The City of Long Beach, California on May 19, 2020 followed in the footsteps of Los Angeles City and adopted its own version of the Right of Recall Ordinance (“Recall Ordinance”) and Worker Retention Ordinance (“Retention Ordinance”). These two sister ordinances are substantially similar to the City of Los Angeles’ ordinances but apply to a more limited subset of janitorial and hotel employees. 

The Recall Ordinance applies to commercial property employers that provide janitorial services and employ more than 25 employees, and hotel employers that employ 25 or more employees. It requires that these businesses rehire workers who have been furloughed or laid off due to “a lack of business, a reduction in work force, bankruptcy, or other economic, non-disciplinary reason” in a specified manner, rather than at the employer’s discretion.

The accompanying Retention Ordinance governs these same industries and mandates that in the event of a change in control or change in ownership of a commercial property business¹ or hotel business, those employed on or after March 4, 2020 by the incumbent business, must be placed on a “preferential hiring list.” The new entity must hire personnel from this list for at least six months, must retain these personnel for no less than 90 days, and must also conduct performance evaluations to assess ongoing employment. During this 90-day period, an employee rehired under this section cannot be fired without cause.

Neither ordinance contains a sunset provision, and instead requires that the city manager update the city council and mayor every 90 days on each ordinance’s effectiveness and whether they are still necessary. Both ordinances will become effective on June 22, 2020.² These two ordinances, and the similar ones adopted by other municipalities are, for the most part, cut and paste legislation drafted by UNITE Here as the union advocates aggressively to limit the applicability of at-will employment³ and establish just cause termination requirements typically found in a collective bargaining agreement for janitorial and hotel employees.

Is My Business Impacted?

The two companion ordinances apply to the following industries only:⁴

• Commercial Property Employers and Commercial Property Businesses: include non-residential properties located in the City of Long Beach that provide janitorial services and employ 25 or more employees (not just 25 or more janitorial employees). Covered employers include the owner, operator, manager, lessee, contractor, subcontractor or sublessee.⁵
• Hotel⁶ Employers or Hotel Businesses: include any person who owns, controls, or operates a hotel in Long Beach and employs 25 or more employees who provide services at the hotel in conjunction with the hotel's purpose, including any contracted, leased or sublet premises connected to or operated in conjunction with the building's purpose, or providing services at the building.

What Does the Recall Ordinance Require My Business to Do?

The Recall Ordinance requires that employers in the identified industries make a written offer (by mail, email and text message) of recall back to work to a “Laid-off Employee” for any position that is or becomes available for which the individual is qualified. To be qualified for recall, the worker must have either:

1. Held the same or similar position at the same site of employment at the time of the most recent separation; or
2. Is or can be qualified for the position by receiving the same training that a brand new hire would receive for the position.

Don’t Forget Seniority!

If more than one worker is entitled to a preference to be recalled, the employer must give priority to the worker with the greatest length of active service for the employer based on that employee’s having held the same or similar position at the same worksite.

Employees subject to recall must be given at least five business days (excluding Saturday, Sunday or official state holidays) to accept or reject the offer of recall.

Does My Affected Business Have to do this for All its Employees?

No. The two ordinances only apply to active employees of the identified business (including time when the employee was on leave or vacation) and meet all of the following criteria:

1. Employees who, in a particular week, perform at least two hours of work within the geographical boundaries of the City for the employer, and
2. Have been employed with the employer for at least six months or more, and
3. Whose most recent separation from active employment by the employer occurred on or after March 4, 2020, as a result of a lack of business, a reduction in work force, bankruptcy or other economic, non-disciplinary reason.

Managers, supervisors and confidential employees are not covered.

Can My Business Still Fire Employees for Any Lawful Reason?

The ordinances create a rebuttable presumption that any termination of employment occurring on or after March 4, 2020, was due to a non-disciplinary reason—i.e., due to COVID-19-related operational limitations or closures.  However, if the employee was having performance or work conduct issues, or was otherwise being disciplined for lawful reasons, it is imperative to maintain documentation of such measures in order to definitively rebut the ordinance’s presumption that the employee was fired for non-disciplinary reasons that might entitle them to automatic right of recall.

