Due to the effect COVID-19 has had on the economy and across all industries, Los Angeles City has been in the forefront of protecting the workforce by providing further benefits and protections to workers.  Simultaneously, however, new worker protections effectively translate into new burdens on employers.

Last week, the City Council addressed and amended two proposed ordinances: the Worker Retention Ordinance and the Right to Recall Ordinance.  These Ordinances would require certain businesses to continue to employ workers after a change in control (Worker Retention Ordinance) and make an offer of re-employment to a qualified laid off worker (Right to Recall Ordinance).  These Ordinances have not been finalized nor signed by the Mayor, and as such are not in effect as of today’s date.

Below is a brief summary of what the Ordinances would require, as currently drafted.

Right of Recall Ordinance

What would this Ordinance require?

A covered employer (see below) would be required to make a written offer of recall to a qualified Laid Off Worker (see below) of any position which is or becomes available after the Ordinance goes into effect.  The written offer must be sent to the qualified Laid Off Worker’s last known mailing address, electronic mail, and text message phone number.

The Laid Off Worker would have 5 days (decreased from 10 days) to accept or decline the offer of recall.

What employers would be covered under this Ordinance?

Previously, the Ordinance covered all employers that earned gross receipts in excess of $5,000,000 in 2019.  The amendment to the Right of Recall Ordinance narrows the businesses it would apply to. Now, only the following business –as defined in the Ordinance– would be subject to the recall requirements:

  • Airport Businesses;
  • Commercial Property Businesses (owner, operators, managers, or lessees of non-residential property that employ 25 or more janitorial, maintenance or security service workers);
  • Event Center Businesses (including concert halls, stadiums, sports arenas, convention centers, etc.); and,
  • Hotel Businesses (those with 50 or more guestrooms or that earned gross receipts in excess of $5,000,000 in 2019).

The Ordinance, however, excludes airlines and those businesses whose contract with the airport contain a pre-existing rehire requirement.  Similarly, only janitorial, maintenance and security workers of commercial property businesses would be covered by the Ordinance.

Although the Ordinance now excludes restaurants from its coverage, it is important to note that any restaurant physically located on hotel premises are covered.

Who would be a covered “qualified Laid Off Worker”?

Only Laid Off Workers are subject to the right of recall.  A Laid Off Worker is any person who:

  • performs at least 2 hours of work in a particular week within the City of Los Angeles for a covered employer;
  • worked for the employer for 6 months or more; and,
  • was laid off due to lack of business, reduction in workforce, or other economic non-disciplinary reasons on or after March 4, 2020. The Ordinance creates a rebuttable presumption that any lay off occurring on or after March 4, 2020 was due to a “non-disciplinary reason.”

Further, a Laid Off Worker is qualified if he/she:

  • held the same or similar position at the same site of employment at the time his/her most recent separation from active service with the employer; or,
  • is or can be qualified for the position with the same training that would be provided to a new worker hired for that position.

Would any type of worker be excluded from coverage?

The Ordinance explicitly excludes managers, supervisors, confidential employees or “a person who performs as their primary job responsibility sponsorship sales for an Event Center Employer” from coverage.

Does the Ordinance create a private cause of action?

Yes, the Ordinance would create a private cause of action for covered qualified Laid Off Workers, including reinstatement, lost pay and benefits, and punitive damages.

However, as amended, the Ordinance would impose conditions precedent on employees prior to filing a lawsuit against the employer:

  • the worker would be required to provide written notice to the employer delineating the specific provisions of the Ordinances that have been violated, as well as the facts supporting such allegations; and,
  • the employer would have 15 days from receipt of the notice to cure the alleged violations.

The Ordinance would also permit a court to award reasonable attorneys’ fees and costs to an employer who prevails and obtains a court determination that the worker’s lawsuit was frivolous.

Worker Retention Ordinance

What would this Ordinance require?

In general, the Ordinance would subject specific businesses (see below) to retain certain workers when a change in ownership or control occurs within 2 years after the declaration of emergency due to COVID-19.  In other words, the Ordinance would apply to businesses that have or will change ownership or control from March 1, 2020 through March 1, 2022.  The “incumbent” employer/business would be required to post, in a conspicuous place, a written notice advising employees/workers of the change in control within 5 business days following the

Specifically, the Ordinance would require that, within 15 days of the execution of an agreement to sell, acquire, etc. (a “transfer document”), the incumbent employer/business provide to the new successor business the name, address, date of hire and occupation classification of each worker.  The incumbent employer/business would be required to post, in a conspicuous place, a written notice advising employees/workers of the change in control within 5 business days following the execution of the transfer document.  The notice must remain on the premises for 6 months after the business is open to the public and under the control of the successor business employer.

The successor business would then be required to maintain a preferential hiring list of those workers, and hire from that list for 6 months after the new business opens to the public.

Similarly, for those workers that are hired from the list described above, the new successor business would have to retain each such worker for at least 90 days.  After the 90-day period, the successor business would be required to perform written evaluations for each employee.  If satisfactory, the successor business would then have to consider offering the worker continued employment.

What businesses would be covered under this Ordinance?

The covered businesses are identical to those under the Right to Recall Ordinance.  Only Airport Businesses, Commercial Property Businesses, Event Center Businesses, and Hotel Businesses would be covered under this Ordinance.

Which workers would be covered under this Ordinance?

Only those workers who are employed by the incumbent employer/business and

  • that have worked for the employer for 6 months or more;
  • whose primary place of employment is a covered business subject to a change in control;
  • who are employed or contracted to perform work functions directly by the incumbent employer/business or by a person who has contracted with the incumbent employer/business to provide services to that employer; and,
  • worked for the employer on or after March 1, 2020 and before the execution of the transfer document.

Would any type of worker be excluded from coverage?

The Ordinance explicitly excludes managerial, supervisory, or confidential employees from coverage.

Does the Ordinance create a private cause of action?

Yes, even after the amendment, the Ordinance would create a private cause of action for covered workers, including reinstatement, front or back pay, and the value of benefits the worker would have received under the former employer’s benefits plan.

Just as the Right to Recall Ordinance, however, this Ordinance would require that, prior to filing a lawsuit, the worker:

  • Provide written notice to either the current employer and/or the successor business employer of the specific provisions of the Ordinance alleged to have been violated, as well as the facts to support the alleged violations; and,
  • The current employer/successor business employer would have 15 days from receipt of the notice to cure the alleged violations.

Again, these Ordinances are not yet in effect and remain subject to further changes/amendments.  We will continue to monitor them closely, and will provide updates as this issue continues to develop.