Governor’s New Order Provides Some Relief from California Law Requiring 60-Days’ Notice Prior to Mass Layoffs
Employers across the nation are grappling with the painful economic consequences of the COVID-19 pandemic. Nearly all businesses have suffered and will continue to suffer contractions in operations. Some are unable to keep their doors open at all as a result of “shelter-in-place” mandates. For many employers, short- or long-term layoffs or furloughs may be the only option. While under normal circumstances California’s Warn Act requires companies with more than 75 employees to provide 60-days’ notice of any mass layoff, Governor Newsom ordered some relief from that requirement reasoning that these unprecedented circumstances could not have been predicted.
Background on California’s WARN Act
California’s WARN Act generally requires that employers with 75 or more full- and part-time employees give a 60-day notice to affected employees if the employer plans to layoff 50 or more employees during any 30-day period. Failure to abide by the notice requirements entitles employees to bring a private right of action to receive back pay for the period of violation up to 60 days as well as a possible civil penalty of $500 a day for each day of violation.
But it became clear that a 60-day notice period is not feasible during the coronavirus crisis and California does not have a counterpart to the federal WARN Act’s “unforeseeable circumstances” or “natural disaster” exceptions. Fortunately, Governor Newsom signed Executive Order N-31-20 on March 17, 2020 to address this concern.
Executive Order N-31-20
The Order acknowledges that because of the need to prevent or mitigate the spread of COVID-19, employers may be forced to close rapidly without providing the advance notice required under the law. Therefore, the Order provides that for the period beginning March 4, 2020 through the end of the emergency, California’s WARN Act provisions (Labor Code sections 1401-1403) are suspended for employers ordering a mass layoff, relocation or termination. To qualify for this relief, however, the layoffs must be due to COVID-19 business circumstances that could not have been anticipated. In addition, the employer must comply with the following.
Notify Government Officials
Employers are still required to notify government officials of the layoff, specifically the WARN Act Coordinator at California’s Employment Development Department, the local workforce investment board, and the chief elected official of each city and county government within which the termination or mass layoff occurred.
Give Employees As Much Notice As Possible
Employers must still provide affected employees as much notice as is practicable and at the time notice is given explain why 60 days’ notice is not feasible. The notice must include:
- The name and phone number of a company official to contact for further information.
- A statement as to whether the planned action is expected to be permanent or temporary.
If an entire plant is to be closed include:
- The expected date of the first separation and the anticipated schedule for subsequent separations.
- Job titles of positions to be affected.
- The number of employees to be laid off in each job classification
- The name of each union representing affected employees as well as the elected union officer and whether or not bumping rights exist.
Provide Unemployment Benefits Information
Employers implementing a layoff must include information about unemployment benefits. Specifically, any notice should state: “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 at labor.ca.gov/coronavirus2019.”
Although not required, employers affecting a layoff may also want to direct employees to resources other than unemployment insurance benefits. California employers and employees can find helpful information related to unemployment insurance, State Disability Insurance, and Paid Family Leave options from EDD at https://www.edd.ca.gov/about_edd/coronavirus-2019.htm
According to EDD, employees can be eligible for UI even if still employed, but have work hours reduced due to the quarantine or are subject to a quarantine required by a medical professional or state or local health officer.
Other Considerations Before Layoff
California employers who decide to layoff employees should be aware that Labor Code requirements for prompt payment of final wages still apply. This means that employees should be provided all wages earned and all accrued, but unused PTO or vacation at the time of layoff. While paid sick leave need not be cashed out, employees who return to work for the same employer within 12 months must have those paid sick leave hours restored.