Clear and unequivocal documentation of performance concerns is crucial because both ordinances expressly provide for a private right of action enabling employees to sue in California state court.

What are the Risks for Non-Compliance?

The enforcement provisions of the Long Beach ordinances are identical to the City of Los Angeles ordinances.  Failure to comply with the Recall Ordinance allows eligible employees to sue in California Superior Court to obtain:

• Hiring and reinstatement rights;
• Actual damages for lost pay and benefits, and statutory damages of $1,000, whichever is greater;
• Punitive damages; and
• Reasonable attorney’s fees and costs.

Before suing under the Recall Ordinance, however, the employee must give written notice to the employer of the legal violations and facts, and the employer is allowed 15 days from receipt of the notice to cure the violations.

Similarly, failure to comply with the Retention Ordinance allows eligible employees to sue the previous owner or the successor business to obtain:

• Hiring and reinstatement rights;
• Front or back pay for each day the violation continues, which will be calculated at a rate of compensation not less than the higher of:
  
  • The average regular rate of pay received by the worker during the last three years of their employment in the same occupation classification; or
  • The most recent regular rate received by the worker while employed by either the business, the previous owner, or the successor business;
• The value of the benefits the worker would have received under the successor business’ benefits plan; and
• Reasonable attorneys’ fees and costs.

Similarly, before suing under the Retention Ordinance, the worker must give written notice to the previous owner and/or successor business of the legal violations and facts, and the previous owner and/or successor business has 15 days from receipt of the written notice to cure the violations.

We are About to Buy One of These Distressed Businesses. How do These Ordinances Impact Change in Personnel?

Businesses seeking to acquire or are acquiring other businesses in the above categories must also comply with these ordinances as successor employers—regardless of whether it is an asset or stock purchase. 

The previous owner is required within 15 days after execution of a document of transfer/sale, to provide to the successor business the names, addresses, dates of hire, and occupation classifications of each worker.  For purposes of this section, the eligible workers of the previous owner include the following:

1. An employee who has been actively employed with the previous owner for six months or more;
2. Whose primary place of employment is a business subject to the sale, assignment, transfer, bankruptcy, contribution or acquisition or other change of control;⁷
3. Who is employed or contracted to perform work functions directly by the previous owner, or by a person who has contracted with the previous owner to provide services at the business subject to the change in control; and
4. Who worked for the previous employer on or after March 4, 2020, and prior to the execution of the documents transferring control/ownership.

Consistent with the above, the eligible employees do not include managerial, supervisory, or confidential employees.

From the list provided by the previous owner, the “successor business” must hire from a preferential list provided by the previous owner for at least six months after the successor business opens its operation to the public.  If the successor business extends an offer of employment to a worker, the successor business must keep written verification of that offer for no fewer than three years from the date the offer was made, and the verification must include the name, address, date of hire, and occupation classification of each worker.

The successor business must then retain such workers for a period of at least 90 days, and conduct performance evaluations after the 90-day period. An employer can only fire an employee during this time if there is “cause” for the termination.  If the worker’s performance during the 90-day transition employment period is satisfactory, the successor business must consider offering continued employment, and retain a record of the written performance evaluation period for no fewer than three years.

What if the Employees of Our Company are Already Covered by a Collective Bargaining Agreement?

The ordinances expressly stated that a collective bargaining agreement containing a right of recall clause supersedes these ordinances.  If the collective bargaining agreement expires or is subject to renewal, a waiver of the ordinance must be in clear and unambiguous terms in the collective bargaining agreement itself.  Any other alleged waiver of the ordinance will be deemed void.

What About Temporary Workers?

The ordinances do not specifically address recall or retention of temporary workers who are dispatched by a staffing agency to perform services at commercial property employers or hotel employers, but are not directly employed by the host business.  Accordingly, since the stated purpose of these ordinances are to return hotel and janitorial service workers “to their previous jobs as the pandemic begins to recede and business activity resumes,” employers that utilize temporary workers should work closely with staffing agencies and counsel to mitigate risk of noncompliance.