News & Updates: San Francisco – New Recall Ordinance Impacts Restarting Businesses

As employers look to reopen their doors following local and state-wide emergency orders, the San Francisco Board of Supervisors passed the “Back to Work” emergency ordinance requiring non-union employers to provide employees notice and recall rights similar to rights typically provided under union contracts. As described below, covered employers must offer reemployment to employees laid off on or after February 25 before hiring other employees to fill their former positions or any similar positions. The ordinance, which became effective on July 4, was passed on an emergency basis, and the rush to pass the law is clear from the numerous inconsistencies and ambiguities throughout the ordinance. The San Francisco Office of Labor Standards Enforcement (“OLSE”) is given authority to enact regulations which may clarify employers’ obligations.

Below are key provisions of the ordinance.

Coverage

Covered Layoffs: The ordinance applies to layoffs of 10 or more employees by “covered employers” during any 30-day period commencing on or after February 25, if the layoff was caused by an employer’s lack of funds or lack of work for employees resulting from either the COVID public health emergency or San Francisco’s shelter-in-place orders.

Covered Employers: Employers (other than public entities and certain health care organizations) that had 100 or more employees at the time of the first covered layoff are subject to the requirements of the ordinance.

Eligible Laid-Off Employees: Employees who worked for the employer for at least 90 days in the year before receiving a layoff notice are entitled to the notice and recall rights provided in the ordinance.

Notice of Layoff

The ordinance imposes new requirements for providing employees notice of layoff and notice of their rights under the ordinance. These requirements are in addition to any state or federal WARN notice requirements.

Notice to Eligible Laid-Off Employees: Employers must provide each eligible laid-off employee a written notice at or before the time of layoff with the following information:

• The effective date of the employee’s layoff;
• A summary of the right to reemployment created by the ordinance; and
• A telephone number for a hotline, to be operated by the Office of Economic and Workforce Development (“OEWD”), which employees may call to receive information regarding their rights under the ordinance and other services available to them.

For covered layoffs which occurred before the ordinance took effect, employers must provide notice to eligible laid-off employees within 30 days after the effective date of the ordinance (that is, by August 3).

Notice to the OEWD: Employers are also required to notify the OEWD of covered layoffs within 30 days of the date an employer initiates a layoff or, if the employer did not foresee that it would lay off ten employees within thirty days, within seven days of laying off the tenth employee in a thirty-day period. The notice to the OEWD must include:

• The total number of eligible laid-off employees (those who worked in San Francisco and had been employed 90 days before the effective date of their layoff);
• The job classification at the time of separation for each eligible laid-off employee;
• The original hire date for each eligible laid-off employee; and
• The date of separation from employment for each eligible laid-off employee.

As discussed below, employers must also provide the OEWD information regarding all offers of reemployment to eligible laid-off employees.

Recall from Layoff Based on Seniority

When an employer seeks to hire a person to fill a position that was formerly held by an eligible laid-off employee (or a position “substantially similar” to such a position, as defined below), the employer must first offer the position to the eligible laid-off employee before offering the position to anyone else.

A “substantially similar” position includes any positions within San Francisco:

• with comparable job duties, pay, benefits, and working conditions as the eligible laid-off employee’s position at the time of layoff, or
• in which the eligible laid-off employee worked for the employer in the 12 months preceding the layoff, or
• for which the eligible laid-off employee would be qualified, including a position that would necessitate training that would otherwise be made available to a newly-hired employee.

Seniority: If more than one employee was laid off from the same job classification, the employer must offer reemployment to eligible laid-off employees in order of seniority. The ordinance provides that seniority is based on an employee’s “earliest date of hire” with the employer, but does not indicate how breaks in service may affect seniority. The ordinance does not permit an employer to consider employees’ relative skills or qualifications in making recall decisions, nor may the employer consider an employee’s poor performance or disciplinary history.

Exceptions to Recall Obligation: Employers are not obligated to offer reemployment to an employee in the following very limited circumstances:

• If the employer learned after the layoff that the employee engaged in any act of dishonesty, violation of law, violation of policy or rule, or other misconduct during their employment with the employer;
• If the employee signed a separation agreement before the July 4 effective date of the ordinance that provided the employee “adequate” consideration in exchange for a general release of claims; or
• Before the effective date of the ordinance, the employer already hired someone else to fill the employee’s position or the substantially similar position.

