California Orders Partial Suspension of Cal/WARN Act

The Cal/WARN law applies more broadly, with some different provisions than the federal version. As California employers respond rapidly to the declared COVID-19 emergency, including by having to layoff and furlough employees and even shutting down altogether, larger employers must consider whether Cal/WARN applies and take any necessary steps.

Because employers have had to act quickly, Governor Gavin Newsom issued Executive Order N-31-2 to suspend Cal/WARN’s 60-day advance notice requirement. Employers still must comply with notice requirements, including giving employees written notice with specific language that the Executive Order requires.

When Cal/WARN Applies

Under the federal WARN Act, employers with 100 or more full-time employees must provide notice to employees, employee representatives (i.e., unions), and state/local officials at least 60 calendar days in advance of plant closing or mass layoffs affecting 50 or more employees at a single site of employment. Cal/WARN, however, applies to any “covered establishment” (meaning “any industrial or commercial facility or part thereof”) in California where, within the preceding 12 months, an employer employed 75 or more full- or part-time employees. An “employer” includes anyone who directly or indirectly owns and operates a covered establishment, with a parent company considered an employer as to any covered establishment that a subsidiary directly owns or operates. These definitions, along with any joint employment considerations, can be important for determining whether a situation involves a sufficient number of employees for Cal/WARN to apply.

Under Cal/WARN, an employer must give written notice at least 60 days before any mass layoff, relocation, or termination. The law defined those terms as follows:

• Mass Layoff: There must be 50 or more employees at a covered establishment who are separated from a position for lack of funds or lack of work during any 30-day period. In certain situations, temporary shutdowns and furloughs may be considered a “mass layoff.”
• Relocation: There must be the removal of all or substantially all of the industrial or commercial operations in a covered establishment to a different location 100 miles or more away.
• Termination: There must be a substantial cessation of industrial or commercial operations in a covered establishment.

Cal/WARN has exceptions for when these actions “are necessitated by physical calamity or act of war,” in which case no notices would be required. The Department of Industrial Relations’ guidance on the Governor’s Executive Order cautioned that any employer seeking to rely on the “physical calamity” exception would have to prove that the COVID-19 pandemic is a “physical calamity” in their situation, with no case law has interpreted the term. Significantly, though, unlike the federal WARN Act, Cal/WARN does not have an unforeseeable business circumstance exception – which likely would apply in the COVID-19 emergency.

Partial Suspension By Executive Order

Recognizing the “rapidly progressive response to the threat of COVID-19 cause business needs and circumstances to change in ways that were not reasonably foreseeable as recently as just weeks and days ago,” Governor Newsom temporarily suspended some sections of Cal/WARN when a mass layoff, relocation, or termination stems from COVID-19-related business circumstances. The suspension is retroactive to March 4, 2020, and continues through the end of the COVID-19 emergency.

The Executive Order suspended the requirement of 60 days’ advance written notice, as long as employers provide notice as soon as practicable, with the particular language required in notices to the employees. Employers seeking to rely on the Executive Order’s suspension of the California WARN Act 60-day advance notice requirement must satisfy the following conditions:

1. The employer’s mass layoff, relocation or termination must be caused by COVID-19 related “business circumstances that were not reasonably foreseeable at the time that notice would have been required.”
2. The employer must provide written notices to (1) employees affected by the mass layoff, relocation, or termination; (2) all representatives of employees affected (such as their union); (3) the EDD; the Local Workforce Development Board; and the chief elected official of each city and county government within which the termination, relocation or mass layoff occurs;
3. The employer must provide written notices to employees that satisfy the following requirements: (1) give as much notice as practicable (i.e. reasonably possible) at the time notice is given to employees and their representatives; (2)provide a brief statement as to why the 60-day notification period could not be met; and (3) include 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.”
4. The following information needs to be included on the notice to the EDD, the Local Workforce Development Board, and the chief elected official of each city and county government within which the termination, relocation or mass layoff occurs: (1) name and address of the employment site where the closing or mass layoff will occur; (2) name and phone number of a company official to contact for further information; (3) statement as to whether the planned action is expected to be permanent or temporary, and if the entire location is to be closed, a statement to that effect; (4) expected date of the first separation, and the anticipated schedule for subsequent separations; (5) job titles of positions to be affected, and the number of employees to be laid off in each job classification; (6) in the case of layoffs occurring at multiple locations, a breakdown of the number and job titles of affected employees at each location; (7) an indication as to whether or not bumping rights exist; (8) name of each union representing affected employees, if any; and (9) name and address of the chief elected officer of each union, if applicable.

When providing the required notice to employees, any reasonable method of delivery that ensures receipt of notice is acceptable (e.g., first-class mail, personal delivery with optional signed receipt, electronic mail, etc.). For the EDD, employers can send an email to eddwarnnotice@edd.ca.gov, and include the notice and contact information for an employer representative in the event the EDD needs additional information. For the Local Workforce Development Board and Chief Elected Official, visit the Local Area listing by county website for information on how to contact your Local Area Board who will assist in contacting the correct official.

The Department of Industrial Relations, Division of Labor Standards Enforcement and the EDD provided further guidance on the conditional suspension of Cal/WARN through the Department of Industrial Relations. It is available here.

Takeaways

While the Executive Order provides relief for the requirement of 60 days’ notice, it still requires that some notice be provided when Cal/WARN otherwise applies. Employers also still must consider whether the federal WARN Act applies and, if so, how to comply. (Please see Arent Fox’s alert on federal WARN Act issues “Temporary Office Closings, Furloughs, an Layoffs; What Employers should Know About the WARN Act.”.) Employers faced with the difficult prospect of permanent or temporary closings, furloughs, or layoffs should consult with counsel as they consider how best to comply with the applicable federal and state requirements.