California’s SB 93: Governor Signs COVID-19 ‘Rehiring and Retention’ Law

On April 16, 2021, California Governor Gavin Newsom signed Senate Bill (SB) 93 into law. This new statute creates California Labor Code Section 2810.8 and requires that employers in certain industries make written job offers to employees whom they laid off because of COVID-19. Employees have five business days to respond and, if more than one employee responds, the employer must award the job by seniority. Employers must keep records for three years. The California Division of Labor Standards Enforcement (DLSE) will enforce the new law and may order reinstatement, front and back pay, and benefits, as well as impose substantial penalties and liquidated damages. SB 93 takes effect immediately and expires on December 31, 2024.

Given the rapid pace at which the California economy appears to be reopening, the immediate effective date of SB 93, and the act’s substantial penalties, covered employers may want to consider beginning compliance preparations by compiling a list of laid-off employees by classification with the other information that the DLSE requires, as explained below. Covered employers also may wish to begin creating the forms that the law requires, including the conditional offer of employment and written notice that the employer is not rehiring a laid-off employee for a particular position.

Covered Employers

SB 93 applies to the following employers:

• Hotels with 50 or more guest rooms.
• Private clubs that operate “a building or complex of buildings containing at least 50 guest rooms” that they offer to members for overnight lodging.
• Publicly or privately owned event centers “of more than 50,000 square feet or 1,000 seats that [are] used for … public performances, sporting events, business meetings, or similar events.” Event centers include “concert halls, stadiums, sports arenas, racetracks, coliseums, and convention centers.” For purposes of this statute, event centers also include “any contracted, leased, or sublet premises connected to or operated in conjunction with the event center’s purpose, including food preparation facilities, concessions, retail stores, restaurants, bars, and structured parking facilities.”
• Airport hospitality operations that provide services “in connection with the preparation of food or beverage[s] for aircraft crew or passengers at an airport.” Airport hospitality operations also includes businesses that provide “food and beverage[s], retail, or other consumer goods or services to the public at an airport.” Airport hospitality operation “does not include an air carrier certificated by the Federal Aviation Administration [FAA].”
• Airport service providers that provide services “directly related to the air transportation of persons, property, or mail.” These providers include businesses related to “security, airport ticketing and check-in functions, ground-handling of aircraft, aircraft cleaning and sanitization functions, and waste removal.” Air carriers certified by the FAA are not included in the definition of ‘airport service provider.’”
• Employers that provide “janitorial, building maintenance, or security services” to office, retail, or other commercial buildings.

Covered Employees

In order for SB 93 to provide protection, an employee must have:

• worked two hours or more per week for a covered employer;
• been employed by a covered employer for “6 months or more in the 12 months preceding January 1, 2020”; and
• been “separat[ed] from active service … 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, nondisciplinary reason related to the COVID-19 pandemic.”

Employers’ Obligations to Covered Laid-Off Employees

If a covered employer establishes a position, it first must offer the position in writing to laid-off employees within five business days of establishing the position. The employer must deliver the offer “either by hand or to their last known physical address, and by email and text message” if the employer has that information.

A laid-off employee must be qualified for the position offered. SB 93 considers an employee to be qualified “if the employee held the same or similar position … at the time of the employee’s most recent layoff with the employer.”

SB 93 also provides that “[a]n employer may make simultaneous, conditional offers of employment to laid-off employees.” Laid-off employees have “five business days, from the date of receipt, in which to accept or decline the offer.” However, if more than one qualified laid-off employee accepts the position, the employer must rehire the individual “with the greatest length of service based on the employee’s [previous] date of hire.”

If an employer “declines to recall a laid-off employee on the grounds of lack of qualifications,” it must “provide the laid-off employee a written notice within 30 days.” The written notice must include a list of all employees hired for the position, with their length of service with the employer, and the employer’s explanation as to why the employer did not rehire the employee.

Maintaining Records

Employers must maintain records relating to new Labor Code Section 2810.8 for three years, “measured from the date of the written notice regarding the layoff, for each laid-off employee.” According to SB 93, these records must include the employee’s:

• full legal name;
• job classification at time of layoff;
• date of hire;
• last known address of residence;
• last known email address; and
• last known telephone number.

Records must also include any layoff notices and “all records of communications between the employer and the employee” regarding employment offers made under SB 93’s requirements.

No Retaliation

SB 93 prohibits employers from retaliating against employees who exercise their rights under the new law. The statute emphasizes that an employer must not retaliate against employees who mistakenly, but in good faith, allege that the employer is not complying with SB 93.

Union Employees

SB 93 also applies to employees covered by a collective bargaining agreement. In order to waive the provisions under SB 93, the collective bargaining agreement must do so “in clear and unambiguous terms.”

Enforcement and Penalties

An employee may file a complaint with the DLSE, which the statute charges with exclusive jurisdiction to enforce the law.

The DLSE may award the complainant the following:

• Hiring and reinstatement rights
• Front or back pay
• Value of the benefits the complainant “would have received under the employer’s benefit plan”
• “Interest on all amounts due and unpaid”

In addition, the DLSE may impose civil penalties of $100 for each individual whose rights the employer violated. The statute also provides the DLSE with the discretion to impose liquidated damages of $500 per day for each individual whose rights the employer violated “until such time as the violation is cured.” The state will pay the penalties and liquidated damages to affected employees.

Compliance Checklist

As explained above, SB 93 takes effect immediately and carries substantial penalties. As the California economy continues to reopen, covered employers may wish to begin their compliance efforts by:

• preparing a list of all laid-off (including furloughed) employees by job classification, including dates of hire in order to discern which employees have the most seniority;
• informing hiring managers about the new law;
• establishing a rehire process that ensures positions are offered to laid-off and furloughed employees before those positions are offered to others;
• preparing a conditional offer form template that makes clear offers are conditional and are based on seniority; and
• preparing a form template informing employees that the employer has selected another individual for the position.

Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.