Los Angeles City Council Votes To Approve Right of Recall and Worker Retention Ordinances

Topics: COVID-19

Despite vociferous public objection during this morning’s LA City Council meeting from various entities and associations across a wide array of LA businesses, the City Council voted unanimously (15-0) to approve agenda item 29 recommending that Mayor Garcetti approve and enact two COVID-19-driven workforce ordinances: The Right of Recall and The Worker Retention Ordinances. 

Upon enactment by (and subject to revision by, or the unlikely outright rejection by) the Mayor, these ordinances will further burden “Airport,” “Commercial Property,” “Event Center,” and “Hotel” employers attempting to either revive their businesses or sell their businesses to entities financially capable of resuming business.  Litigation will increase and business sales will slow. 

The ordinances will cover many employers throughout LA—e.g., owners, operators or managers of (i) hotels with 50+ rooms or gross revenues exceeding $5M in 2019, (ii) concert halls, (iii) stadiums, (iv) sports arenas, (v) racetracks, (vi) coliseums, (vii) convention centers; as well as (viii) owners, operators, managers, and lessees, including contractors, subcontractors, and sublessees of non-residential property in the City that employ 25 or more janitorial, maintenance, or security service workers; and (ix) any employer that provides any service at the Airport or provides any service to any employer servicing the Airport.

The burdens that these ordinances will impose are simultaneously significant and vaguely worded (a fact the City Council Members themselves noted, admitting the proposed legislation was “not a model of clarity”).  For example, covered businesses will be required to—

• offer employees discharged since March 4th all positions that become available for which the employees are qualified and (arguably) even if not necessarily experienced. 
• offer positions to the discharged employee with the greatest length of service should more than one employee be qualified for a position (arguably) regardless of whether the employee with more seniority is less qualified than others. 
• provide recall-eligible discharged employees at least 5 days to accept an offer and various measures to ensure receipt of the offer. 
• provide a “preferential hire list” of workers that subsequent employers will have to hire from, for at least six months following a change in control;

Today’s vote is tantamount to an employment litigation stimulus plan, and the newly approved ordinances stack the litigation deck against employers by—

• Creating a rebuttable presumption that any termination, which occurred on or after March 4, 2020, was due to a non-disciplinary/performance-based action. 
• Requiring businesses to provide recalled employees a 90-day window during which the employer shall be prohibited from discharging an employee without cause despite California being an at-will state.
• Limiting the waive-ability of certain new ordinance rights.
• Leaving these burdens in place until at least March 1, 2022, and most egregiously,
• Imposing punitive damages liability against employers found to be in violation of these vague and onerous new technical recall and retention requirements. 

As LA prepares to return to work, covered employers will now have another layer of compliance apprehension tied to their hiring and reopening decisions.