Governor Signs AB 438 Announcing Sweeping Changes to the Classified Layoff Process for School Districts; AALRR Webinar Planned

10.12.2021

On Friday, October 7, Governor Newsom signed Assembly Bill (AB) 438 into law. Effective January 1, 2022, AB 438 will largely change how school districts will conduct classified layoffs and extend greater protections to classified employees.

Existing law provides that classified employees are generally subject to layoff for a lack of work and/or lack of funds upon 60 days’ notice. AB 438 amends Education Code sections 45117 and 88017 to closely resemble the process for certificated layoffs. The Superintendent or Chancellor must provide notice by March 15 that a school district/community college intends to recommend a permanent employee be laid off, stating the reasons therein. Districts will now be required to provide notice of termination to employees to be laid off before May 15 each year. However, if a layoff is conducted as a result of the expiration of a specially funded program, districts need only provide 60 days’ notice.

The standard for conducting a classified layoff remains the same; lack of work and/or lack of funds. However, AB 438 now requires districts to provide a permanent employee with both notice and an opportunity to a hearing. The hearing must be conducted before an administrative law judge to determine whether there is cause for not reemploying each laid off employee.[1] [1] However, the ALJ decision is not binding and districts’ governing boards shall make the final determination. The ALJ’s proposed decision must be provided to both the district’s governing board and the employee before May 7 of the school year, unless a continuance is granted. A final notice of termination must be issued on or before May 14. Thus, unless there is a statutory exemption, classified employees can no longer be laid off mid-year. Permanent employees not given notices and the right to a hearing are deemed reemployed for the following school year. Probationary employees may still be released without a hearing, even if the release is due to a lack of work and/or lack of funds.

AB 438 also provides that if the Legislature vests certificated or academic employees with any additional rights to notice or hearing as to layoffs, permanent classified employees must be afforded the same rights by the school district or community college district, as applicable.

Importantly, AB 438 assigns all expenses of the hearing, including the cost of the ALJ, to the district. Accordingly, districts will have to further consider the added costs of conducting hearings when laying off classified workers for lack of funds.

The passage of AB 438 raises a number of questions and concerns. First, it remains unclear how California’s Office of Administrative Hearings (“OAH”) will meet the increased demand that will likely result from a significant influx of classified layoff hearings, which must be completed during the same time period as certificated layoffs.

Second, while the new classified layoff procedure matches that for certificated employees, much of the case law guiding districts with regard to certificated layoffs will not be applicable to classified employees. As a result, ALJ’s will be left with the considerable challenge of rendering decisions with minimal decisional authority and will be forging new paths relying on sparse legislative guidance.

Third, the passage of AB 438 may render certain language in classified collective bargaining agreements void or untenable. This will require districts to review their collective bargaining agreements and demand to bargain changes to the layoff articles.

AB 438’s changes are far too sweeping to fully address all questions and considerations in an Alert format. For example, many districts use a multi-step approach to classified layoffs, notifying a first group of employees, and then a subsequent group after the first group decides if it wishes to exercise displacement (bumping) rights). AB 438 might frustrate this process. As a result, AALRR will be offering a comprehensive paid webinar in November to provide an in depth review of the new law, and address the myriad of questions raised by its passage. This webinar will further analyze AB 438 and provide districts with a road map to navigate this new procedure. The exact date and cost of the webinar is forthcoming.

We also recommend school districts consider the following timeline:

Now-October 31, 2021: Districts are advised to review their current staffing levels and determine whether a midyear classified layoff is needed. Notices under the old law must be issued by October 31, 2021, in order for the layoff to be effective prior to January 1, 2022.
November 12, 2021 (Tentative): Attend the AALRR webinar. Begin reviewing your collective bargaining agreements to see if any language should be changed.
December 2021: issue demand to bargain any changes to your collective bargaining agreement. Begin determining whether your District will need to conduct a layoff effective July 1, 2022.
January-March: Negotiate any changes with your classified unions. Continue layoff preparation.
No later than March 15, 2022: Issue preliminary layoff notices; begin the layoff process.

Please feel free to contact the Authors of this Alert or your regular AALRR counsel with any questions you might have about AB 438’s specific impact on your district.

Special thanks to our post bar clerk, Nathaniel Rosilez, for his assistance with this alert.

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[1] See also Government Code section 11500 et seq.