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Philadelphia City Council Passes Recovery Package Targeting Hospitality Workers

Posted: February 4, 2021

Last month, the Philadelphia City Council and Mayor Jim Kenney passed a large economic recovery package aimed at protecting hospitality industry workers by granting them a right of recall if they are laid off due to COVID-19-related economic hardship, or if their employer undergoes an ownership change or foreclosure. Called the Black Workers Matter Recovery Package, the legislation is designed to address racial equity issues in the hospitality industry and is made up of three separate bills:

  1. “Travel and Hospitality Worker Recall and Retention” (Bill No. 200557): Gives laid-off hospitality workers a right of recall to jobs they lost due to the pandemic.
  2. “Retention of Hotel Workers” (Bill No. 200563): Protects workers’ jobs if a hotel is sold or goes through foreclosure.
  3. "Protection of Displaced Contract Workers” (Bill No. 200559): Amends an existing law to allow stadium seasonal workers and food service workers at Philadelphia International Airport to keep their jobs if a new contractor takes over services.

Philadelphia Mayor Jim Kenney signed the recovery package into law on January 7, 2021.

 

Bill #1: Travel and Hospitality Worker Recall and Retention (“Right of Recall”)

Under this package, employees laid off from companies dealing in airport hospitality, hotels or event centers such as stadiums, will have a right of recall to their old jobs if they are laid off due to economic hardship related to COVID-19. This chapter will expire on December 31, 2025.

Eligible employees include those who are classified as non-exempt and work for an employer in the aforementioned industries within Philadelphia city limits. This includes, but is not limited to, full-time employees, part-time employees, seasonal and temporary workers. It also covers workers who provide food and beverage services and make more than half of their income from service charges or commissions.

The bill defines a “laid-off employee” within certain date-specific parameters. It includes any employee:

  1. Who was employed by the company for six months or more in the 12 months preceding January 31, 2020;
  2. Whose most recent separation from active employment with the company occurred between January 31, 2020 and January 31, 2022; and
  3. Lost their job due to a government shutdown order, lack of business, a reduction in force or other, economic, non-disciplinary reason.

 

Right of Recall

Under the right of recall provision, an employer must offer each laid-off employee any available job position for which the employee is qualified.

The job must be offered in the same way the employer typically communicates with its employees, such as via email, text, postal mail, or any other method by which employees can confirm they received the job offer.

The bill also lays out specific date requirements for the job offer and acceptance. A laid-off employee that is offered a position must have at least five (5) days from the day they confirm receipt of the offer to the day they accept or decline the job. If the employee so chooses, they can accept the offer anytime within those five days.

Upon accepting the job offer, the laid-off employee has seven (7) days from the expiration of the initial five-day period to return to work, unless a different date is mutually agreed upon by the employer and employee.  

 

Priority & Qualifications

When offering jobs back to laid-off employees, the employer must follow priority rules stated in the regulation. The first step is determining whether the employee is qualified for the job opening. A laid-off employee is qualified for a position if the employee: held the same or similar position with that employer when they were laid off, or would be qualified for the position with the same training that the employer would have to provide to a new person to fill that position.

If there are multiple employees that satisfy that test, priority rules apply. Employees who held the same or similar position when they were laid off get priority over those who would need additional training. Then, if multiple employees satisfy that test, the one with more seniority gets priority.

If an employer makes an outside hire on the grounds that there weren’t any qualified laid-off employees available, the employer must provide the laid-off employee written notice within 30 days of the hire. The notice must identify who was hired in lieu of recall and the reason for the decision.

In the event there is a change in ownership after the layoffs, that change will not limit the right of recall so long as:

  1. The organization is still engaging in the same or similar operations as it did before the ownership change as of Jan. 31, 2020.
  2. The organization change took place after Jan. 31, 2020; or
  3. The employer relocates operations from where the laid-off employee worked before Jan. 31, 2020 to a different location within the city.

 

Civil Actions & Other Penalties

One or more employees can submit a complaint to the city Department of Labor (DOL) for review if they believe an employer violated their right to recall under this law. If the city DOL provides a certification that there is enough for the claim to proceed, the employee(s) can bring a cause of action against the employer for violation of this chapter.

If the court finds the employer violated this chapter, the court may enjoin the employer from engaging in the violating action, and offer affirmative relief such as:

  1. Back pay, including the value of benefits lost, for each day during which the violation continues;
  2. Hiring of the employee at no less than the last wage rate and benefits, andhours worked per work day, that the worker received;
  3. Other compensatory damages as appropriate; and
  4. Attorneys’ fees and costs.

In addition, the employer may be subject to monetary penalties per employee per day of violation of up to $1,000. If an employer takes adverse action against an employee that complains within 60 days of the complaint, there is a rebuttable presumption that the firing was in violation of the right of recall. The employer must prove there was a legitimate business reason for the action. The employee may rebut that reason by showing that the action was pretextual.

 

Bill #2: Retention of Hotel Workers

Under this bill, eligible hotel employees must receive notice of changes in ownership or control, and must be given an opportunity to keep their jobs after that transition. An “eligible employee” is any individual who performs work at a hotel and has worked there for six months or more before the ownership change.

In the event the hotel is sold, the incumbent owner must post a notice about the ownership change in a conspicuous place in the hotel. The incumbent owner must also pass on the contact information and occupation classification of each eligible employee to the new owner within 15 days after the transfer is final. 

 

New Owner Responsibility

The successor hotel employer is then required to give job offers to all employees on the eligible employees list for six months after the hotel is operating under new management. Job offers must be in writing and be effective for at least 10 consecutive business days from the date of offer. The new owner must save written verification of the job offer (including name, address, date of offer, and occupation of each eligible employee) for a minimum of three years from the date of offer.

If the new owner requires fewer employees than the prior owner, it must give job offers to eligible employees in order of years of service with the prior employer. The first 90 days the employee works under new ownership is a trial period, after which the new owner must perform a written performance review. The new owner cannot discharge this class of employees before the expiration of the 90-day period without cause.

 

Civil Action & Penalties

An eligible employee can bring a civil action under this regulation. If the court finds the employer violated the statute, it may stop the employer from engaging in the action that violated the statute, or order affirmative relief such as:

  1. Backpay
  2. Hiring of the employee at no less than the last wage rate and benefits;
  3. Other compensatory damages as appropriate; and
  4. Attorneys’ fees and costs

The employer may also be subject to a penalty per employee per day of violation of up to $1,000.

 

Bill #3: Protection of Displaced Contract Workers

This bill amends an existing chapter in the Philadelphia code that pertains to contract workers, such as those employed at stadiums and airport restaurants, to allow those workers to keep their jobs in the event a new contractor takes over.

 

Other Jurisdictions

Similar “right of recall” regulations are being passed in cities across the country for hospitality workers. In New Haven, CT, the Board of Elders passed a “right to recall” ordinance in December for laid-off hotel workers to allow those employees to get their old jobs back when the hotel industry resumes hiring. That ordinance follows similar priority rules as the Philadelphia regulation. Providence City Council also passed “right to recall” legislation in November 2020.

In California, Los Angeles, Oakland and San Francisco granted recall rights to workers in the hospitality industry and related fields in Fall 2020, though Gov. Gavin Newsom vetoed a statewide recall bill.

If you have any questions, or would like to discuss how these laws will impact your business, please contact your regular Saul Ewing Arnstein & Lehr LLP labor and employment attorney.