Governor Eases California’s 60-Day Notice Requirement for Layoffs Under State’s WARN Act Due to COVID-19 Outbreak

California Governor Gavin Newsom has aided Bay Area businesses struggling to cope with the novel coronavirus (COVID-19) pandemic by easing the notice requirements for layoffs and terminations under the state’s WARN Act. Employers are no longer required to give 60 days’ notice prior to layoffs ore terminations of 50 or more employees under the March 17 executive order suspending the notice and penalty portions of the statute.

Until Newsom issued Executive Order N-31-20 it was unclear as to whether employers could lay off employees during pandemic-related closures without giving the required notice under California’s WARN Act. The federal WARN Act remains in place and businesses that are subject to that law may still be required to give 60 days’ notice when laying off employees.

California’s Worker Adjustment and Retraining Notification (WARN) Act stipulates that businesses with 75 or more employees are required to provide them with 60 days’ notice of any layoff, termination or relocation affecting 50 or more employees over a 30-day period. That includes part-time employees.

Employers are also required to provide 60 days’ notice if an establishment brings an end to substantial operations at a location or relocates more than 100 miles away. Employees may receive pay in lieu of notice.

Newsom’s executive order allows California businesses that conduct layoffs, terminations or relocations in response to the COVID-19 pandemic to claim an exception to the state WARN Act’s 60-day notice requirement. However, employers must still provide notice under the WARN Act as soon as practicable. That notice must include the information required under the act.

The notices of COVID-19-related layoffs must say that the layoff, relocation or termination was caused by “business circumstances that were not reasonably foreseeable as of the time that notice would have been required.” Additionally, the notice must state that those who have lost their job or temporarily laid off may be eligible for unemployment insurance.

Federal WARN Act is Still Unclear on COVID-19 Layoffs

The federal WARN Act also applies to mass layoffs, but its provisions apply to companies with 100 or more employees, excluding part-time employees working 20 or fewer hours a week. Employers are required to give 60 days’ notice for layoffs of at least 50 employees, excluding part-timers, that comprise at least 33 percent of their workforce. Notice is always required for layoffs of 500 or more employees.

Additionally, notice under the federal WARN Act is required when an employment site is temporarily or permanently shut down and 50 or more employees are laid off or terminated in a 30-day period. The federal act also applies in cases of employer relocation.

Like California’s WARN Act, the federal legislation has a natural disaster exception for employment losses that result from “natural disasters.” The federal act defines natural disasters as “floods, earthquakes, droughts, storms, title waves or tsunamis, and similar effects of nature.” Does a pandemic qualify as a natural disaster under that definition? No court has addressed the issue and the answer is unclear.

Penalties Under State and Federal WARN Acts

If an employer is found to have failed to give required notice under either the California or federal WARN statute, it faces a possible penalty of up to $500 for each day of the violation. Employers will also be required to pay employees for each day the act was violated, as well as the benefits that would normally have accrued over that time.

Both WARN Acts cap back pay and benefits at the lower of 60 days or half the number of days an individual employee worked for the business. However, both the state and federal acts allow for the award of attorney fees and under the California WARN Act, it is possible that a court could find individual company officers and directors liable for violations.

Categorised in: HR and Payroll

This post was written by Sean Allaband