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Sorry, No Reservations Available: A California Hospitality Employer’s Primer for Reopening as the World Enters Pandemic Recovery Mode

April 30, 2021, by

We see a glimmer of hope that the end of the pandemic is near. Hotels may soon be moving from “high vacancy” to “no vacancy,” reservations are getting booked at restaurants, and bars are currently devising crafty summer cocktails. As more of the California population gets vaccinated, the hospitality industry is eager to reopen and recover. COVID-19 has affected every sector across the globe, but the hospitality industry is among the hardest hit. After an extremely difficult year, hospitality businesses in California finally have the greenlight to begin taking steps on the road to recovery. Governor Gavin Newsom recently announced that the California economy will “fully reopen” on June 15 if current COVID-19 trends hold and that California will soon move away from its color-coded tier system that regulates closures and openings county-by-county.

After our last article about avoiding litigation pitfalls as businesses were still deep in the trenches of a closed economy during the peak of the pandemic, it was a relief to prepare this employment practices primer that hospitality businesses should consult during this phase of recovery in California. The below represent key items that the hospitality sector should consider in their reopening plans:


    1. Restaurant Revitalization Fund

First things first: if you are a restaurant, you should look into the federal Restaurant Revitalization Fund, part of the recently passed American Rescue Plan Act (RRF), which will provide $28.6 billion in grants to restaurants and bars in need. Through the RRF, eligible establishments will be able to apply for a grant to recoup lost revenue from the Small Business Administration (SBA) equal to their pandemic-related revenue loss, up to $10 million per entity or $5 million per location, limited to 20 locations. Grants will be calculated by subtracting 2020 revenue from 2019 revenue. The period of the grant covers February 15, 2020 to December 31, 2020, and grant funds will not be taxed like income. The following food and beverage establishments are eligible for the grant: restaurants, bars, food stands, food trucks and carts, caterers, saloons, inns, taverns, lounges, brewpubs, tasting rooms and taprooms, and other similar places of business in which the public assembles for the primary purpose of being served food or drinks. The grant can be used for the following purposes: payroll costs, principal and interest payments on a mortgage, rent payments, utilities, maintenance expenses; supplies, including personal protective equipment and cleaning materials; covered supplier costs, operational expenses, and paid sick leave.

The SBA announced that the application process for the restaurant program, which will be first-come, first-served, is expected to be available soon. Therefore, we encourage restaurants to be prepared in advance of the applications becoming available. We recommend that restaurants begin gathering the financial data from 2020 and 2019 to show revenue loss as they await further guidance from the SBA. Businesses should act fast since it is likely that funds will be depleted quickly.

In addition, the SBA also announced that restaurants will no longer be required to register with the government on the System of Award Management, which used to be a cumbersome and time-consuming effort. Now, restaurants are better poised to receive a grant in a timely manner.

The SBA announced that it will test a seven-day pilot program for the RRF application portal. Following the pilot program, the application portal will be opened to the public. However, it is important to note that the first 21 days of the application are being prioritized for women-owned, minority-owned and/or veteran-owned businesses.

On April 19, 2021, the Small Business Administration (SBA) released key details on application requirements (RRF Application), eligibility and a program guide (RRF Program Guide) for the Restaurant Revitalization Fund (RRF). According to the SBA’s April 19th release, the SBA is “focused on ensuring that the RRF program’s application process is streamlined and free of burdensome, bureaucratic hurdles – while still maintaining robust oversight.”


    2. Maintain Sanitation Protocols and Use Personal Protective Equipment

We also urge hospitality employers to not be so quick to discard CDC sanitation protocols that were utilized throughout the ongoing pandemic. While we understand that such protocols are a pain because they are costly and time-consuming, we predict that the threats of OSHA whistleblower lawsuits, discussed at length in my prior articles, are not going away anytime soon. In fact, it is important to be aware that the pandemic took a toll on the mental health of employees, who are understandably nervous about reopening and being in contact with a higher volume of guests and patrons and may have lingering anxiety from the early days of the pandemic. Therefore, we recommend that businesses continue following CDC guidelines and training* employees to do so. While the extent of the cleaning and sanitizing during the pandemic may not be feasible as business increases, it is important to slowly transition to a less strict adherence to CDC guidelines and consider which sanitizing protocols you would like to retain, and what makes your employees most comfortable.

