Coronavirus (COVID-19): Furloughs and Temporary Layoffs

Increasingly, employers must consider furloughs, layoffs and workplace closures during the novel coronavirus (COVID-19) pandemic. As the situation becomes more dire in a rising number of states, economic conditions and government mandates may require an employer to significantly decrease or even cease business operations altogether.

While some employers may not be able to avoid permanent layoffs as a result of the pandemic, others may wish to explore temporary layoffs or other stopgap measures in the interest of keeping as many employees on the payroll as possible.

The following measures may help an employer deal with furloughs and temporary layoffs during the pandemic.

Retaining Employees as a Goal

Employee retention should be a top priority for employers during challenging times. Often, employees show their true value to the organization during emergent circumstances.

An employer benefits from retaining trained, productive employees during a pandemic or other emergency. Once the crisis has passed, these experienced employees can help boost much-needed revenues more readily than new hires.

Even if a temporary layoff is unavoidable, an employer should communicate its desire to retain its workforce. Explain that the step must be taken only due to circumstances outside of the employer's control, and that the decision is not based on performance or misconduct.

Alternatives to Layoffs

If possible, an employer should explore any available alternatives to temporary or permanent layoffs. In addition, the following options may be used in conjunction with laying off certain employees (for example, an employer chooses to lay off only those employees in non-essential positions).

Hiring Freezes

An employer may wish to institute a hiring freeze during a pandemic.

Hiring freezes should affect non-essential positions. This will allow an employer to restructure operations as needed with its current staff.

Hiring freezes may be done in conjunction with a number of other actions, including reductions in compensation and benefits and changes in flexible work arrangements.

Ensure that any managers with hiring authority understand the greater plan. Often, individual managers may seek to continue hiring even though a freeze is in effect: for example, by hiring temporary workers or interns instead.

Compensation and Benefits

While a reduction in salary and benefits is not always the most popular workplace change, an employer should consider these steps in an effort to avoid a temporary or permanent layoff:

  • Salary freezes;
  • Bonus or pension freezes;
  • Salary rollbacks; and
  • Benefit decreases, such as elimination of fringe benefits or 401(k) matching.

Flexible Working Arrangements

Job Sharing

Job sharing involves changing full-time workers into part-time workers while the workers share one full-time position. Usually, a full-time position is divided equally between two job-sharers, although more than two employees may share one job.

The practice can be an efficient way to:

  • Avoid a temporary or permanent layoff; and
  • Comply with social-distancing recommendations by keeping employee contact to a minimum.

Job sharing also makes it possible for employees to earn some income while, for example, caring for a family member with a serious health condition, as an alternative to taking all leave unpaid. Family and Medical Leave Act (FMLA) leave can be combined with paid, part-time job sharing for temporary periods.

Job sharing works best when workers communicate well with one another regarding the status of any particular project. The practice remains a viable option for employers when providing services to clients, customers or contacts.

Scheduling

Reductions in hours or shifts for employees may be one way to avoid temporary layoffs.

In addition, an employer may consider scheduling employees on alternate shifts to reduce the number of employees in a workplace (while complying with social distancing recommendations or requirements).

Reduced-schedule leave is often used in conjunction with family and medical leave as an accommodation. Because of the pandemic, this need may arise more frequently for employers.

Workforce Reductions

Employers should explore a variety of ways to reduce workforce spend while retaining the most desirable, productive employees. These options include:

Temporary Layoffs or Furloughs

Consider a temporary layoff or furlough if:

  • An employee cannot work safely from home;
  • It is an administrative challenge for a nonexempt, hourly employee to telecommute; or
  • If business conditions otherwise warrant laying employees off temporarily.

An employee furlough generally means that employees take unpaid or partially paid time off for various periods of time. Generally, the employee will either have a scheduled furlough period or be subject to callback rights. Benefits usually continue during a furlough period, while pay is decreased or eliminated. Consider all applicable paid leave laws, however, that may apply.

A furlough is assumed to be temporary - expected to end. Sometimes, the law treats a furlough as a termination, even if it is meant to be temporary. Indefinite furloughs or furloughs that last more than 10 days may be treated as a permanent layoff for unemployment benefit or termination notice and pay purposes.

Ensure that the EEO disparate impact analysis has been conducted. When deciding whom to furlough and whom to allow to work remotely, for example, ensure that these decisions are based on legitimate business reasons. When the crisis passes, an employer may need to justify that its decisions were not based on discriminatory, retaliatory or otherwise unlawful reasons.

Beware of having a clear rule as to who will be allowed to work from home (e.g., only exempt employees may work from home) or who will be furloughed, and then making exceptions to the rule.

Keep in mind that reducing an employee's hours could result in relief through unemployment insurance benefits for employees who cannot afford to continue to pay full-time salaries.

