California Fines Terranea $3.3 Million for Not Rehiring Laid Off Employees

Last week, California’s labor commissioner fined Terranea Resort in Rancho Palos Verdes $3.3 million after failing to offer 53 former employees the opportunity to return to their jobs before hiring new candidates. Terranea’s former food servers, bartenders, sous chefs, housekeepers, and others initially lost their jobs due to the COVID-19 pandemic.

Like most hotels throughout California, Terranea temporarily closed in March 2020 and eliminated much of its workforce. But management failed to rehire those workers first when reopening in mid-2021, a requirement by California law. In May 2021, California Gov. Gavin Newsom signed Senate Bill 93 or right to recall law, which guaranteed laid-off hospitality workers including housekeepers, cooks, servers, and bartenders an opportunity to return to their jobs. This right to recall is extended through December 31, 2024.

The state launched an investigation after local hospitality labor union Unite Here Local 11 filed the complaint on behalf of Terranea employees, who allege they were not given the chance to return to their jobs when business increased at Terranea in 2021. Interviews with former and current Terranea employees, human resource managers, and a payroll record audit determined that DH Long Point Management, LLC, the company that owns Terranea Resort, violated SB 93.

For each employee, SB 93 entitles them to liquidated damages of $500 per day until the rehiring violation is restored, and $100 in civil penalties for each employee whose rights were violated. The law also protects employees from retaliation with potential pay, benefits, and reinstatement. The Los Angeles Times reports that 14 housekeepers will split $1.3 million of the fine. In a statement, the California Division of Labor Standards Enforcement office says that Terranea Resort was cited $3,080,000 in liquidated damages, $5,300 in civil penalties, and $208,582 in assessed interest.

“These workers invested years of service at Terranea and through no fault of their own lost their jobs due to the pandemic,” says commissioner Lilia García-Brower in a statement. “The law makes it clear that workers in the hospitality and services industries must be prioritized to return to the same or similar positions when their former employer reopens for business.”

Eater LA reached out to Terranea Resort and received the following statement:

“We strongly disagree with the Labor Commissioner’s citation, which is not a finding of fact. We are exploring all of our legal options. The present dispute has nothing to do with Terranea’s good-faith, seniority-based approach to recalling its associates, and everything to do with ambiguous and poorly-defined language in SB 93. In fact, of the 53 employees referenced in the citation, only four have not been recalled. The remainder are either currently working at the resort or were offered a job. We demonstrate our care and concern for our associates through our deeds, not just words. That more than 85 percent of our pre-pandemic associates returned to Terranea speaks volumes about our positive, employee-centric culture.”