Cities can enact local ordinances dealing with displaced workers, and California courts have upheld these local laws. For example, the California Supreme Court upheld a Los Angeles ordinance that forbids new owners of large grocery stores from laying off the existing workforce for 90 days after the new ownership takes over.1

• Check local ordinances in locations where you have employees to make sure that there aren’t any municipal regulations relating to layoffs in your industry.

Rights of Janitors and Building Maintenance Personnel

California law prohibits at-will termination of janitors and building maintenance personnel under certain circumstances.2 The Displaced Janitor Opportunity Act (DJOA) affects contractors and subcontractors, known as “successors,” who are awarded janitorial or building maintenance contracts within 30 days of the termination of another janitorial or building maintenance contractor or subcontractor’s contract at the same facility.

The DJOA requires a successor with 25 or more employees to hire and retain the previous contractor’s employees for 60 days, unless:

• An employee had less than four months of service at the site(s) covered by the successor’s contract.
• The successor has just cause to refuse to hire an employee. In this context, “just cause” is defined as “reasonable and substantiated cause not to hire a particular employee based on that employee’s performance or conduct while working under the terminated contract.”3

The DJOA does not require the successor to pay the same wages or offer the same benefits as the prior contractor or subcontractor.4

Within three working days of receiving notification of contract cancellation, the terminated contractor must provide to the successor the name, date of hire and job classification of each employee at the site(s) that the terminated contract covered. If the terminated contractor does not know who the successor will be, the terminated contractor must provide the information to the person or company who terminated the contract.5

As the successor, you must make a written offer of employment to each employee in their primary language or another language in which they are literate. The offer must state how much time the employee has to accept the contract, with a minimum of 10 days.6

Local governmental agencies can impose stricter standards than this state law.7

Successor’s First 60 Days

During the first 60-day period of employment, you cannot terminate any employee who was retained based on the DJOA, unless there is “cause” to terminate. Cause must be based “only on the performance or conduct of the particular employee.” If layoffs must occur within the 60-day period for economic reasons, you must lay off employees in order of seniority by job classification.

At the end of the 60-day period, you must provide a written performance evaluation to each employee who was retained under the DJOA. If the employee’s performance during the 60-day period is satisfactory, you must offer the employee continued employment. Any employment after the 60-day transition employment period is at-will employment. You can terminate the employee without cause unless you and the employee agree otherwise.8

Preferential Hiring Lists for Janitors and Building Maintenance Personnel

During the 60-day period, you must maintain a preferential hiring list of eligible employees whom you did not retain and you must use this list to hire any additional employees until all of the terminated contractor’s employees have been offered employment. After the 60-day period, you need not use the list.9

You must provide a list of your employees and the employees of subcontractors at the site(s) to the person or company to whom you are providing services. The list must indicate which of the employees the terminated contractor or subcontractor had employed at the site(s). You must also provide a list of any of the terminated contractor’s employees who were not retained. The list must state why these employees were not retained.10

Liabilities and Penalties Under the DJOA

An employer who violates the DJOA may be liable for back wages, benefits, attorneys’ fees and court costs. Building owners are not liable under the DJOA.

The DJOA covers a contract that was entered into more than 30 days after the termination of a previous service contract if the contract was deliberately delayed to avoid the law’s requirements.

Rights of Grocery Workers

California law provides grocery store workers certain protections when ownership changes.11

The law applies to supermarket or other grocery retail stores (“grocery establishments”) that are over 15,000 square feet and sell primarily household foodstuffs for offsite consumption — the primary purpose being food sales.12 It also applies to distribution centers owned and operated by grocery establishments and used primarily to distribute goods to or from stores, regardless of the square footage. It does not apply to grocery establishments in an area designated as a “food desert.”

A grocery establishment doesn’t include a retail store that has ceased operations for 12 months or more.

The law doesn’t apply if the parties agree that a collective bargaining agreement supersedes the law’s requirements, but only if the agreement explicitly says so in clear and unambiguous terms.13

The law also exempts an incumbent and successor grocery establishment from the requirements of the law if the sum of both of the following is less than 300.14

• The number of grocery workers employed, immediately prior to the change in control, by the incumbent grocery employer across that employer’s grocery establishments nationwide.
• The number of grocery workers employed, immediately prior to the change in control, by the successor grocery employer across that employer’s grocery establishments nationwide.

Within 15 days following a change in control (sale, assignment, transfer or other disposition), the prior grocery employer must provide the new grocery employer with a list that contains the name, address, date of hire, and employment occupation classification, and, if known, the phone number and email address of each “eligible grocery worker.” The 15 days runs from the date of execution of the transfer document.15 If the incumbent grocery employer doesn’t provide the information within 15 days, the successor grocery employer may get the information from a collective bargaining representative.

