San Diego Extends COVID-19 Hotel and Janitorial Worker Recall and Retention Ordinance Until March 2022

On March 2, 2021, the City Council of San Diego, California, extended the “COVID-19 Worker Recall and Retention Ordinance” (O-21231/O-2021-20). The ordinance provides certain rights and preferences to hotel and janitorial workers affected by the COVID-19 pandemic. The ordinance originally took effect on September 8, 2020, and was set to expire on March 8, 2021. However, given the extraordinary loss of jobs in San Diego in the building services, leisure, and hospitality industries, the city council opted to extend the ordinance’s sunset provision until March 8, 2022, by way of an emergency ordinance (O-21296/O-2021-97).

Summary of Worker Recall Requirements

The ordinance requires “commercial property employers,” “event center employers,” and “hotel employers” to offer “laid-off employees” all positions for which they are qualified, as locations reopen and such jobs become available.

“Commercial Property Employer”

“Commercial property employer” is defined as “an owner, operator, manager, or lessee, including a contractor, subcontractor, or sublessee, of a non-residential property located within the geographical boundaries of the City [of San Diego] that employers 25 or more janitorial, maintenance, or security service employees. Only the janitorial, maintenance, and security service employees who perform work for a commercial property employer are covered.”

“Event Center Employer”

“Event center employer” is defined as “an owner, operator, or manager of a privately-owned structure of more than 50,000 square feet or 5,000 seats that is used for the purposes of public performances, sporting events, business meetings, or similar events, and includes concert halls, stadiums, sports arenas, racetracks, coliseums, and convention centers.” The term “event center” also includes “any contracted, leased, or sublet premises connected to or operated in conjunction with the event center’s purpose, including food preparation facilities, ushering services, ticket-taking services, concessions, retail stores, restaurants, bars, and structured parking facilities.” The term “event center employer” does not include governmental entities.

“Hotel Employer”

“Hotel employer” is defined as “the owner, operator, or manager of a residential building located within the geographical boundaries of the City [of San Diego] with at least 200 guest rooms that provides temporary lodging in the form of overnight accommodations to transient patrons, and may provide additional services, such as a conference and meeting rooms, restaurants, bars, or recreation facilities available to guests or to the general public.” Note that a “hotel employer” also includes “the owner, operator, manager, or lessee of any contracted, leased, or sublet premises connected to or operated in conjunction with the building’s purpose, or providing services at the building.”

“Laid-off Employee”

“Laid-off employee” is defined as “any individual who, in a particular week, performs at least two hours of work within the geographic boundaries of the City [of San Diego] for an employer, has a length of service with the employer of six months or more in the 12 months preceding March 4, 2020, or in the case of an event center employee, 3 months or more in the 12 months preceding March 4, 2020, and whose most recent separation from active service, or failure to be scheduled for customary seasonal work, occurred on or after March 4, 2020, and before any termination of the Declaration of Emergency proclaimed by California’s Governor on March 4, 2020, and was due to a government shutdown order, lack of business, a reduction in force or other, economic, non-disciplinary reason.” The definition excludes “a manager, supervisor, or confidential employee.”

The above-mentioned employers must offer a laid-off employee, in writing by mail (and email and text message, if the employer has such contact information), all positions for which the individual is qualified. The individual is deemed qualified if he or she:

(1) “held the same or similar position at the site of employment at the time of the laid-off employee’s most recent separation from active service with the employer”; or

(2) “is or can be qualified for the position with the same training that would be provided to a new employee hired into that position.”

If more than one employee is eligible to be recalled for a position, the employer must offer the job to the laid-off employee who has seniority (including periods of vacation and leaves of absence).

The laid-off employee offered the position “must be given no less than 3 business days in which to accept or decline the offer.” If a covered employer chooses not to recall an employee because the individual is unqualified and the employer hires someone else instead, the employer “must provide the laid-off employee a written notice of the non-selection within 30 days” of the hiring of the other individual, and the notice must include the reason or reasons for the decision. The employer must keep records related to the hiring for at least three years and make them available to the City of San Diego or the laid-off employee upon request.

Further, for a period of at least three years, covered employers must retain the following records regarding each laid-off employee: the employee’s full legal name; the employee’s job classification at the time of separation; the employee’s hire date; the employee’s last known physical residential address, phone number, and email address; and a copy of the written [layoff] notice given to the employee.