Notice and Pay Considerations

Employers should comply with any and all applicable notice requirements under the federal Worker Adjustment and Retraining Notification (WARN) or any state and local counterparts, which may be activated if a temporary layoff is really a permanent one.

  • Even if temporarily laying off employees, an employer may need to provide termination notices under unemployment insurance laws (such as California's form).
  • In addition, final pay requirements may apply.
  • Because the pandemic requirements change often, ensure that the organization is following the latest guidance.

Possible Permanent Layoffs

Even if certain alternatives to layoffs are feasible for a time, an employer may need to begin laying off employees as conditions worsen. For example, increasing shelter-in-place orders and state actions banning nonessential businesses from continuing to operate may hinder an employer's business plans.

In addition, organizations must plan for a continued business downturn, in which a permanent downsizing of the workforce could be the best alternative.

In the event of permanent layoffs or workplace closures, communicate as much as possible with the workforce during challenging times of change in order to increase retention. Observe wage and hour requirements. And, of course, follow any notice and pay considerations, which may or may not have been triggered through a furlough of a longer duration.

Fortunately, some states have provided some relief from certain statutory requirements.

Relief Available From Government Agencies

A number of government agencies at the federal, state and local level have provided additional relief for employers and employees during the COVID-19 pandemic.

The federal Department of Labor's Employment and Training Administration announced guidance outlining state flexibilities in administering their unemployment insurance programs to assist Americans affected by the COVID-19 outbreak. Federal law allows states to pay benefits if:

  • An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work;
  • An individual is quarantined with the expectation of returning to work after the quarantine is over; and
  • An individual leaves employment due to a risk of exposure or infection or to care for a family member.

In addition, federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19.

Potential relief and tax assistance is available from federal, state and local governments and agencies. For example:

  • Connecticut's "SharedWork" program allows employers to reduce full-time employees' hours by up to 60 percent, while the employees collect partial unemployment benefits.
  • California offers a "Rapid Response" team to help avert potential mass layoffs, and the state has provided some relief from its mini-WARN requirements.
  • A number of federal and state agencies have relaxed deadlines for tax payments.

For additional information on benefits available from states, consult our Coronavirus (COVID-19): Temporary Disability Insurance and Unemployment Insurance.

Return to Work

As conditions improve during and following the crisis, an employer may wish to recall employees who have been placed on furlough or laid off.

However, a return to work may vary significantly for employees due to the varying regional impact of the pandemic; the differences in state and local reopening orders and response; and changes in business strategy due to market forces.

Selecting Employees for Recall

An employer should take into consideration its business needs, applicable law and contractual obligations when selecting employees for recall. The employer should note any recall/callback rights under applicable collective bargaining agreements and/or internal layoff and recall policies and practices.

The recall process begins when first deciding on whether to place an employee on furlough, temporary layoff or permanent layoff and any attendant recall expectations at the time of the initial employment action. However, the process is not a static one: a decision may be made at a later time, based on worsening business circumstances, to implement a temporary or a permanent layoff in place of a furlough.

An employer should take the time to think through the business case behind selecting positions for recall. This exercise allows an employer to consider its approach, to discuss the reasons for the recalls internally and to review how these employment decisions further legitimate business objectives.

The process should focus on fairness. Ways to ensure the recall process is equitable include:

  • Focusing on positions, not individual employees;
  • Taking into account objective measures, such as specific competencies;
  • Consistently applying objective measures;
  • Ensuring that the individuals chosen for recall are being selected in a manner that is consistent with federal, state and local equal employment opportunity (EEO) laws (for example, selecting for recall only those employees without caregiving responsibilities may run afoul of applicable EEO laws);
  • Guarding against front-line supervisors or recruiters making selections other than those decided upon; and
  • Promoting transparency.

HR may work with inside or outside counsel to prepare an unprivileged recall list. It is perfectly reasonable to explain why some positions were not selected for recall at any point in time (e.g., non-essential positions).

Offers to Return to Work

Remember that bringing employees back to work is not a one-sided, automatic decision or process. An employer's recall from furlough or layoff is an offer of employment to a worker. The worker may then accept or reject the offer.

Circumstances for both parties may have changed in the time following the furlough or layoff. For example, an employer may be making a recall offer that includes changed job responsibilities and possible reassignments. In addition, the employee may be faced with different circumstances (e.g., inability to secure child care due to widespread school closures) or have found alternative employment during the period of furlough or layoff.

Conditions of Offer

An employer should use a detailed letter when offering to recall an employee from furlough during the coronavirus (COVID-19) pandemic. The letter confirms the conditions of recall, including updated terms and condition of employment.

The letter should include:

  • Guidelines for employment, including an at-will disclaimer and information on policies and practices;
  • Compensation and benefits information, including any information on benefits continuation or seniority, if applicable;
  • Tax and other withholding information;
  • Information on an employer's compliance efforts with respect to health and safety, including any new protocols resulting from the pandemic; and
  • Any applicable offer contingencies.

