Many companies have undertaken severe measures to mitigate the economic impact of the COVID-19 pandemic. Unfortunately, this includes laying off employees. Prior to instituting layoffs, employers must evaluate whether the federal Worker Adjustment and Retraining Notification Act (“WARN Act”) applies.
Employers must also examine state laws, as many states have their own “mini-WARN” Acts which provide workers with greater protections than the federal WARN Act. California is one of these states. In response to the COVID-19 crisis, California has relaxed—but not waived—its state WARN Act’s notice requirements.
Federal WARN Act
Under the federal WARN Act, employers must provide 60 days’ advance notice to its workers and local government agencies prior to a plant closing or mass layoff. Failure to comply with notice requirements can result in significant financial penalties, including back pay and benefits for each affected employee, assessment of daily civil penalties, and reasonable attorneys’ fees and costs.
Employers are subject to the federal Warn Act if they employ:
(a) 100 or more employees, excluding part-time employees; or
(b) 100 or more employees, including part-time employees, who collectively work at least 4,000 hours per week (exclusive of overtime).
The federal WARN Act’s notification requirements are triggered by a plant closing or “mass layoff,” which is defined as a reduction in force that results in an employment loss at a single site of employment for any 30-day period for either 50 employees who comprise at least 33% of active employees or at least 500 employees. The federal WARN Act establishes specific requirements for what must be included in a notice to employees. Notice must be provided to:
- Employees affected by the mass layoff;
- All representatives of employees affected (such as their union);
- State dislocated worker unit; and
- Chief elected official of the unit of local government where the layoff will occur.
California WARN Act
The California WARN Act (“Cal-WARN”) is broader than the federal WARN Act—it applies to employers who own and operate an industrial or commercial facility that employs, or has employed within the preceding 12 months, 75 or more employees. Employers are required to provide 60 days’ written notice prior to implementing a mass layoff, relocation, or termination. A “mass layoff” is defined as a layoff of 50 or more employees during a 30-day period, regardless of the percentage of the workforce impacted.
Cal-WARN requires employers to provide notice to affected employees, California’s Employment Development Department, the local Workforce Investment Board, and the chief elected official of each city and county government where the termination, relocation, or mass layoff occurred. Failure to provide notice results in penalties, including back pay and benefits (capped at the lesser of 60 days or half of the number of days the employee was employed), civil penalties, and attorneys’ fees.
Executive Order N-31-20 Relaxed Cal-WARN’s Notice Requirements
On March 17, 2020, Governor Newsom issued Executive Order N-31-20 (the “Executive Order”), suspending some of the requirements of Cal-WARN for companies affected by COVID-19. On March 23, 2020, the Department of Industrial Relations, Division of Labor Standards Enforcement, and Employment Development Department provided the following guidance regarding the Executive Order’s conditional suspension of Cal-WARN’s requirements.
When Do the Relaxed Notice Requirements Apply?
An employer seeking to rely on the Executive Order’s suspension of the 60-day advance notice requirement must have a layoff caused by COVID-19 related “business circumstances that were not reasonably foreseeable at the time that notice would have been required.” The suspension of Cal-WARN’s notice requirement applies from March 4, 2020 through the end of the declared state of emergency.
What Notice Requirements Are Suspended?
The Executive Order only reduces the notice period—it does not eliminate the notice requirement under Cal-WARN. Employers must still give as much notice as is practicable (i.e., reasonably possible) at the time notice is given to employees and their representatives.
What Else is Required?
The Executive Order requires employers to provide a brief statement as to why the 60-day notification period could not be met. The notice must also include a statement regarding each affected employee’s eligibility for unemployment insurance.
Eric Wu is a Partner in Leech Tishman’s LAX office, which is located in El Segundo, California. He practices in the firm’s Employment, Litigation, and Corporate Practice Groups. He can be reached at 424.738.4400 or firstname.lastname@example.org.
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 29 U.S.C. § 2101, subd. (a)(1).
 29 U.S.C. § 2101, subd. (a)(3).
 20 C.F.R. § 639.6.
 Cal. Lab. Code § 1400, subd. (a).
 Cal. Lab. Code § 1401, subd. (a).
 Cal. Lab. Code § 1402.