A bill that could impose penalties on employers for rehiring policies might be affected by the current worker shortage as the state readies for full reopening next week.
SB 93, which was signed by Gov. Gavin Newsom in April, requires employers to rehire laid-off employees in order of seniority. Cities have passed similar mandates but at least two – Los Angeles and Long Beach – also provide a right-to-cure provision that the state law does not.
“There’s noble purpose to it, but it denies business owners the opportunity to adjust their payroll to the conditions they’re encountering when reopening,” C. Kerry Fields, professor of clinical finance and business economics at the USC Marshall School of Business, told the Northern California Record.
It applies mostly to workers at hotels and restaurants, among the businesses most severely impacted by COVID-19 mandated shutdowns.
More employers are likely to become aware of the law as businesses across the state resume operations. The law contains a specific set of notification requirements and enforcement measures. Compliance is being handled by the Division of Labor Standards Enforcement (DLSE), so while employees don’t have a personal right to sue, they can cooperate to cause the state to impose substantial fines and penalties on businesses.
“The burden of which was recognized by the local ordinances but not by the state – that’s an unfortunate part of the bill,” Fields said. “If we can’t trust the government to provide warning before assessing fines, I fear, like others do, that the state may act in a heavy-handed manner or ways that serve the agencies.”
Fields noted that since the law was passed and the state has started to reopen, the worker shortage has left less need for the mandate, but it does remain in effect through December 2024.
“In the long-term it’s just burdensome on employers,” Fields said. “Businesses that are familiar with serving tourists and the hospitality industry wanted an opportunity to cure, which I think was overlooked in the haste of getting the bill enacted and might be something they can cure with an amendment.”