Benefits

Many employers have chosen to bridge the gap, as much as possible, for employees during the period of furlough. Options available to employers include:

  • Subsidizing COBRA payments;
  • Working with carriers to temporarily continue non-COBRA-eligible benefits, such as disability and life insurance benefits; or
  • Allowing employees to pay premiums, whether through pay-as-you-go options or by setting up a repayment plan (i.e., an employer subsidizes the entire premium during the time of furlough, and the employee repays a portion upon returning to work).

The Affordable Care Act (ACA) regulates breaks in services and may require reinstatement to avoid penalties under the law. An employer should refer to its plan terms when confirming waiting periods and reinstatement for specific employees.

For example, if an employee was in a waiting period, then their time on the waiting period is usually added to whatever remains upon their return. However, be aware that if leave extends for a longer duration, the waiting period may reset.

Regarding paid and/or unpaid sick time, returning workers may be entitled to leave under the Families First Coronavirus Response Act (FFCRA). While there is usually a waiting period before any sick time may accrue, returning employees may be entitled to emergency paid sick or emergency family and medical leave under FFCRA. In addition, states and localities continue to add mandatory leave requirements for employers due to the COVID-19 pandemic.

Immigration Issues

Recalling a worker on a visa has very specific consequences depending on the terms and conditions of the visa. The US Citizenship and Immigration Services (USCIS) has temporarily suspended in-person service to help slow the spread of COVID-19 and is offering only emergency services for limited situations. As a result, new visa petitions filed on recall, pending visa petitions or approvals of visas may be delayed. However, the agency has temporarily amended a number of regulations in the wake of COVID-19 in order to extend maximum allowable periods of stay for certain visa categories.

If a worker had returned to a home country on furlough, then there may be complications for return to work in the US because of existing border closures for all but essential travel (and, by extension, essential workers).

With respect to employment eligibility verification and the Form I-9, the USCIS considers a furlough or temporary layoff to be continuing employment.

Discrimination and Retaliation Concerns

Employers should anticipate employees' concerns with respect to discrimination and retaliation upon return to work. Employers should adopt a proactive approach to concerns and communicate any changes to protocols as a result of COVID-19, as well as reviewing any avenues for the processing of employee questions or concerns.

Equal Employment Opportunity Commission (EEOC) guidance states that employers will be acting consistent with the Americans with Disabilities Act (ADA) as long as any screening that is being implemented is consistent with advice from the Centers for Disease Control and Prevention (CDC) and public health authorities for the type of workplace at any particular point in time. For example, an employer may conduct temperature screening under the direct threat exception to the ADA's restrictions on medical inquiries. However, employers should not engage in unlawful disparate treatment based on protected characteristics in decisions related to screening and exclusion practices.

In addition, an employer may require employees to wear protective gear (e.g., masks and gloves) and observe infection control practices (for example, regular hand washing and social distancing protocols).

However, if an employee with a disability needs a related reasonable accommodation under the ADA (e.g., non-latex gloves or gowns designed for individuals who use wheelchairs), or a religious accommodation under Title VII (e.g., modified equipment due to religious garb), the employer should engage in the interactive process and provide the modification or an alternative, if feasible and not an undue hardship on the operation of the employer's business under the ADA or Title VII.

Employers should ensure that employees are receiving standardized, consistent messaging. Perhaps executives or HR could hold town hall meetings with the workforce upon return to work for COVID-19 updates.

  • Train supervisors regarding any changes to policies or procedures. Ensure that these front-line managers have all the tools supervisors need to answer employee questions, and, most importantly, that they know when to escalate a concern.
  • Use caution when disciplining employees when returning to the office. A number of laws contain retaliation protections (e.g., Title VII; the Occupational Safety and Health (OSH) Act and its state counterparts). In addition, a number of states have added retaliation protections for employees who are seeking to follow the CDC's and state board of health recommendations.
  • For employers seeking to enforce attendance, make sure that you are doing it not just in a compliant manner, but also in a compassionate and empathetic way that takes employees' concerns into account.

State and Local Protections

Jurisdictions have begun to address the implications of the COVID-19 pandemic on existing laws that address involuntary terminations.

Long Beach, California

Recall Ordinance

Effective June 22, 2020, the City of Long Beach, California, has enacted a worker recall ordinance, which includes protections for hospitality and janitorial workers who have been laid off by their employers during the coronavirus (COVID-19) pandemic.

The City Manager must report back every 90 days to the City Council and Mayor on the effectiveness of the ordinance's provisions, with recommendations for additional protections, and whether the provisions continue to be necessary.

The ordinance's protections may be waived in a bona fide collective bargaining agreement.

