The 12 Days of California Labor and Employment Series – Day 8 "Expansion of COVID-19 Layoff Recall Rights"

In the spirit of the season, we are using our annual "12 days of the holidays" blog series to address new California laws and their impact on California employers. On the eighth day of the holidays, my labor and employment attorney gave to me eight maids-a-milking and SB 723.

Layoffs and reductions in force were prevalent during the pandemic. Job layoffs severely impacted the hospitality and building services industries during the pandemic. Based on the number of layoffs and the primary industries affected, California passed SB 93 in 2021. This bill created California Labor Code Section 2810.8.

Background

SB 93 provided a qualified laid-off employee in certain industries an opportunity to return to work when the employer was ready to hire again, effectively giving them a right of first refusal.

To be eligible, an employee had to have been employed for six months or more in the 12 months preceding January 1, 2020, and whose most recent separation from active service was due to a reason related to the COVID-19 pandemic, including a public health directive, government shutdown order, lack of business, a reduction in force, or other economic, nondisciplinary reason related to the COVID-19 pandemic. The law applied to:

• Airports
• Airport hospitality operations
• Airport service provider
• Building service (janitorial, security, or building maintenance)
• Enterprise
• Event centers
• Hotels
• Private clubs

SB 93 mandated that when an employer was hiring, that employer must, within five business days (excludes weekends and holidays) of establishing a position, offer its laid-off employees in writing, either by hand or to their last known physical address, and by email and text message to the extent the employer possesses such information, all job positions that become available after April 16, 2021, for which the laid off employees are qualified.

A laid-off employee is qualified for a position if the employee held the same or similar position at the enterprise at the time of the employee's most recent layoff with the employer. If a laid-off employee is not recalled because of lack of qualifications and the employer hires someone besides a laid-off employee, the employer must provide the laid-off employee a written notice within 30 days, including specified reasons for the decision and other information on those hired. If multiple laid-off employees are qualified, the laid-off employee with the most seniority must be offered the position first and then down the line in order of seniority.

SB 93 further provided that until December 31, 2024, an employer was prohibited from refusing to employ, terminate, reduce compensation, or take other adverse action against any laid-off employee for seeking to enforce their rights under these provisions. An aggrieved laid-off employee could file a complaint with the Division of Labor Standards Enforcement for specified relief, including hiring and reinstatement rights, back pay, and/or a civil penalty. There are no criminal penalties.

SB 723

SB 93 was set to sunset on December 31, 2024. With the enactment of SB 723, the sunset deadline has been extended for another year to December 31, 2025.

SB 723 updates the following:

1. SB 723 removes the COVID-19 requirement and relatedness to the layoff. 
2. SB 723 amends the definition of a "laid-off employee" to now include all employees who were employed by the employer for six months or more and whose most recent separation from employment by the employer occurred on or after March 4, 2020, and was a result of a:
   • public health directive,
   • governmental shutdown order,
   • lack of business,
   • reduction in force,
   • or other economic, non-disciplinary reasons. 
3. The layoff does not have to relate to COVID-19.
4. SB 723 also does not provide protections to any employee terminated for performance or misconduct reasons.

However, SB 723 adds a presumption that an employee who fits the definition above must be offered to be rehired.

What Does This Mean for Employers?

1. Employers must consider previously laid-off employees from March 4, 2020, onward when and if they are ready to rehire.
2. Based on the specifics, employers should keep well-documented records noting if and when an employee was terminated for disciplinary or misconduct issues to avoid the requirement of asking that former employee back when the employer is in a hiring mode.
3. As to any other laid-off employee, the employer must reach out to those employees who fit the job description as to their right of recall to avoid any potential complaints and litigation.
4. In addition, the same recordkeeping requirements enacted in 2021 are still in place. That means qualified employers must maintain their records for at least three years.
5. It is recommended that requisite employers have standard policies and procedures for hiring in compliance with SB 93.
6. Human resource personnel should be trained and updated, and procedures regularly monitored to avoid any complaints with the Division of Labor Standards Enforcement.
7. Employers should also note that this law is in play until at least December 31, 2025.