. "This particular legislation leaves a lot of questions unanswered. Some people won't accept a conditional offer because they have moved on to another employer or don't feel comfortable coming back into the COVID environment. Those people could technically remain on an employer's hiring list through the end of 2024."

Additionally, certain requirements, such as basing recall on a hire date rather than other considerations, could conflict or be inconsistent with existing company policies or practices, Inesta noted. She said smart employers will reach out to union leaders to address the discrepancies and try to get agreement from the union on how to move ahead.

Pre-pandemic, "any business in California that was recalling employees from a layoff had complete flexibility to pick and choose which employees to bring back, the order in which workers would be recalled, and even the flexibility to decide not to recall particular workers, based on their prior job performance," wrote Bruce Sarchet, an attorney with Littler in Sacramento, Calif., and Michael Lotito, an attorney with Littler in San Francisco, when SB 93 was first enacted.

But the rules have changed for employers that are covered by the right-to-recall law, so they should "take stock of their current situations and evaluate their options for compliance," Sarchet and Lotito said.

Susan Kostal is a freelance writer and editor in San Francisco.