Covered Employers

The ordinance covers commercial property or hospitality employers. Commercial property employer means an owner, operator, manager or lessee, including a contractor, subcontractor, or sublessee, of a non-residential property in the City of Long Beach that provides janitorial services and employs 25 or more employees. Hotel employer means any person who owns, controls or operates a hotel in the City and employs 25 or more employees who provide services at a hotel in conjunction with the hotel's purpose. A hotel employer includes any contracted, leased or sublet premises connected to or operated in conjunction with the building's purpose, or providing services at the building.

Covered Employees

The ordinance applies to laid-off hotel or commercial property employees who:

  • In a particular week, performed at least two hours of work within the geographical boundaries of the City of Long Beach for a covered employer;
  • Had a length of service with the employer of six months or more; and
  • Whose most recent separation from active employment occurred on or after March 4, 2020, as a result of:
    • Lack of business;
    • Reduction in force;
    • Bankruptcy; or
    • Other economic, nondisciplinary reason.

The ordinance does not cover any person employed as a:

  • Manager;
  • Supervisor; or
  • Confidential employee.

The ordinance creates a rebuttable presumption (i.e., an assumption unless proven otherwise) that any termination occurring on or after March 4, 2020, was due to a nondisciplinary reason.

Right of Recall

The ordinance requires priority of recall/rehire for covered laid-off employees. A covered employer must provide a recall offer to covered employees for job positions that become available for which the employee is qualified. The recall offer must be in writing, to their last known mailing address, electronic mail address and mobile/text number (to the extent the employer has such information).

A covered employee is qualified for a position if the employee:

  1. Held the same or similar position at the site of employment at the time of the employee's most recent separation from active service with the employer;
  2. Is or can be qualified for the position with the same training that would be provided to a new hire.

An employer must offer positions to laid-off employees in an order of preference corresponding to these categories. If more than one employee is entitled to preference for a position, then the employer must offer the position to the employee with the greatest length of service (i.e., based on seniority).

A laid-off employee who is offered a position must be given no less than five business days in which to accept or decline the offer of reemployment. A business day is any day except Saturday, Sunday or official state holidays.

Retaliation Protections

The ordinance prohibits an employer from retaliating, terminating, reducing in compensation, or otherwise discriminating against any worker for:

  • Seeking to enforce their rights under the ordinance by any lawful means;
  • Participating in related proceedings;
  • Opposing any practice proscribed by the ordinance; or
  • Otherwise asserting rights under ordinance.
Private Right of Action

A covered employee may file a claim in state superior court. Remedies include:

  • Hiring and reinstatement rights under the ordinance;
  • All actual damages (e.g., lost pay and benefits) and statutory damages in the sum of $1,000, whichever is greater;
  • Punitive damages; and
  • Reasonable attorney fees and costs.

A civil action may continue only after the following requirements have been met:

  1. The covered employee provides written notice to the employer of the alleged violations along with supporting facts; and
  2. The employer is provided with 15 days from receipt of the written notice to cure any alleged violation.

Worker Retention

Effective June 22, 2020, the City of Long Beach has passed a worker retention ordinance in the wake of the coronavirus (COVID-19) pandemic. The ordinance requires that any successor employer to a covered incumbent hospitality and janitorial employer provide a transitional retention period to workers upon a change in control.

The City Manager must report back every 90 days to the City Council and Mayor on the effectiveness of the ordinance's provisions, with recommendations for additional protections, and whether the provisions continue to be necessary.

The ordinance's protections may be waived in a bona fide collective bargaining agreement.

Covered Employers

The ordinance covers commercial property or hotel employers. Commercial property employer means an owner, operator, manager or lessee, including a contractor, subcontractor, or sublessee, of a non-residential property in the City that provides janitorial services and employs 25 or more employees. Hotel employer means any person who owns, controls, or operates a hotel in the City and employs 25 or more employees who provide services at a hotel in conjunction with the hotel's purpose.

Covered Workers

Worker means an individual employed by an incumbent business employer who performs work at a hotel or commercial property business and:

  • Who has a length of service with the incumbent employer for six months or more;
  • Whose primary place of employment is a business subject to a change in control;
  • Who is employed or contracted to perform work functions directly by the incumbent employer, or by a person who has contracted with the incumbent employer to provide services at the business subject to the change in control; and
  • Who worked for the incumbent employer on or after March 4, 2020, and prior to the change in ownership.

Worker does not include a person employed as a:

  • Manager;
  • Supervisor; or
  • Confidential employee.
Worker Retention and Transitional Period

The incumbent employer must, within 15 days after execution of a transfer document, provide to the successor employer each worker's:

  • Name;
  • Address;
  • Date of hire; and
  • Occupation classification.

The successor employer is required to:

  • Maintain a preferential hiring list of workers identified by the incumbent employer; and
  • Hire from that list for a period beginning on the date of change of ownership and continuing for six months after the business is open to the public under the operation of the successor employer.

