On September 18, 2012, the Montgomery County Council approved the Displaced Service Worker Protection Act (the "Act"), which will go into effect on December 21, 2012. The Act's stated purpose is to provide a transitional period of temporary employment for certain service employees who would otherwise lose their jobs due to their employer's loss of a contract. As a practical matter, however, this labor-supported legislation allows labor unions to continue representing employees across changes in contractors by all but ensuring that the incoming contractor becomes a successor to the unionized predecessor under the National Labor Relations Act.

The Act's Coverage

The Act applies to service contracts on which there are at least 20 "service employees" providing security, janitorial, building maintenance, food preparation, or non-professional health care services in a Montgomery County facility used as a 1) private school; 2) hospital, nursing care facility or other health care provider; 3) multi-family residential building or complex with more than 30 units; 4) commercial building or office building occupying more than 75,000 square feet; or 5) institution such a museum, arena, airport, or convention center. A "service employee" is an individual employed full or part time as a building service employee, security officer, door staff, maintenance technician, superintendent, elevator operator, window cleaner, food service worker, or non-professional health care services provider.

Excluded from the Act's coverage are service contracts awarded by a federal, state, county, or municipal government. Also excluded are employees who are managerial or confidential employees under the National Labor Relations Act, employees who are exempt executive, administrative, or professional employees under the Fair Labor Standards Act, employees earning more than $30/hour, and employees regularly scheduled to work less than 10 hours per week.

The Act's Requirements

The Act requires each successor contractor to:

  • make a written employment offer to each displaced service employee of the predecessor contractor (with a copy to any labor union representing the employee) that states the date by which the employee must accept the offer and allows at least 10 days to accept the offer; and
  • retain each hired service employee for at least 90 days or until the successor contract is terminated, whichever is earlier, unless the successor contractor has just cause to terminate the employee sooner.

Importantly, however, a successor contractor may offer employment to less than all of the affected service employees during the 90 day transition period if the successor contractor:

  • finds that fewer service employees are required to perform the work than the terminated contractor had employed;
  • retains service employees by seniority within each job classification;
  • maintains a preferential hiring list of the employees not retained; and
  • hires any additional service employees from the preferential hiring list, in order of seniority, until all affected service employees have been offered employment;

The successor contractor can also deny employment to an individual who fails an ineligibility test used by the successor as a condition of employment (e.g., a criminal background check), provided that this condition was adopted in a written employment policy prior to bidding on the contract in question. The Act is silent on whether the successor contractor must offer the same compensation as its predecessor.

In addition to the requirements imposed on the incoming contractor, the Act also requires the entity that is party to the contract with the predecessor contractor to take the following actions at least 15 days prior to the contract's termination:

  • request that the prior contractor provide the successor contractor a list containing the names, dates of hire, and job classifications of its employees on the affected contract;
  • provide the successor contractor with a list containing the names, dates of hire, and job classifications of each employee on the affected service contract;
  • notify any collective bargaining representative of the employees affected; and
  • ensure that the prior contractor conspicuously posts a written notice to its employees describing the pending termination of the contract and their rights under the Act.

Enforcement

The Act will be enforced by the Montgomery County Office of Human Rights and the Human Rights Commission. Violations of the Act are punishable by compensation for financial loss, plus interest, and equitable relief.

Employers affected by the Act would be well-served by codifying any eligibility tests that are not already included in a written policy, and to confirm that any such existing policies capture all eligibility tests.