The temporary shutdowns in response to the pandemic dealt a major blow to businesses as well as their employees. Since last March, many employers have been forced to shutter their businesses and lay off their workforce. One of the hardest hit sectors has been the coronavirus-sensitive leisure and hospitality industry. The industry alone accounts for 39% of all jobs lost to the pandemic. With the introduction of a vaccine and government restrictions loosening up, businesses are starting to reopen, and employers will begin looking to fill positions. However, before making a new hire, D.C. hospitality employers must offer certain former employees their jobs back. On January 13, 2021, D.C. Mayor Muriel Bowser signed into law the Displaced Workers Right to Reinstatement and Retention Amendment Act of 2020 (“Act”) (D.C. Act 23-0591), which provides eligible non-exempt workers in the hospitality industry who were displaced by COVID-19 the right to be reinstated to their former positions, and in some cases, even when there is a change of ownership. While the Act must receive congressional approval before it takes effect, the mayor also signed a substantially similar emergency 90-day provision that took effect immediately.
The new law protects certain workers who were employed by “covered establishments,” including hotels with 50 or more employees as of December 1, 2019, and restaurants, bars, nightclubs, and certain retail establishments with 50 or more employees as of March 1, 2020. The protections also extend to workers employed by “contractors” employing 25 or more employees as food service workers, janitorial or maintenance office staff, nonprofessional health care workers, and security personnel. Hotel employees who were laid off due to the pandemic after December 1, 2019 are eligible for benefits under the Act. Non-hotel workers of covered establishments are eligible for coverage under the Act if they were laid off after March 1, 2020. The Act excludes employees who were classified as “exempt” under the FLSA, employees who received severance upon termination, and employees who could have been terminated for cause before the layoffs.
The Act provides eligible employees two rights: 1) the right to reinstatement; and 2) in the event of a change in control of the employer’s business, the right to be hired and retained by the new entity.
First, as positions become available, covered employers must offer eligible former employees reinstatement to their previous (or a substantially similar) position before hiring someone new to fill the position. After making the offer of reinstatement—in writing by registered mail, email, or text—the employer must hold the position open for no less than three days before extending an offer of employment to someone new. This requirement obviously constrains employers attempting to fill open positions right away. The bill initially required employers to hold the position open for ten days, but efforts were made by the business community to get it reduced to three days in the final version of the Act.
If ownership of the former employer’s business changes, and the new entity is in the same or similar line of business, the new entity must notify eligible employees of the change in control 15 days before the close of the transaction, and then retain those reinstated employees for at 90 days. At the end of the 90 days, the new employer must perform a written performance evaluation of each retained employee and offer continued employment if the employee’s performance was satisfactory.
Covered employees can sue their employers for violations of the Act on an individual and class basis. Prevailing employees can be awarded back pay, the cost of lost benefits, punitive damages, and attorney’s fees. A sunset provision was included in the law that expires on June 30, 2023.
Commentators from the leisure and hospitality industry expressed serious concern that the provisions imposed too many requirements on covered employers whose industry was already decimated by the pandemic. Commentators representing employers also noted that the new regulations essentially make D.C. government a “super-personnel” department that gets to second-guess the employer’s business judgment. Indeed, employee performance management generally has been within the employer’s discretion, but covered D.C. employers must take care to review their practices and procedures to comply with these new requirements. Similar laws have been passed in other nearby localities, including Baltimore City, which has mandated the rehire and retention of certain maintenance, janitorial, and security employees of commercial properties, employees of event centers, and employees of hotels who were laid off due to COVID-19. As the effects of the pandemic are still being felt, similar laws protecting employees in other hard hit industries could follow.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.