A successor employer must retain written verification of any offers to covered workers for three years from the date the offer was made. The verification must include each worker's:

  • Name;
  • Address;
  • Date of hire; and
  • Occupation classification.

A successor employer must retain each worker hired under the ordinance for 90 days following the worker's start date. During the 90-day transition employment period, a worker must be employed under reasonable terms and conditions of employment or as required by law. The successor employer must provide a worker with a written offer of employment. This offer must remain open for at least five business days from the date of the offer.

If, within the transition period, the successor employer determines that it requires fewer workers than were required by the incumbent employer, then the successor employer must offer the position to the worker in the same occupational classification with the greatest length of service (i.e., seniority) with the incumbent employer.

During the 90-day transition employment period, the successor employer may only terminate a covered worker for cause. At the end of the 90-day transition employment period, the successor employer must perform a written performance evaluation for each worker retained under the ordinance. If the worker's performance during the 90-day transition employment period is satisfactory, then the successor employer must consider offering the worker continued employment.

The successor employer must retain a record of the written performance evaluation for three years.

Notice

The incumbent employer must post written notice of the change in control at the location of the affected business within five business days following the transfer of ownership. Notice must remain posted during any closure of the business and for six months after the business is open to the public under the successor employer.

Notice must include:

  • The name of the incumbent employer and its contact information;
  • The name of the successor employer and its contact information; and
  • The effective date of the change in control.

Notice must be posted in a conspicuous place at the business so as to be readily viewed by workers and applicants.

Retaliation Protections

The ordinance prohibits an employer from retaliating, terminating, reducing in compensation, or otherwise discriminating against any worker for:

  • Seeking to enforce their rights under the ordinance by any lawful means;
  • Participating in related proceedings;
  • Opposing any practice proscribed by the ordinance; or
  • Otherwise asserting rights under ordinance.

Private Right of Action

A covered worker may file a civil claim in state superior court. Remedies include:

  • Hiring and reinstatement rights under the ordinance;
  • Front or back pay for each day a violation continues. The pay is calculated at the higher rate of: (i) the average regular rate of pay received by the worker during the last three years of employment in the same occupation classification; or (ii) the most recent regular rate of pay received by the worker while employed by either covered employers or a covered business;
  • Value of the benefits the worker would have received under the successor employer's benefits plan; and
  • Reasonable attorney fees and costs.

A worker may successfully file a court claim only after:

  1. The worker provides written notice to the incumbent and/or the successor employer of the alleged violations and any supporting facts; and
  2. The incumbent and/or successor employer is provided 15 days from receipt of the written notice to cure any alleged violation.

Los Angeles, California

Los Angeles has enacted two ordinances, the Right of Recall Ordinance and the Worker Retention Ordinance, which cover the same sets of employers and workers. In addition, both ordinances contain retaliation protections.

Covered Employers

The ordinances apply to:

  • Airport employers (excluding airlines);
  • Commercial property employers (with at least 25 janitorial, maintenance and/or security workers - and only those workers are covered);
  • Event center employers (with more than 50,000 square feed or at least 1,000 seats); and
  • Hotel employers (including any restaurants on the hotel premises).

The ordinances specifically exclude non-profit institutions that operate medical centers in the city.

Covered Workers

Covered workers are those:

  • Who, in a particular week, perform at least two hours of work within the city for a covered employer;
  • Who have a length of service of six months or more (to include all active service, including leave or vacation time); and
  • Whose most recent separation from the covered employer occurred on or after March 4, 2020, as a result of:
    • Lack of business;
    • A reduction in force; or
    • Any other economic, nondisciplinary reason.

The ordinances assume that any termination occurring on or after March 4, 2020, was due to a nondisciplinary reason (although this assumption may be rebutted).

The following workers are not protected:

  • Supervisors;
  • Confidential employees; or
  • Those who perform as their primary responsibilities sponsorship sales for an event center employer.

Retaliation Protections

The ordinances prohibit an employer from terminating, reducing in compensation or otherwise discriminating against any worker for:

  • Opposing any practice prohibited by the ordinances;
  • Participating in related proceedings;
  • Seeking to exercise protected rights; or
  • Otherwise asserting protecting rights.

Right of Recall Ordinance

Effective June 14, 2020, the City of Los Angeles requires the recall of laid-off workers in certain industries.

Article 4-72J-A, Chapter XX of the Los Angeles Municipal Code.

Right of Recall

A covered employer who seeks to rehire workers must give priority to covered laid-off workers. A covered employer must make a written offer to a covered worker's last known mailing address, e-mail address, and text message phone number, of any position which is or becomes available after June 14, 2020, for which the covered worker is qualified.

