In April, we reported on a new California state law (Senate Bill 93) that requires certain employers—such as hotels, event centers, airport hospitality operations, and building services businesses—to offer available jobs to qualified former employees who were laid off for economic reasons relating to the COVID-19 pandemic. Right-to-rehire laws like this have long been championed by unions.
Nearly 20 years ago, the City of Santa Monica adopted a similar recall ordinance in response to an economic downturn that was worsened by the terrorist attacks of September 11, 2001. This ordinance covers businesses in Santa Monica’s “Coastal Zone” and “Extended Downtown Core” whose gross receipts in the year 2000 exceeded $5 million. Unlike the new California law which expires at the end of 2024, the Santa Monica ordinance includes no “sunset” date and remains on the books even though some current employees were not even born at the time of the 9/11 attacks.
On October 31, 2018, a luxury beachfront resort laid off part-time employees in its food and beverage operations, while retaining full-time employees. One of the laid-off employees was a restaurant server who worked for the Hotel for two different time periods—first from September 2017 to April 2018, and then from July to October 2018.
The laid-off employee sued the Hotel in October 2019, claiming that it violated the Santa Monica ordinance by failing to offer him full-time server positions that allegedly opened up after he was laid off. The Hotel is represented by BRG&S attorneys Richard Rosenberg, John J. Manier, David J. Fishman, and Janet S. Soultanian.
In early 2020, a Los Angeles Superior Court judge dismissed the lawsuit, finding that even if all of his allegations were true, he did not have any valid claim under the Santa Monica ordinance.
On May 14, 2021, the California Court of Appeal agreed and upheld the defense judgment in a published decision (Bruni v. The Edward Thomas Hospitality Corporation).
For a laid-off employee to be entitled to rehire under the Santa Monica ordinance, the employee must have been employed for six months or more at the time of the layoff. The employee argued he qualified under this requirement because the Hotel initially employed him for 10 months and then later for more than three months.
However, the appellate court noted that after his initial 10-month employment period, he voluntarily resigned his job because of scheduling difficulties. As the court observed, the purpose of Santa Monica’s recall ordinance “is to protect employees who were involuntarily laid off due to economic circumstances—not to protect employees who quit for personal reasons.”
For this reason, the court ruled that the employee's earlier, 10-month employment before his resignation “does not count toward the six-month minimum period of employment.” This meant the employee was ineligible for recall under the Santa Monica recall ordinance, so his claim for violation of that ordinance was correctly dismissed.
The employee tried to assert one other claim against the Hotel, for “wrongful failure to rehire” in violation of public policy. The appellate court rejected this claim as well.
There were certain issues the appellate court mentioned but did not decide. For instance, the court left open whether an employee could ever combine two or more periods of employment to reach the six-month requirement for eligibility of recall. The court ruled an earlier period could not be used if it ended with the employee’s voluntary resignation, but it did not address situations where an employee was laid off on multiple occasions. Similarly, the court did not decide whether the ordinance applies to seasonal workers. The court also noted—but did not decide—whether Santa Monica’s recall ordinance “has become unworkable because its benchmark is based on a business’s revenues more than two decades ago, and without any indication as to how the ordinance would apply to newly-established businesses.”
The Court of Appeal’s decision was great news for the Hotel. However, the Santa Monica ordinance remains on the books and is now joined by the new California state law giving certain employees a right to rehire through December 31, 2024, if they were laid off due to the pandemic.
As more and more businesses will be looking to increase their workforces once again, some will be required to give written employment offers of rehire to their laid-off employees under California state law, the Santa Monica recall ordinance or other applicable local laws.
If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact at (818) 508-3700, or visit us online at www.brgslaw.com.
David J. Fishman
John J. Manier
Janet S. Soultanian
Ballard Rosenberg Golper & Savitt, LLP