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Right-Of-Recall Compliance Issues For Employers To Study

By Adam Karr and Kelly Wood · January 6, 2021, 4:23 PM EST

Adam Karr
Adam Karr
Kelly Wood
Kelly Wood
The right to be recalled to a former job after being furloughed or laid off is not a new concept.

It has been a bargained-for right in unionized workforces for a long time. 

Union employers and unions know how to deal with this scenario, and there are contractual rules and grievance mechanisms to resolve disputes.

But what happens when the government seeks to expand this type of protection to the private sector through right-of-recall statutes? The answer is, a lot of compliance issues and many unanswered questions.

With millions of workers laid off due to COVID-19, jurisdictions across the U.S. have enacted or are considering right-of-recall laws.

California has been leading the way. Several California cities — including Los Angeles, San Francisco, Oakland, Long Beach and San Diego — already have such laws on the books.

Many more may follow, although it is worth noting that the California Legislature passed a statewide right-of-recall law that was vetoed by Gov. Gavin Newsom for being "too onerous a burden on employers navigating these tough challenges." 

In this article, we identify the top five things that employers must consider as compliance issues in dealing with right-of-recall statutes. We also highlight five challenges these types of laws will present going forward.

Five Key Compliance Issues With Right-of-Recall Laws

1. Determine if a Recall Ordinance Applies to Your Workforce

If an employer operates in California, it must determine if a recall ordinance applies to some or all of its employees — which may not be as simple as it sounds. For example, the Los Angeles ordinance, which was the first to be enacted in the U.S. in May 2020, applies only to certain industries, including commercial property, hotel, event center, and airport employers — but even those categories are not all inclusive. 

For commercial property employers, the ordinance only applies to those with 25 or more janitorial, maintenance or security workers. Similarly, airport employers does not include airlines, and hotel employers include only those with 50 or more guest rooms, or more than $5 million in gross revenue in 2019. 

Under the Long Beach ordinance, a hotel employer is defined as a hotel that employs 25 or more employees in conjunction with the hotel's purpose, while the San Diego ordinance defines a hotel employer as those with at least 200 guest rooms. 

The Oakland ordinance also covers restaurant employers, which includes any full-service restaurant, café, fast-food restaurant, or bars with alcohol consumption occurring on premises. 

The definition of laid-off employees also varies depending on the ordinance. For example, under the Los Angeles ordinance, laid-off employees are only those who were employed by a covered employer for at least six months, worked at least two hours in a particular week in the city of Los Angeles, and were separated on or after March 4, 2020, due to lack of business or other economic reason.

The category does not include managers, supervisors or confidential employees. The San Diego ordinance also considers individuals who were not offered customary seasonal work as laid-off employees. Given the complexity of these provisions, it is critically important that employers determine whether, and which, employees have recall rights. 

2. Determine Offer Priority for Available Positions

Once an employer determines which employees have recall rights, the employer must then determine the order in which employees will be offered available positions. Again, this process is not likely to be straightforward, since employees in a nonunionized workforce generally are not assigned seniority. 

For instance, under the Los Angeles ordinance, an open position must be offered to every laid-off employee who held the same or a similar position at the same site of employment, and if more than one laid-off employee is entitled to preference, then the employer must make the offer to the employee with the greatest length of service with the employer. 

If there is no such employee or if the offer is declined by those employees, the job must then be offered to a laid-off employee who is "qualified for the position with the same training that would be provided to a new worker hired into that position." 

Only if the job remains unfilled may the employer then make an outside hire. The Oakland, Long Beach and San Diego ordinances have similar job offer parameters. This process is likely to be complex and time-consuming, and employers should consider prioritizing offers before positions need to be filled. 

3. Establish Procedures for Offers and the Hiring Process

As positions become available, employers will need structured procedures for making job offers and working through the hiring process. 

Under the Los Angeles, Oakland, San Diego and Long Beach ordinances, employers must send job offers by mail, email, and a text message to each laid-off employee who must be offered an available position. Under the Los Angeles ordinance, each eligible employee must be given no fewer than five business days to accept or decline the job offer. 

The San Diego ordinance only provides three days for laid off employees to consider an offer, and under the Oakland ordinance, laid-off employees must be given at least ten days from the date of receipt of the mailed letter to consider a job offer.

Additionally, under the Oakland ordinance, if the business hires someone other than a laid-off employee, the employer must send a letter to the laid-off employee advising of the non-selection. As discussed below, a number of variables may make this process even more cumbersome for employers. 