In order of priority, a worker is qualified if they:

  1. Held the same or similar position at the same site of employment at the time of their most recent separation from service; or
  2. Is or can be qualified for the same position with the same training as a new hire.

If more than one covered worker is entitled to preference for a position, then the employer must offer the position to the worker:

  1. With the greatest length of service in the same or similar position (i.e., seniority); and then
  2. Who is or can be qualified for the position with the same training that would be provided to a new hire.

A worker who is offered a position must be provided no less than five business days in which to accept or decline the offer.

Other than a collective bargaining agreement (which supersedes the provisions of the ordinance if in effect), a worker may not waive, and an employer may not request a waiver of, any rights under the ordinance.

Enforcement

A covered worker may bring a civil action for enforcement of the ordinance's protections. Remedies include:

  • Hiring and reinstatement;
  • Actual damages (e.g., lost pay and benefits) and statutory damages in the sum of $1,000, whichever is greater;
  • Punitive damages;
  • Reasonable attorney fees; and
  • Costs.

A worker may bring the court claim only after:

  • Providing written notice to the employer of the alleged violations and the facts to support the allegations; and
  • Providing 15 days from receipt of the written notice to the employer in order to cure the violation.

Worker Retention Ordinance

Effective June 14, 2020, the City of Los Angeles requires the retention of laid-off workers in certain industries by a successor employer in the event of a change in control.

Change in control means any sale, assignment, transfer, contribution or other disposition of all or substantially all of the assets used in the operation of a covered business, or a discrete portion of a business that continues to operate as the same type of business of the incumbent employer or any person who controls the incumbent employer.

Article 4-72J-B, Chapter XX of the Los Angeles Municipal Code.

Employer Responsibilities

An incumbent employer must conspicuously post written notice of a change in control at the location of the affected business within five business days following the execution of a transfer document. The notice must remain posted:

  • During any closure of the business; and
  • For six months after the business is open to the public under the success employer.

The notice must include:

  • Name of the incumbent employer;
  • Name of the successor employer and contact information; and
  • Effective date of the change in control.

Within 15 days after execution of a transfer document in a change of control, the incumbent employer must provide to the successor employer each covered worker's:

  • Name;
  • Address;
  • Date of hire; and
  • Occupation classification.

The successor employer must:

  • Maintain a preferential hiring list of the identified workers; and
  • Hire from that list for a period beginning on the execution of the transfer document in a change of control and continuing for six months after the business is open to the public under the successor employer.

A successor employer must retain each worker for at least a 90-day transition period. A successor employer may only terminate a worker for cause during this period.

During the transition period, the worker must be employed under reasonable terms and conditions of employment or as required by law. The successor employer must provide a worker with a written offer of employment for the transition period. The offer must remain open for at least 10 business days from the date of the offer.

If a successor employer determines that it requires fewer workers than were required by the incumbent employer, then the successor employer must offer the position to the worker in the same occupational classification with the greatest length of service with the incumbent employer (i.e., based on seniority).

During the 90-day transition period, the successor employer must perform a written performance evaluation for each worker. If the worker's performance is satisfactory, then the employer must consider offering the worker continued employment.

Other than a collective bargaining agreement (which supersedes the provisions of the ordinance if in effect), a worker may not waive, and an employer may not request a waiver of, any rights under the ordinance.

Recordkeeping

If the successor employer extends an offer of employment to an identified worker, the successor employer must retain written verification of that offer for at least three years from the date the offer was made. The verification must include each worker's:

  • Name;
  • Address;
  • Date of hire; and
  • Occupation classification.

In addition, a successor employer must retain written performance evaluations for a period of at least three years.

Enforcement

A worker may bring a civil action against either an incumbent or successor employer for violations of the ordinance. Remedies include:

  • Hiring and reinstatement rights under the ordinance (i.e., for a 90-day transition period followed by a possible offer of continued employment);
  • Front or back pay for each day the violation continues; and
  • Value of the benefits the worker would have received under the successor employer's benefits plan.

A worker may only bring a civil action after providing:

  • Written notice to the incumbent employer and/or the successor employer of the alleged violations of the ordinance and the facts supporting the allegations; and
  • Fifteen days from receipt of the written notice for the employer(s) to cure any violation.

San Francisco, California

Effective July 3, 2020, San Francisco has passed the Back to Work Emergency Ordinance, which temporarily creates a right to reemployment for eligible employees laid off due to the COVID-19 pandemic.

The temporary ordinance is in effect through the 61st day following enactment (i.e., September 1, 2020), unless the emergency ordinance is reenacted.

Definitions

Employer means any person who directly or indirectly owns or operates a business or non-profit in the City and, beginning on or after February 25, 2020, employed or employs 100 or more employees as of the earliest date that an employer separated or separates one or more employees that subsequently resulted or results in a layoff. Public agencies and employers in the healthcare industry are not covered by the ordinance.

