The California Worker Adjustment and Retraining Notification (WARN) Act (also called the Cal-WARN Act) requires California employers to give advance notice of mass layoffs or terminations.  Anticipating the global coronavirus pandemic would seriously impact staffing at California businesses, Governor Gavin Newsom issued California Executive Order N-31-20, relieving the state’s employers of the obligation to provide early WARN Act notices of mass layoffs but maintaining other aspects of WARN Act requirements.  Following the issuance of a stay-at-home order, mass layoffs grew to such an extent that the California Employment Development Department’s bi-monthly list of WARN notices must now be updated daily.

After various stages of economic shutdown in California and across the country, mass layoffs continue at a much higher rate than in previous years.  As the government allows the resumption of business in stages, employers are still struggling to determine what comes next.  California employers need answers to questions about the interpretation of the WARN Act in light of the pandemic shutdown, the staged return of businesses to operation, and continuing business closures and financial struggles.  In these troubled times, it’s more important than ever that California employers understand new nuances to the legislative requirements and how to avoid California WARN Act claims in light of the changes.

Questions about WARN Act Notices under California Executive Order N-31-20

In March 2020, California Governor Gavin Newsom began laying the groundwork for efforts to slow the spread of what would soon become a global pandemic.  Few California employers could have foreseen the drastic steps that would soon come to pass. Executive Order N-31-20 conditionally suspended the requirements for WARN Act notices for California employers.  Two days later, on March 19, the governor issued a stay-at-home order that closed all but essential businesses in an attempt to stem the spread of COVID-19.  Despite the availability of federal relief under the CARES Act, many employers were unable to operate or pay employees who were required to stay home, making layoffs inevitable.

The sudden closures left businesses striving to comply with the WARN Act modified by California Executive Order N-31-20.  Suspension of the advance WARN Act notice requirements was welcome and necessary given that closures were inevitable.  Still, the state’s employers who have already laid off employees or are considering it should be mindful of some questionable points in WARN Act notice requirements in the pandemic’s economic recovery period.

Cal-WARN Act Requirements under Normal Circumstances

When businesses determine layoffs or terminations are unavoidable, the California WARN Act and the federal WARN Act require employers to give advance notice of such employment decisions.  Normally, the Cal-WARN Act requires employers to give employees, government officials, and local government officials advance notice of mass layoffs 60 days in advance of a plant closing or mass layoff.  The state WARN Act is stricter than its federal counterpart regarding covered employers.  The Cal-WARN Act applies to employers who have had employed at least 75 employees in the preceding 12-month period. 

Sometimes, a business’s financial downturn is so sudden that complying with the 60-day notice requirement is unworkable.  Although the California Employment Development Department (EDD) may provide guidance on adjustments to WARN Act requirements when businesses are universally affected by changed circumstances, as with the novel coronavirus pandemic, consultation with a California minimum wage attorney is often necessary to help your business avoid California minimum wage claims while striving for better financial footing.

Cal-WARN Act Requirements under California Executive Order N-31-20

Under Executive Order N-31-20, California employers are relieved of the obligation to provide advance WARN Act notices of mass layoffs, but employers must still issue such notices and follow other requirements of the act regardless of the duration of the separation.  The executive order did not affect which employers are covered by the Cal-WARN Act, and covered employers must still give notice in the same manner and to the same individuals and government units as before.

To qualify for the conditional suspension of the 60-day notice requirement, California employers must meet the following criteria:

• The mass layoff must be caused by business circumstances caused by COVID-19 that were not “reasonably foreseeable” when timely notice would have been required.
• The employer must provide notices to the following:
  • Affected employees.
  • The  EDD.
  • The local Workforce Development Board.
  • The executive elected official of the city and county where the layoff occurs.
• The WARN Act notices satisfy the following requirements:
  • The notice must be given as early as possible.
  • The notice must state why the employer could not give 60-day advance notice.
  • The notice must include the following information for affected employees:
    • State whether the layoff is temporary or permanent.
    • State if the employment location is to be closed permanently.
    • State the effective date of the layoff.
    • State whether bumping rights exist.
    • Identify an employer contact by name and phone number where additional information can be obtained.
    • 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.”
  • The notice must include the following information for all other parties to be notified:
    • The employment site of the mass layoff, including business name and address.
    • An employer contact by name and phone number where additional information can be obtained.
    • Identification of each union that represents layoff employees and the name and address of each union’s chief elected officer.
    • A statement of whether the layoff is temporary or permanent.
    • A notice of closure, if the employment location is to be closed permanently.
    • The anticipated date for the first and all subsequent layoffs.
    • Job titles of the separated employees and the number of employees affected in each job classification.
    • The number of employees affected at each location if multiple locations will have layoffs.
    • A statement noting whether bumping rights exist.

The federal WARN Act requires employers to provide much of the information listed above as well as helpful information for employees such as where to find dislocated worker assistance and the estimated length of separation.

Questions about Cal-WARN Act Construction during a State of Emergency

The conditional suspension of 60-day WARN Act notices applies only if the layoffs are necessitated by business circumstances related to COVID-19 that were unforeseeable at the time notices would have been timely under the act.  Employers need to be prepared to show (a) that the layoffs were caused by COVID-19, and (b) that the employer did not know 60 days ahead of time that layoffs would be necessary.  The conditional suspension is recent and, presumably, temporary, leaving employers no legal guidance on how the EDD or courts would interpret those terms.

Additionally, how an employer can demonstrate these elements for layoffs may become more difficult as we get further in time from the issuance of Executive Order N-31-20.  For example, how easily can an employer show in March 2021 that a layoff was caused by COVID-19 — as the economy and businesses are starting to reopen? Further, how can an employer in March 2021 demonstrate that it could not have foreseen the need for layoffs 60 days ago when the economy came to a screeching halt three months ago?

Employers are facing these and other questions about the implementation and interpretation of the conditional suspension of the deadline for sending WARN Act notices.  Employers who have filed or plan to file WARN Act notices short of the usual 60-day advance period need counsel from an experienced employer defense lawyer in California.

Where to Get Guidance on Compliant California WARN Act Notices

Conditional suspension of WARN Act notices can help California employers survive the economic dip caused by the coronavirus pandemic, but employers must tread carefully.  For help navigating the new WARN Act waters and identifying how to avoid California WARN Act claims, employers can turn to an experienced employer defense lawyer in California like Susan A. Rodriguez.  With nearly three decades successfully guiding employers through employment law issues, she is a resource employers turn to again and again. For a consultation at the Law Offices of Susan A. Rodriguez, APC, call (310) 350-9995 or complete this online contact form.

Posted by Susan A. Rodriguez, Esq.

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