An eligible grocery worker means any worker who is primarily employed at the grocery store and has worked there for at least six months prior to the change. Managers, supervisors or other confidential employees are excluded.16

The law requires the new (successor) grocery employer to:17

• Maintain a preferential hiring list of eligible grocery workers from the list provided by the prior owner or collective bargaining representative.
• Hire from that preferential hiring list for the first 90 days after the grocery establishment is fully operational and open to the public.
• Verification of any offer must be retained for three years after the date of the offer. The verification must include the name, address, date of hire, and employment occupation classification.
• Retain eligible workers for at least a 90-day transition period and not discharge them without cause.
• An exception to the retention requirement exists if after opening, the new owner determines that it requires fewer workers. If so, the new owner must retain by seniority or pursuant to a collective bargaining agreement.
• Provide a written performance evaluation for each worker at the end of the 90-day transition period.
• Written performance evaluations must be retained for at least three years.
• Consider offering continued employment to the worker if the worker’s performance during the 90-day transition period was satisfactory.

During the 90-day transition period, the retained workers will be employed under terms and conditions set by the successor employer and/or pursuant to any relevant collective bargaining agreement.

The prior grocery store must also post a public notice of the change in control at the location of the affected store within five business days following execution of the transfer document. Specific information is required.18 Local government agencies can impose stricter standards than this state law.19

Aggrieved employees or employee representatives may bring actions in court for violations of these requirements, which can result in the award of hiring and reinstatement rights, front pay or back pay for each day the violations continue, value of benefits the employee would have received, punitive damages and attorney’s fees.20 Before an employee can bring a claim in court, the employee has to provide written notice to the employer of the violation and allow the opportunity to fix the problem. Employers have 33 days from receipt of the notice to cure the violation. If it doesn’t, then the employee (or representative) may file a claim in court.21

The California Labor Commissioner may also enforce this law and may recover remedies including hiring and reinstatement rights, front and back pay, the value of benefits, and civil penalties.22

Lastly, certain grocery and pharmacy establishments that close and cease operations must provide closure notices to their employees and other parties. This is similar to, but distinct from, the federal and state Worker Adjustment and Retraining Notification laws. For more information see Mass Layoffs and Plant Closings.

Rights of Workers Displaced by COVID-19

In 2021, California created what is commonly referred to as a “right of recall” for certain employees that were laid-off due to COVID-19. 23 Originally set to expire at the end of 2024, the law was extended another year to December 31, 2025.

• California extended the COVID-19 right to recall, set to expire at the end of 2025, another year. It applies until January 1, 2027.

The law applies to hotels, private clubs with at least 50 rooms offered as overnight lodging to members, event centers with 50,000 sq ft or 1,000 seats used for public performances, airport hospitality operations and service providers, and building services such as janitorial, maintenance and security services.

Qualified laid-off employees are those employees who worked for the employer for six months or more whose most recent separation from active employment by the employer occurred on or after March 4, 2020, and was due to COVID-19.

The law also contains a COVID-19 related presumption, meaning that a covered employee separated from employment due to lack of business, reduction in force or other economic nondiscplinary reason is presumed to be separated due to a COVID-19-related reason unless the employer establishes otherwise. As such, employers should ensure they document all reasons for separations and reductions in force not related to COVID-19 in order to rebut the statutory presumption.

Under the law, if a covered employer is going to hire an employee, it must, within five business days of establishing the position, first offer the position to a laid-off employee who’s qualified for the position, e.g., if the employee held the same or similar position at the business at the time of the layoff. A laid-off employee who is offered the position must be given at least five business days from the date the offer is received in which to accept or decline. An employer can make simultaneous conditional offers with a final offer conditioned on a preference system based on length of service.

Employers who refuse to recall an employee on the grounds that the employee lacks the qualifications for the position must provide the employee a written notice within 30 days with their reasons for not hiring them and the length of service of the individual hired.

Employers must keep the following records for at least three years, measured from the date of the written notice regarding the layoff. For each laid-off employee, the employer must keep a record of the employee’s:

• Full legal name
• Job classification at the time of separation from employment
• Date of hire
• Last known address of residence
• Last known email address
• Last known telephone number
• A copy of the written notices regarding the layoff provided to the employee and all records of communications between the employer and the employee concerning offers of employment made to the employee pursuant to this section.

The right of recall will remain in effect through December 31, 2025.

1. California Grocers Assn. v. City of Los Angeles, 52 Cal. 4th 177 (2011)