It’s important for hospitality employers to understand that we are not quite out of the woods yet. In fact, there are actually requirements for California employers to keep their COVID-19 prevention plans up to date and in place through 2023. In a similar vein, the Cal/OSHA COVID-19 prevention requirements do not expire until 2023. Therefore, hospitality employers should maintain their COVID-19 prevention protocols, such as temperature checks, mask policies, social distancing, and thorough sanitizing.


    3. Customers and Patrons Who Refuse to Wear a Mask

While customers may point to “free speech rights” to support their refusal to wear masks, the U.S. Constitution protects an individual’s right to free speech from infringement by the U.S. Government — not a private business such as a restaurant. However, Title III of the Americans with Disabilities Act mandates that public accommodations cannot deny equal enjoyment of goods and services to individuals with disabilities. Therefore, some customers may claim that they are not required to wear a mask because of a medical condition, and that the business must accommodate the medical condition. Nevertheless, there are limits to such accommodations. Businesses are not required to provide an unmasked customer an accommodation if doing so would impede the business’s ability to safely provide its goods and services. Under CDC guidance, allowing unmasked members of the public into business establishments creates a health and safety risk. Therefore, if you are a restaurant or a bar and are faced with customer who claims that she does not need to wear a mask due to a disability, you can kindly turn them away because it is impossible to accommodate such a customer under the current circumstances. Employees should also be advised that they should never ask customers or patrons for documentation regarding their medical condition because such an action runs afoul of the Americans with Disabilities Act (ADA).

To prevent workplace altercations, hospitality employers should train employees on how to communicate with customers regarding mask policies and procedures, namely that they should never argue with a non-compliant customer, attempt to apprehend resistant customers, block customers from entering or exiting the store, or physically force customers to leave. Employees should be trained to remain calm and instead call local law enforcement to handle the situation. Second, employers should be advised to kindly offer free masks to unmasked customers in the event that a customer forgets to bring a mask or as a means to peacefully persuade a non-compliant customer to wear a mask. Accordingly, masking protocols should be incorporated into employee trainings and policies.

The CDC eased its guidelines on April 27 regarding the wearing of masks outdoors, stating that fully vaccinated Americans do not need to wear masks outdoors unless they are in a big crowd of strangers. As of now, this new mask guidance does not apply to restaurants.


    4. Remain Flexible with Attendance, PTO and Leave Policies

Employers learned during the ongoing pandemic that they need to be more forgiving and flexible with their attendance, PTO, and sick leave policies because of employees with health conditions that made them vulnerable to COVID-19 or instances where employees contracted COVID-19. In addition, employers had to deal with employees living with family members with health conditions, employees taking time off to care for family members who contracted COVID-19, employees who needed to stay home due to school closings, and employees who simply feared coming back to work. While vaccines have become more available in California and herd immunity seems promising, employers should remain flexible for the time being.

Before returning employees to work, hospitality employers should reevaluate these policies and consider the level of flexibility they will allow and accordingly update their employee handbooks and written policies. A good rule of thumb is to always inform your employees of these policies and have them sign any modified or new policies. The main takeaway here is to not rush your employees into the “new normal,” but instead gracefully transition them into the post-pandemic workforce.


    5. Become Familiar with the New Paid Sick Leave

On March 19, 2021, Governor Newsom signed SB 95, which expanded and reset COVID-19-related supplemental paid sick leave. The bill applies to California employers with more than 25 employees, and provides COVID-19-related supplemental sick leave to those who are unable to work or telework due to COVID-19. The sick leave requirements apply retroactively to January 1, 2021 and apply until September 30, 2021. The law went into effect on March 29, 2021.

This new law requires COVID-19 supplemental sick leave in addition to the sick leave provided under the Families First Coronavirus Response Act (FFCRA) and the previous 2020 California COVID-19 supplemental sick leave. Essentially, the new law resets the supplemental sick leave bank.

Under the new law, employees can take sick leave for the following reasons, including taking time to receive a COVID-19 vaccine:

  • The employee is subject to a quarantine or isolation period, defined by the state Department of Public Health, the CDC, or local health officer. (This does not include a general stay-at-home order.)
  • The employee has been advised by a health care provider to self-quarantine.
  • The employee is attending an appointment to receive a COVID-19 vaccine.
  • The employee is experiencing COVID-19 vaccine symptoms that prevent them from working or teleworking.
  • The employee is experiencing COVID-19 symptoms and seeking a diagnosis.
  • The employee is caring for a family member (as defined by the regular sick leave law) who is subject to a quarantine requirement or self-quarantine as advised by a health care provider.
  • The employee is caring for a child whose school or place of care is closed due to COVID-19 on the premises.