Notice of Recall from Layoff

The ordinance imposes burdensome and inefficient requirements for providing employees offers of recall from layoff:

Delivery of Offer:

• If the employer has the employee’s telephone number:
  • The employer must attempt to notify the employee by telephone that the employer wishes to extend an offer of reemployment and ask for consent to transmit the offer by email.
  • The employee must consent by text or email to receiving the offer by email by 5 p.m. on the business day after the employer and employee spoke by telephone.
  • If the employee consents to receive the offer by email, the employer then must transmit the offer by email by 5:00 p.m. the following business day.
  • If the employee does not consent to email within the prescribed deadline, the employer must transmit the offer by certified mail or courier delivery to the employee’s last known address.
• If the employer has a record of the employee’s last known email address:
  • The employer must attempt to notify the employee by email that the employer wishes to extend an offer of reemployment and ask for consent to send the offer by email.
  • The employee must consent by text or email to receiving the offer by email by 5 pm on the business day after the employer and employee spoke by telephone.
  • If the employee consents to receive the offer by email, the employer then must transmit the offer by email by 5:00 p.m. the following business day.
  • If the employee does not consent to receiving the offer by email within the prescribed deadline, the employer must transmit the offer of reemployment by certified mail or courier delivery to the employee’s last known address of residence.
• If the employer cannot obtain the employee’s consent to receive an offer of reemployment by email, the employer the employer must transmit the offer of reemployment by certified mail or courier delivery to the employee’s last known address of residence.

Ambiguous Deadline for Employee’s Response to Offer of Reemployment: While the ordinance provides that employees must respond to offers of reemployment delivered by certified mail or courier within two business days of delivery, the ordinance does not indicate any deadline for responding to an offer of reemployment delivered by email. Until this ambiguity is resolved by the OEWD or an amendment to the ordinance, employers may wish to send all offers of recall by courier or certified mail as well as by email (if the employee consents).

Exhaustion of Recall Rights: If an employee turns down the offer or fails to respond by the deadline, the employer must move on to the next most senior employee and follow the same procedure. Only if all eligible employees have declined or failed to respond timely to offers may an employer offer the position to another candidate.

Note: The ordinance does not indicate whether an eligible employee’s rejection or failure to respond to an offer of reemployment terminates the employee’s right to recall to future available positions. Therefore, even if an employee fails to respond to an offer of recall or declines an offer, the employer may be required to offer the employee each subsequent “substantially similar” position that becomes available while the ordinance is in effect, slowing down the rehiring process dramatically.

Notice to OEWD: The employer must provide the OEWD written notice of all offers of recall from lay off, as well as acceptance and rejections of those offers.

Record Retention

Employers must also comply with new record retention requirements, concerning the workers covered by the ordinance. It must retain, for at least two years from the date of notice, the following information for each covered laid-off employee:

• Legal name;
• Job classification at the time of separation;
• Date of hire;
• Last known residence address, email address, and phone number; and
• Copy of the written notice of the layoff that was provided to the employee.

Family Care Hardships

The ordinance prohibits an employer from discriminating against a covered laid-off employee due to the employee experiencing a “Family Care Hardship.” An employee is considered to have a Family Care Hardship if the employee is “unable to work” due to specified COVID-related child-care or dependent care obligations. Thus, an employer must offer reemployment to an employee who is unable to work due to a Family Care Hardship and must also attempt to reasonably accommodate these hardships through, for example, a modified schedule or telework, to the extent that such modifications are operationally feasible. The obligation to reasonably accommodate employees with “Family Care Hardships” extends until the expiration of the emergency ordinance.

Remedies

Employers can expect additional litigation arising from the ordinance. Covered employees may sue in California Superior Court for alleged violations of the ordinance and, if successful, may be awarded hiring and reinstatement rights, front and back pay, benefits, and attorneys’ fees.

Collective Bargaining Agreements

The ordinance does not apply to workers covered by a collective bargaining agreement, “to the extent that the requirements of this emergency ordinance are expressly waived in the collective bargaining agreement in clear and unambiguous terms.” Obviously, this is a perplexing provision, because collective bargaining agreements in place before the effective date of the ordinance would not waive the requirements of the ordinance; therefore employers will be left to harmonize compliance with the ordinance with compliance with existing requirements of collective bargaining agreements unless the union is willing to enter into a Side Letter agreement expressly waiving the ordinance. Employers should consult with legal counsel concerning conflicts between collective bargaining agreements and provisions of the ordinance.