Calif.’s New Landscape: Q&A With Attorney Dwayne McKenzie

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California is currently in the third stage in allowing counties to reopen businesses, and in the past week, officials in Los Angeles announced “sweeping new standards” for all retail locations, and that it’s accelerating the process for in-person dining and other sectors like hair salons.

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County Supervisor Janice Hahn said L.A. is walking “a fine line,” and that officials are “threading the needle” between keeping the public safe and allowing the economy to reopen. And the commercial real estate industry has to navigate through complex government relief programs and a slew of new employment-related regulations issued by local, state and federal authorities.

Dwayne McKenzie is an employment and labor law partner at Cox, Castle & Nicholson, LP, a real estate-focused firm with offices in L.A., San Francisco and Orange County. McKenzie represents employers, trade associations, owners, public agencies and labor-management trust funds in employment law and traditional labor relations.

McKenzie, speaking with Commercial Observer before police clashed with protestors in L.A. and before stores were looted throughout the weekend, discussed how employers can move forward as officials slowly reopen the economy amid a pandemic. He also responded to different interventions from different levels of government, and how the dynamic relates to employers’ responsibilities in the new normal.

Commercial Observer: How significant is it for officials to announce they’re aiming to accelerate the process, with proposed dates for the economy to reopen? 

Dwayne McKenzie: Very. Employers and employees need to plan. Although many employers and businesses have been hard at work mapping out their physical safeguards and preparing their new practices and policies, they need to communicate with employees, vendors, and customers. They need to make firm decisions, and an anticipated date sets a timeline to work toward. 

What does it mean to have actual dates and timeframes for people to work and plan toward? 

There’s the obvious planning such as changes to the physical environment, identifying and obtaining personal protective equipment, sanitizing equipment and products, signage, and the like. But I think the psychological aspect is often one that is overlooked until employers are actually dealing with it. 

Many employees are fearful or have concerns about returning to work, especially older workers and those with preexisting conditions. Working toward a set date allows employees to mentally prepare and to work with their employers to address concerns and consider alternatives. Returning to work for many will be a mental exercise before it is a physical one. A set date starts that process.  

How do you expect the summer to play out? 

My crystal ball has been taxed lately. Obviously, much will depend on whether a coronavirus resurgence will cause a quick shutdown again which has been a source of concern generally. But, concern developing over that possibility has actually had some upsides, since it means that many businesses and employers are taking proactive steps now to prevent that. 

We are seeing many businesses, such as restaurants and hospitality, focusing on sustainability and not just profitability. To reopen and stay open is a good initial goal. If we are able to do that over the summer and develop practices to navigate through fall and winter without a complete shutdown, employers can keep their doors open until such time that we can confidently reopen more fully.  

Governor Gavin Newsom’s state of emergency executive order establishes a “presumption” until July 5 that any employee who contracts coronavirus within 14 days of working at their place of employment became infected at work, which entitles workers to California Workers’ Compensation benefits. Should companies delay opening their offices because of that?

Practical needs will dictate. If an employer can operate remotely through July 5 and avoid bringing employees back to the workplace — whether all or even partially — they can avoid the potential for workers’ compensation claims related to COVID-19. That certainly makes sense. But for those employers who do not have that luxury, the economic impact of remaining closed likely outweighs the potential concern of workers’ compensation claims and potential future increased insurance rates.  

Can you talk about best practices for commercial real estate companies and employers who are considering reopening their workplaces?

Fortunately, there is a lot of information that has developed from public health officials, industrial hygienists and other experts as to the actual physical safeguards and practices to implement. A consensus has been forming around best practices for various work environments. It’s not necessarily one-size-fits-all.  But some common goals are to achieve social distancing, limit person-to-person contact and the duration of those contacts, implement physical safeguards and barriers, direct traffic flows, take measures to avoid common touch points, and deploy extensive cleaning procedures.  

Importantly, employers should be sure to monitor and comply with state and local requirements, especially county and city health official requirements for reopening. We have seen various requirements for different locations across the country, so the devil is in the details. Also, many employers will need to have written plans in place, so they should develop those and consider what policies and changes to existing policies they may need to implement before they roll out the information to employees.   

How is the commercial real estate industry navigating the onslaught of complex government interventions coming from different levels? What’s your reaction to the level of government intervention into commercial real estate — rent freezes, worker paid leave, eviction moratoriums, etc.?

Generally speaking, the industry is showing itself to be nimble in trying to adapt. The amount of planning and investment in complying with requirements — not only short-term but long-term as well — has been impressive. Many in the industry are being very proactive, especially in dealing with tenants to work through rent issues and other economic impacts of the pandemic.  

The industry has been pragmatic about cash flows and sensitive to safety issues. With that in mind, some of the more extreme proposals in terms of rent freezes and eviction moratoriums are unsettling. Some owners are financially better able to navigate these, but many, especially small to mid-sized owners, are not. The loss of cash flows due to the proposed lengthy rent freezes and moratoriums could have severe impacts. 

What other employment-related issues have arisen in the commercial real estate industry during this pandemic?

An initial challenge for employers has been to enable employees to keep working during the various stay-at-home orders. I think many other challenges are yet to come, a significant one being how to deal with employees who will need to be accommodated to return to work. 

Employers have obligations to provide reasonable accommodations in various circumstances — for instance with respect to disabilities — and I expect a large uptick in accommodation requests. Much of these will be driven by employees fearful of returning to work where they will be around other employees.  

Also, many employers will need to address cultural issues. Managing employee interactions and the new social distancing etiquette will be challenging. Different employees have different sensitivities, which can lead to conflict. I can foresee employers needing to manage conflicts between coworkers more frequently than in the past.

What else are you seeing in capital markets in Southern California? What else are you seeing in the industry? 

One of the things I find interesting is that the changes being implemented now to accommodate reopening are changes that in many ways will remain, perhaps long after the pandemic is under control or ended.  Investment is being made on physical systems for the long term. Many in the industry are planning now and will likely do much more in the future, to prepare properties for potential future issues. With COVID-19, the world has woken up to an unappreciated threat. Many in the industry are preparing for an uncertain future, whatever it may bring.