LA Looks to Impose New Employment Requirements on Businesses Hardest Hit by Covid-19

Topics: COVID-19, Employee Leave, Legal Information

Many Los Angeles employers were relieved on Monday when the City Council announced that it had suspended its scheduled meetings for the next two weeks.  That relief is minimal and temporary, however, as the suspension only delayed the Council’s consideration of two looming motions for emergency COVID-19-driven ordinances directed at already-strained employers throughout the city. 

LA employers, like their counterparts throughout the state, have been reeling to assess and respond to Governor Newsom’s order earlier this month directing “all individuals living in the State of California to stay at home or in their place of residence” absent limited exceptions.  This has resulted in an extreme and sudden loss of business for many employers.  Thereafter, the federal government issued emergency legislation requiring employers, with limited exceptions, to provide two weeks of additional paid sick leave, paid FMLA leave, and reinstatement rights to employees impacted by COVID-19.  These new financial burdens have come at a time when many sectors of the economy have ground to a halt.

Yet, some members of the LA City Council want to squeeze more blood from the stone, as reflected in Council Motions 72-J and 72-KK in particular.  

Council Motion 72-J begins with a recital observing that “as people increasingly avoid public places because of the new coronavirus, hotels and restaurants in neighborhoods are feeling the impact.”  Setting aside that this emphasized language is both a colossal understatement and is unnecessarily limited to two industries (as layoffs and shutdowns have been rampant all month in many industries across Los Angeles), what is more surprising is that the Motion then pivots to a call for a retroactive law imposing additional burdens and obstacles on COVID-19-impacted employers.  For example, Motion 72-J, calls for new laws requiring that:

• all layoffs implemented since March 1, 2020 be conducted “in order of seniority” (rather than based the specific needs of the struggling business),
• an employer’s right to implement permanent layoffs be eliminated absent documented “just cause” and that all other former employees would have a right to recall regardless of changes the employer may make to their business in an effort to survive the pandemic; and
• employers who take over workplaces from other employers by way of contract or change in control be required to give priority to the prior employer’s workers, again, in order of seniority;

Council Motion 72-KK takes dead aim at the hospitality industry stating that the “actions aimed to contain and mitigate the spread of COVID-19 are also severely impacting the economy, with some sectors, such as the hospitality industry, experiencing immediate and drastic effects.  Restaurants and hotels closing as a result of government mandates may be faced with financial hardships [but] it is also important to support workers.” Again, this emphasized language constitutes a massive understatement suggesting the stay-at-home directive “may” result in financial hardships for businesses.  But Motion 72-KK nonetheless seeks the implementation of a regulatory scheme for the hospitality industry in Los Angeles that would require (i) layoffs be conducted by seniority, (ii) recall rights be extended by seniority, (iii) that permanent terminations be proven supported by just cause, (iv) and that unspecified “worker retention” provisions be implemented. 

Cities need to be taking measures to help their employers stay afloat during these incredibly difficult times and recover once the restrictions are lifted, not increase the odds of permanent closures. California's Labor Code contains a presumption that employees are employed at will, which means that either the employer or the employee may terminate employment at any time, with or without cause or prior notice.  These Motions seek to undermine that fundamental principal, and impose retroactive exposure for layoffs already dutifully effectuated in response to the Governor’s express stay-at-home directives. 

Workforce flexibility is incredibly important to any employer looking to avoid bankruptcy in the face of a statewide executive order directing people to stay at home.  But as we come out of these pandemic-driven restrictions, at-will flexibility will be just as important to employers seeking to restart operations on shoestring budgets by making strategic decisions concerning essential personnel.  Employers will not be able to make these decisions based on seniority, and will not be able to divert limited resources to meet just cause burden of proof for each and every permanent layoff, and Los Angeles should not be forcing them to do so thereby risking businesses deciding not to reopen in the city.  Jobs will return if the businesses return, but municipal job security rights are worth nothing if the job is no longer there to secure.  For these reasons, if these Motions come to vote in mid-April, I hope the Los Angeles City Council will deny the Motions and maximize the opportunity for city-wide recovery.