Montgomery County Passed Displaced Service Workers Protection Act

Montgomery County recently passed the controversial Displaced Service Workers Protection Act (the “Act”), which places new requirements on both successor contractors and businesses that enter into service contracts with such contractors (i.e., building owners). The Act is intended to require successor contractors to continue the employment of employees who worked at that site for the prior contractor. And, perhaps most controversially, the Act is intended to obligate the business that enters into the contract to ensure that the new contractor complies with the law.

The Act requires successor contractors that employ more than 20 service employees (including but not limited to janitors, security officers, door staff, maintenance technicians, food service workers, and non-professional employees performing health care services) to:

(i) offer in writing to retain the previous contractor’s service employees at an affected site for 90 days;

(ii) send a copy of the offer to the employees’ collective bargaining representative, if any;

(iii) refrain from discharging such service employees without just cause during the 90 day transition period.

The Act also places requirements on entities that enter into service contracts with successor contractors. Such businesses are required to do the following at least 15 days before a service contract is terminated:

(i) request the previous contractor to give the successor contractor a list containing the names, dates of hire, and job classifications of its employees on the affected service contract;

(ii) provide the successor contractor with a list containing the names, dates of hire, and job classifications of its employees on the affected service contract;

(iii) notify any collective bargaining representative of the employees affected;

(iv) ensure that the previous contractor conspicuously posts a written notice to its employees.

The Act applies to contracts for the provision of security, janitorial, building maintenance, food preparation, or non-professional health care services in a facility located in Montgomery County which is used as a (i) multi-family residential building or complex with more than 30 units; (ii) commercial building or office building occupying more than 75,000 square feet; (iii) private school; (iv) institution such as a convention center, arena, airport, museum or music hall; or (v) hospital, nursing care facility or other health care provider.

There are certain exceptions that may apply. For example, managerial employees, employees who earn more than $30 per hour, employees who regularly work less than 10 hours per week, and employees who work in an executive, administrative or professional capacity are not considered service employees. Further, and importantly, if a successor contractor routinely requires all service employees to undergo an ineligibility test as a condition of employment, which was adopted as part of a written employment policy prior to bidding on the contract, then the successor contractor is not required to retain a service employee who fails that ineligibility test.

Businesses who utilize such service contracts and contractors should review their policies and practices to ensure they are in compliance with the Act. Penalties for violations of the Act include compensating affected employees for financial losses, consequential damages, interest, as well as equitable relief. The Act goes into effect December 21, 2012.