The new law requires employers to provide 80 hours of COVID-19 supplemental sick leave for employees that are full-time, or if the employee was scheduled to work at least 40 hours per week for the two weeks preceding the sick leave. If the employee works a part-time regular schedule, the employee is entitled to COVID-19 supplemental sick leave in the amount of hours normally worked over two weeks. For employees with schedules that vary by the week, the number of hours is calculated based on how long the employee has worked for the employer.

Employers should note that they cannot require an employee to use other paid or unpaid leave, paid time off, or vacation time before the COVID-19 supplemental paid sick leave. Further, employers are required to provide written notice to employees of the amount of COVID-19 supplemental sick leave they have available.

However, employers can require employees to exhaust their COVID-19 supplemental sick leave if they are excluded from the workplace due to COVID-19 exposure. Employers can also count paid leave an employee took due to COVID-19 from January 1 to the present toward the supplemental sick leave hours. Additionally, employers may request retroactive compensation from employees who took unpaid leave due to COVID-19 from January 1 to the present, and this time will count toward the new supplemental sick leave.


    6. Right-of-Recall Bill for Hospitality Employers

In addition, California hospitality employers should be aware that they will need to track COVID-19 layoffs until 2025 as a result of SB 93, which Governor Newsom recently signed into and enacts Labor Code Section 2810.8 effective immediately and remains in effect through December 31, 2024. The new law requires hospitality employers to rehire eligible employees who were previously laid off due to the COVID-19 pandemic.

Covered employers include the owner or operator of a hotel, private club, event center, airport hospitality operation, airport service provider or an enterprise that provides building services, defined as janitorial, building maintenance or security, to office, retail, or other commercial buildings. To be eligible for recall under SB 93, a laid-off employee had to have been employed by the covered employer for six months or more in the 12 months preceding January 1, 2020, and their most recent separation from active service had to have been due to a reason related to the COVID-19 pandemic, including a public health directive, government shutdown order, lack of business, a reduction in force, or other economic, non-disciplinary reason due to the COVID-19 pandemic.

There are specific recall procedures that covered employers must follow when recalling employees back to work. Covered employers must offer laid-off employees information about job positions that become available for which the employees are qualified, and offer positions to those laid-off employees based on a preference system. Under the preference system, if more than one employee is entitled to a position, the employer must offer the position to the employee with the greatest length of service based on the employee’s date of hire.

Further, covered employers must provide written notice of the offer to recalled employees within 30 days which includes all of the reasons not to recall the laid-off worker, including the length of service of those employees who were recalled and hired. Lastly, records of the written notices to the employee and all other communications concerning offers of employment between the employer and the employee must be kept for three years measured from the date of the original layoff date.

California hospitality employers should become familiar with this new law because there are costly consequences for violations. There is a civil penalty of $100 for each employee whose rights under these provisions are violated and an additional sum payable as liquidated damages in the amount of $500 per employee for each day the employee can prove their rights were violated through the date the violation is cured.

In light of the above, California employers should modify their recall and rehire policies to reflect the requirements of Labor Code Section 2810.8.


    7. Tax Credit Available for Hospitality Employers

There is some good news for hospitality employers: the IRS has recently stated in new guidance that employers are eligible for tax credit over the cost of paid sick and family leave for reasons previously covered by the Families First Coronavirus Response Act (FFCRA) or for one or more of the following:

  • The employee is obtaining a COVID-19 vaccination and recovering from side effects;
  • The employee is recovering from any injury;
  • The employee is seeking or awaiting the results of a diagnostic test or medical diagnosis for COVID-19, or the employer has requested such a test or diagnosis.

Tax credits are available to eligible employers that provide paid sick and family leave for qualifying COVID-19 related reasons from April 1, 2021 through September 30, 2021. Eligible employers include the following: 1) any business, including a tax-exempt organization, with fewer than 500 employees, and 2) a government employer other than a* federal government and any agency or instrumentality of the federal government that is not an organization described in section 501(c)(1) of the Internal Revenue Code.