As a result of a Washington, D.C., law passed Jan. 13, 2021, certain D.C. employees displaced during the COVID-19 pandemic will gain reinstatement rights as their former positions become available. The law also gives certain employees job protections when their employer changes identity or experiences a change in control.
The Displaced Workers Right to Reinstatement and Retention Amendment Act of 2020 provides that employers and contractors in retail, hospitality or other covered industries must offer some employees displaced by COVID-19 reinstatement to their previous positions or to a substantially similar position as positions become available.
Which employers does this law cover?
This law protects only certain workers employed by “contractors” or “employers” at “covered establishments.” All of these terms have special meanings under this law.
“Contractor” means an individual or company that employs 25 or more individuals and who has hired individuals to work in the following capacities:
- As food service workers in a hotel, restaurant, cafeteria, apartment building, hospital, nursing care facility or similar establishment;
- To perform janitorial or building maintenance services in an office building, institution or similar establishment;
- As nonprofessional employees to perform healthcare or related services in a hospital, nursing care facility or similar establishment; or
- To perform security services in an office building, institution or similar establishment (not including special police officers who are armed and employees performing security services in public schools).
“Employer” means: (1) an entity that employed 50 or more individuals at a covered establishment on March 1, 2020; or (2) if the covered establishment is a hotel, an entity that employed 50 or more individuals at a hotel on Dec. 1, 2019.
“Covered establishment” means any of the following in D.C.: (1) hotels; (2) restaurants (or other D.C.-licensed public food-service businesses); (3) taverns, brew pubs, nightclubs or clubs (all as defined by D.C. law); (4) live performing art, sporting event or other entertainment event venues; or (5) businesses engaged in the sale of goods to consumers, but not including wholesalers.
Which employees gain rights under this law?
Not every employee is eligible for reinstatement rights. The only employees eligible are those who ceased working at the covered establishment or for a contractor for reasons other than voluntary resignation or termination for cause; and (1) for hotel workers, those whose last date of employment was between Dec. 1, 2019, and the last day of the public health emergency declared by mayor’s order in response to the COVID-19 pandemic; or (2) for non-hotel workers, those whose last date of employment was between March 1, 2020, and the last day of the public health emergency.
However, the following groups of individuals are not eligible for reinstatement rights: (1) individuals considered “exempt” under the executive, administrative or professional exemptions under the Fair Labor Standards Act; (2) individuals who received severance from the employer or contractor when the individual’s employment ceased (if the employer or contractor has written, verifiable proof of the severance); and (3) individuals whose employer or contractor could have terminated the individual for demonstrable just cause when the individual previously worked for the employer or contractor.
While the law uses the terms “cause” and “demonstrable just cause,” those terms are not defined and it is unclear whether the terms have the same meaning.
How must the reinstatement be made?
Covered entities must offer eligible employees reinstatement to the employee’s previous position or to a substantially similar position. Employers or contractors must make the offer by registered mail or by email, text or other method that is documented and retained. The offer must have an acceptance deadline that is no fewer than three calendar days from the date received. If the employee accepts the offer, he or she must report to work within seven days, or later if requested by the employer. If more than one eligible employee is entitled to reinstatement to a particular position, the employer or contractor may make simultaneous, conditional offers of reinstatement to eligible employees for the same position, as long as offers are based on seniority, unless the position is at a restaurant, tavern, brew pub, nightclub or club. Finally, an employer or contractor may not hire a new employee for a position until all eligible employees either have not responded to an offer of reinstatement by the deadline or have declined the offer.
What happens if the employer changes identity or experiences a change in controlling interest?
The law also requires employers to retain employees after a change in the controlling interest or a change in identity, assuming that the business operations conducted by the new entity are the same as or similar to those conducted by the former employer. These events include: (1) any sale, assignment, transfer, contribution or other distribution of a controlling interest in an employer by consolidation, merger or reorganization of the employer or of any entity that maintains an ownership interest in the employer; or (2) any purchase, sale, lease, reorganization or restructuring, or relocation of the employer’s operation.
If an employer changes identity or controlling interest, the new employer must retain reinstated employees for 90 days. This 90-day transition period begins on the date of reinstatement. The new employer must also retain employees who agree to remain employed by the new employer for a 90-day transition period beginning on the date of the change in control or the employer’s change of identity. During the 90-day period, the employer may not discharge such employees without cause. At the end of the 90-day period, the employer must perform a written performance evaluation for each such employee and, if the employee’s performance was satisfactory, the employer shall offer the employee continued employment.
If the new employer determines that fewer employees are required to work at the covered establishment than the number required before the change in controlling interest or identity, the new employer must retain employees by seniority within job classification. This seniority requirement does not apply to restaurants, taverns, brew pubs, nightclubs or clubs.
Several questions regarding interpretation of this aspect of the law remain, but it could have broad-reaching consequences for corporate transactions involving D.C. establishments or their parent companies.
What notice must an employer provide when it changes identity or controlling interest?
When an employer anticipates a change in controlling interest or identity, the employer must issue certain notices at least 15 calendar days before the change:
- To parties to the transaction resulting in the change, and to labor unions representing retained employees or eligible employees, the employer must provide notice of the name, last known address, date of hire, position, and text or telephone contact information of each eligible employee.
- To retained employees and eligible employees, and to labor unions representing retained employees or eligible employees, the employer must provide notice that the employer anticipates a change in controlling interest or identity and provide notice of the employee’s right to reinstatement or retention under this law.
Retaliation is prohibited.
The law prohibits retaliation against an individual who has asserted rights under, participated in proceedings related to, or opposed a practice believed to be in violation of the law. Importantly, the law creates a rebuttable presumption that an adverse action was retaliatory if it occurs within 60 days after the individual engaged in protected activity. To rebut the resumption, the employer must produce credible evidence that the sole reason for the adverse action was a legitimate business reason.
An eligible or retained employee may file a lawsuit to enforce the law. If the employee prevails, the employee must be awarded back pay, the cost of lost benefits, and reasonable attorney’s fees and costs. If the employer violated the law with malice or reckless indifference, the employee may be awarded treble damages, compensatory damages and punitive damages.
Assuming Congress takes no action, the law should take effect approximately 30 legislative days after Jan. 13, 2021, although typographical errors in the bill suggest it could be 60 legislative days. The law will expire June 30, 2023, with the anti-retaliation and enforcement provisions expiring on June 30, 2024.
For assistance in complying with this new COVID-19-related law, or for any other question related to employment law, contact the authors of this article or another member of the McGuireWoods labor and employment team.
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