4. Establish Document Retention Procedures

In addition to sending job offers to laid-off workers, California's recall ordinances also have varying document retention requirements. For instance, the San Diego ordinance requires employers to retain each laid-off employee's name, job classification at time of separation, date of hire, last known address, email address, phone number and a copy of the written notice regarding the layoff provided to the employee for a period of three years. 

The Oakland ordinance similarly requires employers to document the reason for making an outside hire for three years. Because records may be requested by the city, employers should ensure that the required records are collected and maintained.   

5. Review and Monitor Changes in State and Local Ordinances

As mentioned above, numerous jurisdictions have enacted or considered enacting right-of-recall laws as a result of the COVID-19 pandemic. While the proposed statewide law was vetoed in California, other jurisdictions have considered passing right-of-recall ordinances, including Las Vegas, Massachusetts and Connecticut, and more are likely to pass in the coming months. Employers should ensure that someone is monitoring for changes in existing ordinances, as well as new ordinances likely to come into effect.    

Five Challenges Presented by Right-of Recall Laws in the At-Will Employment Context

1. Logistics of Job Offers and Filling Open Positions

Employers covered by recall ordinances will undoubtedly face logistical challenges in determining the scope and priority of laid-off employees qualified for available positions, distributing job offers to those individuals, and then tracking employee decisions. Notably, there are numerous questions left unanswered by the ordinances, including whether an employer must keep a job open for a laid-off employee who accepts a job offer but needs time to provide notice to his/her current employer.

Similarly, in many instances, employers must determine which laid-off employees are qualified for various positions — other than the positions they previously held — whether to send out multiple job offers to eligible laid-off employees at the same time, and how far in advance to start the job offer process before each position needs to be filled. This process is likely to be onerous in general, and even more so for employers with laid-off employees in numerous right-of-recall jurisdictions. 

2. Determining When an Outside Hire is Permissible

Current recall ordinances do not permit covered employers to hire outside workers unless all qualified laid-off employees have declined, or not responded to, a job offer, or if an outside hire would require less training than hiring a laid-off worker.

While that concept seems simple enough, it may not always be the case. For example, determining the training a new hire would require for a position he/she has held in the past — or currently holds at a different company — as compared to a laid-off employee in a different position who is familiar with the employer's business may not be a straightforward analysis. 

Moreover, employers hiring an outside worker will undoubtedly face higher governmental scrutiny than if the employer had hired a laid-off worker, which may make the rehiring and training process that much more challenging for covered employers.  

3. Hiring From a Right-of-Recall Industry

While covered employers will shoulder the bulk of the work associated with recall laws, other employers and employees may also face complexities. For instance, employers who are not covered by recall laws may be reluctant to hire workers from covered industries for fear that the employees will leave when/if they are recalled to their previous positions.

Employees from covered industries may also face challenges in being hired outside of their industry for the same reason, or may choose to remain on unemployment until they are recalled to their previous positions. 

4. Pay and Position Details for Recalled Employees

Another complexity not addressed by existing recall ordinances is whether an employer is permitted to change the pay and duties of a position once a recalled employee is returned to work. 

In the union context, pay scales are generally set forth in a collective bargaining agreement, but in the at-will context, it is unclear whether an employer can recall a laid-off worker and offer a significantly reduced wage or require the performance of additional job duties. 

It is similarly unclear how long an employer must keep a recalled employee in his/her recalled position.  If the employee is not performing well upon return, can the employer simply terminate the employee, or could that decision be challenged as circumventing the recall ordinance? These sorts of issues are almost guaranteed to come up, but have yet to be addressed in this rapidly growing and evolving area of law. 

5. Private Right of Action and Cure Period

Finally, the current recall ordinances provide a private right of action after the covered employer has been given notice by a laid-off worker of an alleged violation and period to cure the issue. 

But from a practical perspective, if an outside worker was hired when a laid-off employee believes he/she should have been recalled, the only way for an employer to cure the alleged violation would be to fire the outside worker, and then offer the job to the laid-off employee, or create an additional job position. 

If the violation is not cured, employers may face a civil action in the Superior Court of the State of California, in which the laid-off employee may be awarded hiring and reinstatement rights, all actual or statutory damages up to $1,000, punitive damages, as well as reasonable attorney fees and costs. 

Conclusion

Within industries struggling to survive, employers should be vigilant about complying with these laws, as failure to follow them could be costly.  



Adam Karr is a partner and Kelly Wood is counsel at O'Melveny & Myers LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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