California WARN Act Suspended For COVID-19 Emergency

Concerned employers are welcoming the Governor’s recent executive order
Concerned employers are welcoming the Governor’s recent executive order.

Governor Gavin Newsom issued an Executive Order suspending the bulk of the California Worker Adjustment and Retraining Notification Act (WARN Act) for the duration of the current COVID-19 emergency, subject to certain conditions — an action that concerned employers are welcoming.

The COVID-19 emergency is wreaking havoc on many employers’ operations. In the state’s effort to mitigate the spread of the virus, many businesses had to quickly convert to remote working or even close altogether.

One of the many concerns that employers are dealing with is how to comply with all state labor laws, including the California WARN act, which requires employers who own covered establishments to provide 60 days’ advance notice to employees when they must order a mass layoff, relocation or termination. Under this law, a covered establishment is any “industrial or commercial facility” that employs or has employed 75 or more persons over the last year.

Failure to provide the 60 days’ notice exposes employers to liability for up to 60 days of back pay and the value of benefits for all laid off employees plus additional civil penalties, which can be recovered under the Private Attorneys General Act (PAGA).

But how do you comply with this requirement when you are forced to massively change, reduce or close your business entirely in a matter of days in response to a public health emergency?

Recognizing the impossible dilemma, the Governor issued an Executive Order on March 17, 2020, that suspends the provisions of the California WARN act that impose liability and penalties (Labor Code sections 1402 and 1403) for the duration of the COVID-19 emergency, subject to certain conditions specified in the Governor’s order, including:

  1. Employers must still give written notice of mass layoffs, relocations or termination consistent with California WARN Act requirements, meaning notice must be given to (1) the affected employees and (2) to the California Employment Development Department (EDD), the local workforce investment board and the chief elected official of each city and county government within which the termination, relocation or mass layoff occurs.
  2. Consistent with the federal WARN Act, employers must give as much notice as practicable and, at the time the notice is given, provide brief statements of the basis for reducing the notification period.
  3. The layoff, relocation or termination must be caused by COVID-19 related “business circumstances that were not reasonably foreseeable as of the time that notice would have been required,” consistent with the federal WARN Act.
  4. For written notices given after the date of the Executive Order, March 17, 2020, in addition to the other required elements, the notice must contain the following 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 https://www.labor.ca.gov/coronavirus2019/.”

If employers comply with the conditions listed above, covered employers shouldn’t have to worry about the potential liability under the state WARN Act if they must order layoffs due to COVID-19.

The federal WARN act is still in effect, though it contains the “unforeseeable circumstances” exception cited in the Governor’s executive order (number 3 above). It is likely that a COVID-19-related order for layoffs fits the exception, but employers should consult with legal counsel about their notice obligations under both the Executive Order and the federal law.

Additionally, the order directs the California Labor and Workforce Development Agency to issue guidance by March 23, 2020, on how the order should be implemented. CalChamber will continue to provide updates as circumstances develop.

James W. Ward, Employment Law Subject Matter Expert/Legal Writer and Editor

CalChamber members can read more about Mass Layoffs and Plant Closings in the HR Library. Not a member? See what CalChamber can do for you.

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