The ordinance prohibits employers from retaliating against individuals who exercise their rights under the ordinance. In the event employees believe an employer has violated their rights, they may bring an action in the Superior Court of the State of California against the employer and may be awarded hiring and reinstatement rights, actual damages (lost wages and benefits or statutory damages of $1,000, whichever is greater), punitive damages, and attorneys’ fees and costs. Importantly, the ordinance does not carry criminal penalties.

Summary of Worker Retention Requirements

The worker retention provisions of the ordinance provide certain protections to employees of a business that undergoes an ownership transfer. Within 15 days of an ownership transfer of a business, the seller (or “incumbent business employer”) must provide the buyer (or “successor business employer”) with a list of its “eligible employees.” The list must include “the name, address, date of hire, and job classification of each eligible employee,” so the incumbent business’s employees receive hiring priority.

“Eligible Employee”

“Eligible employee” is defined as someone employed by the incumbent business employer who: (1) has been employed by the incumbent business employer for at least six months; (2) has a primary place of employment that “is a business subject to a change in control”; and (3) “is employed or contracted to perform work functions directly by the incumbent business employer, or by a person who has contracted with the incumbent business employer to provide services at the business subject to the change in control”; and (4) “who worked for the incumbent business employer on or after March 4, 2020, and prior to the execution of the transfer document.” Importantly, the definition excludes employees who work in a “managerial, or supervisory, or confidential” capacity.

“Commercial property business”

“Commercial property business” is defined as “an owner, operator, manager, or lessee, including a contractor, subcontractor, or sublessee, of a non-residential property in the City [of San Diego] that employs 25 or more janitorial, maintenance, or security service employees.”

“Hotel Business”

“Hotel business” is defined as “the owner, operator, or manager of a building in the City [of San Diego] with at least 200 guest rooms that provides temporary lodging in the form of overnight accommodations to transient patrons, and may provide additional services, such as conference and meeting rooms, restaurants, bars, or recreation facilities available to guests or to the general public.”

“Transfer document”

“Transfer document” is defined as “the purchase agreement or other documents creating a binding agreement to affect the change in control.”

“Incumbent Business Employer”

“Incumbent business employer” is defined as “any person who owns, controls, or operates a business prior to a change in control.”

“Successor business employer”

“Successor business employer” is defined as “the person who owns, controls, or operates a business after a change in control.”

The successor business employer must hire from the incumbent business employer’s list of eligible employees from the time of execution of the transfer/sale document to six months after the business is open under the successor business employer. The successor business employer must keep written verification of each employment offer made from the list for at least three years from the date that the successor business employer made the offer.

The successor business employer also must retain each eligible employee hired for at least 90 days (so long as the successor business employer continues operating for that period of time). Each written offer made during this transition period “must remain open for at least 3 business days.” During the 90-day period, a successor business employer may not terminate an eligible employee’s employment without cause. The ordinance does not explain what circumstances would amount to cause for discharging an employee. Once the 90-day period has elapsed, the successor business employer must provide a written performance evaluation for each eligible employee retained, which the successor business employer must retain for at least three years.

If the evaluation is satisfactory, “the sucessor business employer must consider offering the eligible employee continued employment.”

The successor business employer “must post written notice of the change in control at … the affected business within five business days following the execution of the transfer document. Notice must remain posted during any closure of the business and for six months after the business is open.” The notice must include the following: “the name of the incumbent business employer and its contact information, the name of the successor business employer and its contact information, and the effective date of the change in control.” In addition, the “[n]otice must be posted in a conspicuous place … visible to eligible employees, other employees, and applicants.”

The ordinance prohibits retaliation against eligible employees who exercise their rights under the ordinance’s worker retention provisions. In the event employees believe their rights have been violated, they may bring an action in the Superior Court of the State of California against the successor or incumbent business employer and may be awarded hiring and reinstatement rights, front pay or back pay, the value of benefits to which they are entitled under the successor employer’s plans, and attorneys’ fees and costs. Importantly, the ordinance does not carry criminal penalties.

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. For more information on key COVID-19–related developments for California employers, please join us for our upcoming webinar, “California’s Brand New COVID-19 Supplemental Paid Sick Leave Law,” which will take place on Friday, March 26, 2021, from 11:00 a.m. to 12:00 noon Pacific. The speakers, Charles L. Thompson IV, Leslie E. Wallis, and Jennifer P. Suberlak, will cover the new law’s requirements and its impact on other types of leave, including regular paid sick leave, vacation, paid time off (PTO), and exclusion leave and pay obligations under the California Division of Occupational Safety and Health’s (Cal/OSHA) COVID-19 Emergency Temporary Standards. Register here. Important information for employers is also available via the firm’s podcast programs.