Eligible worker means a person:

  • Employed by their employer for at least 90 days of the calendar year preceding the date on which their covered employer provided or provided written notice to the worker of a layoff; and
  • Who was or is separated due to a layoff.

However, the ordinance does not apply to eligible workers covered by a bona fide collective bargaining agreement if the ordinance's requirements are expressly waived in the collective bargaining agreement in clear and unambiguous terms.

Family care hardship means an eligible worker who is unable to work due to either:

  • A need to care for their child whose school or place of care has been closed, or whose childcare provider is unavailable, as a result of the public health emergency, and no other suitable person is available to care for the child during the period of such leave; or
  • Any other grounds for which a person may use paid sick leave to care for someone other than themselves.

Layoff means a separation of 10 or more employees during any 30-day period, beginning on or after February 25, 2020, and which is caused by a covered employer's lack of funds or lack of work for its employees, resulting from:

  • The public health emergency; or
  • Any shelter-in-place order.

Written Notice of Layoff

Notice to Workers

An employer must provide all eligible workers with written notice of the layoff at or before the time when the layoff becomes effective. The notice must be in a language understood by the worker.

Covered employers should note that an employer must provide written notice to any eligible worker who the employer separated due to layoff before the effective date of the emergency ordinance. A covered employer must provide notice within 30 days of the effective date of the ordinance (i.e., August 2, 2020).

Notice to City

The employer must also provide notice to the Office of Labor Standards Enforcement Economic and Workforce Development (OEWD) of the layoff within 30 days of initiating the layoff. If the layoff was unforeseen, the employer must provide written notice within seven days of its separation of the tenth employee within the 30-day period.

The notice must contain:

  • The total number of employees located in the City and County of San Francisco affected by the layoff;
  • Job classification at the time of separation for each eligible worker;
  • The original hire date for each eligible worker; and
  • The date of separation from employment for each eligible worker.

Record Retention

If an employer initiates a layoff after the beginning of the public health emergency, an employer must retain the following records for at least two years (measured from the date of the layoff notice) regarding each eligible worker:

  • Full legal name;
  • Job classification at the time of separation;
  • Date of hire;
  • Last known address of residence;
  • Last known email address;
  • Last known telephone number; and
  • A copy of the written notice of layoff provided to the eligible worker.

Right to Reemployment

An employer must first offer an eligible worker an opportunity for reemployment to the substantially similar position before offering the position to another person in the following circumstances:

  • If a covered employer has initiated a layoff and subsequently seeks to hire for the position formerly held by an eligible worker; and
  • If an employer has initiated a layoff covered under the ordinance and subsequently seeks to hire a person to any position in San Francisco that is substantially similar to the eligible worker's former position (also located in San Francisco).

A substantially similar position includes any of the following:

  • A position with comparable job duties, pay, benefits and working conditions to the eligible worker's position at the time of layoff;
  • Any position in which the eligible worker worked for the employer in the 12 months preceding the layoff; and
  • Any position for which the eligible worker would be qualified, including a position that would necessitate training that an employer would otherwise make available to a new employee to the particular position upon hire.

In the event that more than one eligible worker is eligible for reemployment, the employer must make offers of reemployment based on a worker's former seniority (i.e., earliest date of hire) with the employer.

Exceptions

An employer may withhold an offer of reemployment under the following circumstances.

  • Misconduct. Based on information attained subsequent to the layoff, the employer learns that the eligible worker engaged in any act of dishonesty, violation of law, violation of policy or work rule or other misconduct while employed with the covered employer.
  • Severance agreement. This exception applies if:
    • The employer separated an eligible worker between the beginning of the public health emergency and the effective date of the emergency ordinance as part of a layoff; and
    • The employer and the eligible worker executed a severance agreement as a result of the eligible worker's separation due to layoff, provided that:
      • The parties executed the agreement before the effective date of the ordinance; and
      • In exchange for adequate consideration, the eligible worker agreed to a general release of claims against the employer.
  • Rehiring. This exception applies if:
    • The employer separated an eligible worker between the beginning of the public health emergency and the effective date of the emergency ordinance as part of a layoff; and
    • Prior to the effective date of the ordinance, the employer hired a person other than the eligible worker to the worker's former position or to a substantially similar position.

Notice of Offer and Acceptance

A covered employer must engage in good faith efforts to notify eligible workers by telephone and email of offers of reemployment and extend offers of reemployment to all eligible workers. If a covered employer does not have telephone or email contact information for an eligible worker or is unable to make contact with an eligible worker by telephone or email, then the covered employer must attempt to contact an eligible worker by certified mail or courier delivery.

