Governor Newsom loosens California WARN Act requirements in response to COVID-19

By Benjamin Kussman | Attorney, Blair & Ramirez LLP

The California Worker Adjustment and Retraining Notification Act (“California WARN Act”) requires all covered employers to provide employees with 60-days notice prior to a mass layoff, plant closing, or major relocation. Cal. Lab. Code §§ 1400-1408.

The California WARN Act only includes two express exceptions: (1) physical calamity; or (2) acts of war. The Act contains no exception for pandemics or, unlike its federal counterpart a catch-all exception for “unforeseeable business circumstances” that might apply to COVID-19.

The current COVID-19 crisis, however, has had devastating effects on the economy. In order to ease the burden on employers suddenly find themselves forced to layoff workers, Governor Newsom signed Executive Order No. N-31-20 on March 17, 2020. Executive Order No. N-31-20 eases the California WARN Act’s notice requirements for employers impacted by COVID-19.

What is the California WARN Act?

Basic provisions

The California WARN Act applies to employers that have had seventy-five or more employees at some point during the preceding twelve months (“covered employers”). Covered employers are required to give both employees and local government officials with 60-days notice prior to any of the following “triggering events”:

1. A mass layoff of more than 50 employees in a 30-day period;
2. A plant closure, defined as a cessation or substantial cessation of industrial or commercial operations; or
3. A plant relocation, defined as the relocation of all or substantially all of a business operation to a new location 100 or more miles away.

The notice must be provided to:

1. The employees affected by the layoff, relocation or termination;
2. The California Employment Development Department;
3. The local workforce investment board; and
4. The chief elected official of each city and county government within which the layoff, relocation, or termination occurs.

Are there exceptions to the Act?

The California WARN Act’s exceptions are limited. Outside of “physical calamity” or “war,” there are exceptions for temporary employment (with specific project durations in mind, such as filming a movie) and employers actively seeking capital wherein providing the statutory notice would have precluded the capital investment.

Failure to provide notice under the California WARN Act can result in a civil penalty of up to $500 per day for each day of violation. The employer may also be liable to affected employees for back pay and the cost of benefits that the employee would otherwise have been entitled to.

The California WARN Act is similar to Federal WARN Act

The California WARN Act mirrors its federal counterpart but is broader in scope. The Federal WARN Act applies to employers with over 100 employees also imposes a 60-day notice requirement prior to:

• Shutting down an employment site that causes employment loss for 50 or more full-time employees;
• Conducting a layoff that effects 50 or more employees and 33% or more of the total workforce at a single location; or
• Laying off 500 or more employees at a single location.

Notably, the Federal WARN Act (unlike the California WARN Act) includes exceptions for: (1) layoffs resulting from a natural disaster; or (2) business circumstances that were not reasonably foreseeable.

Governor Newsom signs new executive order in response to COVID-19 outbreak

On March 17, 2020, Governor Newsom signed Executive Order No. N-31-20, suspending certain obligations under the California WARN Act. Taking a page out of the Federal WARN Act’s playbook, Executive Order No. N-31-20 suspends the California WARN Act’s notice provisions as of March 4, 2020 for any triggering event caused by COVID-19 related “business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”

Employers are still required, however, to provide “as much notice as is practicable.” The notice must include the following information:

1. A brief statement of the basis for reducing the notification period;
2. All of the information required by the Federal WARN Act;
3. All notices required by Labor Code Section 1401(a)-(b); and
4. 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 labor.ca.gov/coronavirus2019.”

Executive Order No. N-31-20 will remain in effect “through the end of this [COVID-19] emergency.”

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About Benjamin Kussman

Mr. Kussman of Blair & Ramirez LLP is an experienced attorney who represents clients in personal injury, employment law, business disputes, and other cases. He is a member of the State Bars of California, Maryland, and the District of Columbia. Mr. Kussman is also an active member of the Consumer Attorneys Association of Los Angeles (CAALA) and the California Employment Lawyers Association (CELA).

About Blair & Ramirez LLP

Blair & Ramirez LLP is a dedicated and successful law office in Los Angeles and Orange County, California. Led by experienced attorneys Matthew Blair and Oscar Ramirez, Blair & Ramirez LLP represents clients in personal injury and employment law cases.

For all employment law inquiries—or to request a consultation with our attorneys—please call us at (213) 568-4000.