San Francisco Set To Impose New Rehire Requirements And Layoff Reporting Obligations On Businesses

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Seyfarth Synopsis: On June 23, 2020 the San Francisco Board of Supervisors passed an emergency “reemployment” ordinance in response to layoffs due to the COVID-19 pandemic. The Ordinance still requires the Mayor’s assent, which is expected. Once effective, it will place significant new reporting and notice obligations – beyond just rehiring laid-off employees – on employers with over 100 employees who engaged in layoffs since February 25, 2020. The good news for businesses about the Ordinance is that it is temporary, expiring 61 days after it becomes effective, unless extended.

Temporary Right to Reemployment Following Layoff Due to COVID-19 Pandemic Ordinance

On Tuesday, June 23, 2020, the San Francisco Board of Supervisors passed a temporary emergency ordinance that, if it becomes effective, will require many businesses across San Francisco to offer reemployment to employees previously laid off due to the COVID-19 pandemic. The Temporary Right to Reemployment Following Layoff Due to COVID-19 Pandemic Ordinance is not yet law. Mayor London Breed has until July 3, 2020 to approve or veto the Ordinance, though the Board appears to have the votes to override a veto.

All businesses, including nonprofits, with over 100 employees and who have operations in San Francisco should take heed. Although styled as a “reemployment ordinance,” its requirements expand beyond rehiring laid off employees. It also places retroactive notice, reporting, and record retention obligations on covered businesses who engaged in qualifying layoffs since February 25, 2020, with significant remedies available against businesses who do not comply with its terms.

The Details

Covered Businesses. The Ordinance applies to any for-profit or nonprofit business with operations in San Francisco on or after February 25, 2020. In a nod to small businesses, the Ordinance was amended while in committee to only cover businesses who employ 100 or more people on the date the business starts a qualifying layoff (the original version set the threshold employee amount at 10 or more). The Ordinance also exempts a number of healthcare related businesses including hospitals, pharmaceutical and biotechnology companies, and related or ancillary healthcare service.

Effective Dates. The Ordinance will become effective once signed by the Mayor. However, if there is any good news in the significant burdens the Ordinance imposes, it is that the Ordinance is only temporary. It expires 61 days after its effective date, and must be extended by vote of the Board of Supervisors if it wants the Ordinance to continue beyond the initial 60 days.

Qualifying Layoff. The Ordinance defines a “Layoff” as a separation of 10 or more employees during a 30-day period, commencing on or after February 25, 2020, including a business ceasing or closing operations. The layoff must have been caused by a lack of funds or lack of available work due to a state or San Francisco COVID-19 public health emergency declaration and any San Francisco shelter-in-place order.

Layoff Notice Requirements. The Ordinance places two new reporting requirements on covered businesses conducting layoffs going forward while the Ordinance is in effect:

1. Covered businesses must provide notice to all “Eligible Workers” (defined in the order as employees subject to layoff who has been employed for at least 90 days) at or before the time of the layoff. The notice must be in a language the employee understands and include (i) the layoff effective date; (ii) a summary of the rehire rights created by the ordinance; and (iii) San Francisco’s Office of Economic and Workforce Development (OEWD) hotline number for the Ordinance.
2. Covered businesses must provide what amounts to a more detailed WARN notice to the OEWD within 30 days of the layoff. The notice must include (i) the total number San Francisco-based employees affected by the layoff, (ii) the employees’ job classifications; (iii) the employees’ original hire date; and (iv) the employees’ dates of separation.

Retroactive Notice Requirement.  For those covered businesses that conducted a qualifying layoff between February 25, 2020 and the Ordinance’s effective date, they must provide notice to previously laid off Eligible Workers within 30 days of the Ordinance’s effective date. This seemingly amounts to a retroactive notice requirement going back to the beginning of the COVID-19 pandemic, even if the employer already provided notice at the time of layoff.

Records Retention Requirement.  The Ordinance also places an additional record retention requirement on covered businesses. Businesses who initiate a qualifying layoff must retain for at least two years records containing the laid off Eligible Worker’s (i) full legal name; (ii) job classification; (iii) date of hire; (iv) last known address; (v) email address; and (vi) phone number; as well as (vii) a copy of the layoff notice.

Rehiring.  For those covered businesses who decide to hire in San Francisco post-layoff while the Ordinance is in effect, the Ordinance requires them to offer positions first to laid off Eligible Workers when:

• Businesses start to rehire for positions formerly held by a laid off Eligible Worker; or
• Employers seek to hire employees for “substantially similar positions” to those held by laid off Eligible Worker.

The Ordinance provides a broad definition of “substantially similar.” It encompasses (i) jobs with comparable duties, pay, benefits, and working conditions; (ii) any position the laid off Eligible Worker held in the 12 months prior to the layoff; and (iii) any position for which the laid off Eligible Worker would be qualified. Additionally, if more than one laid off Eligible Worker is eligible for rehire, the Ordinance requires the businesses to rehire employees based on seniority. 

Covered businesses have limited circumstances in which they can refuse to rehire a laid off Eligible Worker. These include instances (i) where the business uncovers employee misconduct, (ii) when the employee signed a severance agreement prior to the effective date of the Ordinance, and (iii) if the employer hired a new employee for the position prior to the effective date of the Ordinance. The Ordinance also does not apply to employees covered by collective bargaining agreements, provided the CBA waives the requirements in the Ordinance in clear, unambiguous terms. 

Rehiring Offer. Once covered businesses decide to offer reemployment to laid off Eligible Workers, the Ordinance requires businesses to provide these former employees notice of the offer by telephone and email. If the former employees do not respond to these communications, businesses must send the offer via certified mail or courier, giving the former employee at least two business days following delivery to accept the offer.

Rehiring Notice to OEWD.  After any covered business makes offers of reemployment to Eligible Workers, its work is not done under the Ordinance. Next, it must notify the OEWD in writing of (i) all offers of reemployment; (ii) all acceptances from Eligible Workers; and (iii) all rejections from Eligible Workers.

Accommodations for Family Care Hardships.  When rehiring, the Ordinance also requires employers to reasonably accommodate rehires who are experiencing a “family care hardship.” A rehire has a family care hardship when unable to work due to the need to care for a child because the child’s school is closed, or any reason the employee could use San Francisco paid sick leave to care for someone. Reasonable accommodations may include, but are not limited to, modifying the hours to be worked, permitting telework, and modifying the rehire’s schedule.

Penalties. Although the burdens of the Ordinance are significant, covered businesses should consider them carefully. The Ordinance provides employees with the right to file their own civil lawsuit in San Francisco Superior Court and seek reinstatement, economic damages (including back pay and front pay), and attorney’s fees.

Stay tuned for any breaking news on enactment or guidance from San Francisco on the Ordinance. In the meantime, Seyfarth remains ready to assist businesses complying with the new Ordinance and other COVID-19 related issues.