If a covered employer has a record of an eligible worker's last known telephone number, the employer must attempt to notify the eligible worker of an offer of reemployment by telephone. A covered employer must notify an eligible worker that:

  • The employer wishes to extend an offer of reemployment;
  • The employer seeks an eligible worker's consent to transmit a written offer of reemployment by email; and
  • If an eligible worker consents, the eligible worker must provide a covered employer with written confirmation of their consent by text message or email no later than 5:00 p.m. Pacific Standard Time on the business day immediately following the date on which the employer and eligible worker spoke by telephone.

If the eligible worker consents to receiving the offer by email, the employer must transmit such offer by no later than 5:00 p.m. Pacific Standard Time of the first business day following receipt of the eligible worker's communication confirming such consent.

If the eligible worker does not consent to receiving the offer by email within the prescribed timeframe, the employer must transmit a written offer of reemployment to the eligible worker's last known address of residence by certified mail or courier delivery. The offer must remain open for at least two business days following delivery by certified mail or courier.

If an employer has a record of an eligible worker's last known email address, the covered employer must attempt to notify the eligible worker of an offer of reemployment by email. In the email communication, the employer must state that:

  • It wishes to extend an offer of reemployment; and
  • It seeks the eligible worker's consent to transmit a written offer of reemployment by email.

If an eligible worker consents, the eligible worker must provide the employer with written confirmation of their consent by text message or email no later than 5:00 p.m. Pacific Standard Time the next business day.

If the eligible worker consents to receiving the offer by email, the employer must transmit such offer by no later than 5:00 p.m. Pacific Standard Time the first business day following receipt of the eligible worker's communication confirming such consent.

If the eligible worker does not consent to receiving the offer by email within the prescribed timeframe, the employer must transmit a written offer of reemployment to the eligible worker's last known address of residence by certified mail or courier delivery. The offer must remain open for at least two business days following delivery by certified mail or courier.

If a covered employer cannot obtain an eligible worker's consent to receive an offer of reemployment by email, the employer must transmit the offer to the eligible worker's last known address of residence by certified mail or courier delivery. The offer must remain open for at least two business days following delivery by certified mail or courier (no proof of receipt is necessary under these circumstances).

Offers of reemployment must be delivered based on seniority.

Acceptance of Offer

An eligible worker may accept an offer of reemployment by providing a response to the employer in writing by reasonable means identified by the employer, including:

  • By returning a signed version of an offer letter by any reasonable method of delivery; or
  • If authorized by an employer, by applying an electronic signature and transmitting acceptance of the offer to an employer by email or other reasonable electronic method.

If the eligible worker notifies the employer by other means (e.g., by telephone or text message) of their intent to accept the offer, the employer must allow the eligible worker two business days from that date to respond in the written reasonable means identified by the employer. If the eligible worker fails to respond to an offer of reemployment within the specified timeframes, then the eligible worker will be deemed to have rejected the offer of reemployment. The covered employer may then offer the position to the next most senior eligible worker, if applicable, or to an alternative job candidate.

Extension by Mutual Agreement

A covered employer and eligible worker may extend the offer or acceptance periods beyond the required timeframes by mutual agreement.

Nondiscrimination and Reasonable Accommodation Provisions

The ordinance prohibits an employer from discriminating against or taking an adverse employment action against an eligible worker based on a family care hardship.

In addition, an eligible worker must be entitled to reasonable accommodation of a job duty or job requirement if a family care hardship affects their ability to perform a job duty or to satisfy a job requirement. In response to a request for accommodation, an employer must make good faith efforts to reasonably accommodate an eligible worker during the period in which they experience a family care hardship.

Reasonably accommodate includes:

  • Modifying an eligible worker's schedule;
  • Modifying the number of hours to be worked; or
  • Permitting telework, to the extent operationally feasible.

Notification to City of Offers of Reemployment

A covered employer must notify the OEWD in writing of all offers of reemployment made under this emergency ordinance, in addition to all acceptances and rejections by eligible workers of such offers or reemployment.

Remedies

An eligible worker may bring an action in the Superior Court of the State of California against an employer for violating this emergency ordinance, and may be awarded the following relief:

  • Hiring and reinstatement rights, whereupon the 90-day reemployment period must not commence until the date the employer rehires an eligible worker;
  • Back pay for each day of the violation and front pay for each day during which the violation will continue. Back pay and front pay must be calculated at a rate of pay not less than the higher of:
    • If employed for less than three years prior to the layoff, the average regular rate received by the eligible worker during their employment;
    • If employed for more than three years prior to the layoff, the average regular rate received by the eligible worker during the last three years of their employment; or
    • The most recent regular rate received by the eligible worker as of the date of layoff; and
    • The value of the benefits the eligible worker would have received under the employer's benefit plan had the violation not occurred.
  • Reasonable attorney fees and costs if the eligible worker is the prevailing party.

There is no limitation on other rights and remedies otherwise available to eligible workers, including the rights to be free from wrongful termination and unlawful discrimination.