As businesses across the country are roiled by the uncertainty caused by Covid-19, many are forced to make difficult and complicated decisions to stay afloat. Some have already been forced to close permanently . Others, including some in the delivery sector, have been faced with the prospect of onboarding hundreds of thousands of new workers overnight to keep up with demand.
The reality is that the pandemic-triggered economic crisis we find ourselves in affects different businesses in different ways, which is why it is paramount that government’s maintain hyper-flexibility and a general deregulatory posture during Covid-19 to allow businesses the flexibility to adapt on the fly. The many jurisdictions that have enacted temporary waivers to allow traditionally dine-in restaurants and bars to deliver food and alcohol to customers is an example of government getting out of the way and enhancing business flexibility.
Unfortunately, rather than enacting positive change like many locales, the Los Angeles City Council seems determined to move in the opposite direction. The Council plans to vote on several workplace related resolutions during an emergency session today. Among other things, the council is asking the city attorney to draft an ordinance that would only allow employees to be terminated for just cause, which could potentially complicate layoffs made for financial reasons; require any layoffs to be made in order of seniority; require any re-hired workers after the crisis to also be based on seniority; and give workers a right of retention if their employer sells its business to a new firm.
Furthermore, the Council is planning to have these mandates apply retroactively to the beginning of March, which could lead to businesses facing lawsuits or fines for violating rules they did not even know existed.
During economic turmoil, there’s always a high likelihood that employers will need to make tough decisions about their workforce. While no one likes to see someone lose their job, the reality is that businesses—not bureaucrats—are the ones best positioned to make decisions for their future. These businesses need to be able to dynamically react and evolve to sudden revenue declines or other unanticipated situations, and implementing onerous rules about what order they can reduce or increase their workforce prevents them from doing so.
If these rules are implemented, the result will not be less layoffs, but rather more. If they are not given the flexibility to adapt, businesses could be forced to close completely, ensuring that none of their workers will have a job. If anything, now is a time to relax labor laws—such as re-thinking California’s controversial AB5 legislation that limits the use of independent contractors —not implement new ones.
The future of California businesses—and workers—may depend on it.