California’s Rehiring and Retention Law: The Impact on Employers and Employees Alike

In an effort to address the millions of people put out of work in California’s beleaguered hospitality industry as a result of the COVID-19 pandemic, Governor Gavin Newsom signed Senate Bill 93 (“SB 93”), also known as the Rehiring and Retention Law, last April. The new law, which took effect immediately and will remain in effect until December 31, 2024, requires employers in the hospitality industry to first offer open positions to laid off employees based on a preference system, in accordance with specified timelines and procedures.

Who is covered?

Covered employers include hotels, private clubs, event centers, airport hospitality operations, and airport service providers. Also included are janitorial, building maintenance and security service providers to office, retail and other commercial buildings.

Covered employees include those who worked two or more hours per week for a covered employer, were employed by a covered employer for “6 months or more in the 12 months preceding January 1, 2020,” and lost their jobs 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, non-disciplinary reason related to the Covid-19 pandemic.”

What are covered employers’ obligations to covered employees?

 Once a position becomes available, an employer has five business days to reach out in writing to employees who held the same or similar position at the time of their most recent layoff with the employer. Employees then have at least five business days to accept the position. Simultaneous, conditional offers of employment may be made to more than one employee, with the final determination based on seniority. If an employer declines to rehire an employee due to lack of qualifications, it must provide the employee with a written notice within 30 days. This notice must identify all employees hired for the position, their length of service, and an explanation as to why the employee was not rehired.

Covered employers are also required to maintain records for each laid-off employee related to Labor Code Section 2810.8 for three years. These records must include: “the employee’s full legal name; the employee’s job classification at the time of separation from employment; the employee’s date of hire; the employee’s last known address of residence; the employee’s last known email address; the employee’s last known telephone number; and a copy of the written notices regarding the layoff provided to the employee and all records of communications between the employer and the employee concerning offers of employment made to the employee.”

How will this law be enforced?

 The law does not create a private right of action. Rather, the California Division of Labor Standards Enforcement (“DLSE”) is charged with enforcing the law. Relief may include hiring and reinstatement rights and an award of back pay and lost benefits. In addition, employers may have to pay $100 in civil penalties for each employee whose rights are violated and an additional $500 per-employee for each day the employee’s rights were violated until such violation is cured.

What are the challenges imposed by this law?

The law is relatively burdensome in terms of the employers’ obligations to employees, from hiring practices to post-hiring requirements, and the potential penalties are steep. Ensuring that employers are educated on the provisions of the law and have the resources to satisfy them is the first hurdle. The next issue is the inevitable delay in the hiring process as employers have to wait for employees who qualify for a particular open position to respond to the hiring offer. Finally, the law favors seniority, putting employers in the unfortunate position of having to overlook work performance in hiring.

Conclusion

There is no question that Californians are feeling the effects of the economic fallout due to the COVID-19 pandemic. While this new law seeks to alleviate the hardships suffered by employees, it clearly does so at the expense of placing additional burdens on employers in the covered industries that have already been seriously impacted by the pandemic.

To learn more about how the Rehiring and Retention Law could impact your business, please contact Sadaf Nejat.