March 18, 2020 California Employers Get Relief From Strict WARN Act Obligations

Yesterday, California employers were provided with some much needed clarification regarding their obligations to provide WARN notices to employees being furloughed or laid off due to the impact of the COVID-19 (coronavirus) pandemic. In an emergency Executive Order, Governor Gavin Newsom officially recognized that rapidly progressing responses to the pandemic have caused businesses needs and circumstances to change in ways that were not reasonably foreseeable. As a result, the Executive Order relaxes the notice requirements of the California WARN Act.

More specifically, under the Executive Order, California employers otherwise covered by the Act will not be required to provide the full 60 days’ advance notice to employees and government officials of a mass layoff, relocation or termination of operations, as defined under the Act. Instead, similar to the requirements under the Federal WARN Act when unforeseen business circumstances arise, California employers need only provide as much notice “as is practicable” and include a brief statement describing the basis for providing less than the full 60 day notice. The notice must contain all of the elements of information ordinarily required under the Act (see below), as well as this additional statement:

“If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019.”

The standard information that still must be provided in the WARN notices to affected employees includes:

  • A statement explaining whether the planned action is expected to be permanent or temporary; and whether the entire plant will be closed.
  • The expected date when the plant closing or mass layoff will commence.
  • The expected date when the individual employee will be separated.
  • An indication about whether or not bumping rights exist (the right of a senior employee to replace a junior employee not being laid off).
  • The name and telephone number of a company official to contact for further information.

The above information must also be provided to the California Employment Development Department (EDD), the local workforce investment board, and the chief elected official of each city and county government where the job actions will occur. And, if the employees are represented by a union, it must be notified as well.

Notices to the EDD and above-described government officials must also include this additional information:

  • The expected date of the first separation and the anticipated schedule for making separations.
  • The job titles of positions to be affected and the number of affected employees in each job classification.
  • An indication about whether or not bumping rights exist.
  • For multiple layoff locations, a breakdown of the number of affected employees and their job titles by each layoff location.
  • The name of each union representing affected employees.
  • The name and address of each union's chief elected officer.

Keep in mind that only those employers who are “covered” by the Act and implementing changes that “trigger” the Act’s notice requirements need provide the notices described above. Employers are “covered” by the Act if they employ (or have employed within the prior 12 months) at least 75 or more persons at an industrial or commercial facility, including full-time and part-time workers, but excluding new hires within the last 6 months.

An employer “triggers” the Act’s notice requirement when it implements:

  • A layoff (or temporary furlough) of 50 or more employees within a 30-day period at the covered establishment (i.e., facility employing 75 or more persons as described above);
  • A relocation, which is the removal of all or substantially all of a covered establishment's operations to a different location 100 miles or more away; OR
  • A complete termination or substantial cessation of its industrial or commercial operations in a covered establishment.

Unlike the federal standard, temporary layoffs (i.e., furloughs) in California need not exceed six months in duration to trigger California WARN notice requirements. At least one California court has imposed the notice obligation in a situation where 50 or more employees were furloughed for a matter of weeks.

For larger employers covered by the Federal WARN Act, providing the CA-compliant notices described above should also meet the notice obligations under the federal law. Under Federal WARN, employers are exempted from the full 60-day notice obligations when the triggering layoff or closures are caused by unforeseen business circumstances. However, notices must still be provided as soon as practicable, as with the now-relaxed California standard.

What This Means

There continues to be much uncertainty, and change, regarding employers’ obligations in the face of COVID-19-caused challenges.

In situations involving mass layoffs, relocations and shut-downs that implicate California’s WARN Act, employers should provide the notices described above to their impacted employees and government officials as soon as they are able. The Governor’s Executive Order applies for the period beginning March 4, 2020 through the end of this emergency (i.e., when he lifts the proclamation of a State of Emergency in California). Thus, any employer who had a triggering layoff, relocation or facility closure since March 4, 2020, and has not issued WARN notices, is recommended to do so now, as a precautionary measure. WARN notice issues tend to be highly litigated matters and the potential damages can be significant, including up to 60 days’ lost wages and benefits per employee, as well as civil penalties and attorneys’ fees.

Employers are also permitted to manage their layoffs, furloughs, and closures to remain under the triggering event thresholds, without risk of claims they attempted to subvert compliance with the WARN Act. For example, employers may stagger workforce reductions at distinct facilities and/or over time to remain under the 50-employee trigger.

Information

For further information, questions, or assistance with WARN notices, please contact your PPSC lawyer, or any of the PPSC lawyers listed below. PPSC has a dedicated COVID-19 response team and is committed to assisting our valued clients through these challenging and fast-changing times.

This E-Update was authored by Denise Brucker and Camille Gustafson.  For more information, please contact any Paul, Plevin attorney by calling 619-237-5200