California WARN Notices Suspended: Governor Issues Executive Order on Notice Requirements

COVID-19 Update

On March 17, 2020, California’s Governor Gavin Newsom signed Executive Order N-31-20, relieving California employers of some of the notice requirements mandated by California’s Worker Adjustment and Retraining Notification (WARN) Act for implementing mass layoffs, relocations or terminations. The language of the Executive Order still requires an employer to issue prior notice of a layoff, relocation or termination, but provides relief on the timing of such notice (i.e., there is no requirement that it be provided 60 days in advance). The Executive Order will apply for the duration of the period California is in a state of emergency, which started on March 4, 2020.

Under the federal WARN Act, qualifying employers must provide up to 60 days of specific, written notice to employees, their union if applicable, and certain agencies in the event of plant closings or mass layoffs. Failure to do so can result in liability of up to 60 days’ pay and benefits, and civil penalties. California’s WARN Act, as stated in the Labor Code at Sections 1400-1408, is broader and less clear than the federal version. California Labor Code § 1400 et seq., which parallels the federal WARN Act, requires employers to provide at least 60 days’ notice prior to a “mass layoff, relocation, or termination” of a covered establishment. However, even temporary shutdowns and emergency “mass layoffs” could theoretically trigger the notice requirements of the California WARN Act. Notably, the “Shelter In Place” Orders being issued by various counties across California, and resulting furloughs or layoffs, did not provide any employer with the opportunity to give 60 days’ notice to employees. While there is a defense to the state WARN Act, when notice is not possible due to “physical calamity” or “act of war” (Cal. Lab. Code § 1400(c)), it is entirely unclear whether the COVID-19 pandemic would qualify as an exception under the existing language of the California statute, since the statute as written does not anticipate a situation of this magnitude. Thus, in its current iteration, the California statute does not provide an exception for a pandemic. This presents a challenge for employers who have encountered or may encounter immediate and pressing need for furloughs, temporary layoffs, etc. The penalties for noncompliance with the state WARN Act are similar to those under the federal WARN Act.

When Governor Newsom issued Executive Order N-31-20 in direct response to the ongoing COVID-19 pandemic, it effectively suspended employer’s 60-day notice obligations under the California WARN Act. The March 17 Executive Order specifically recognizes the dilemma caused by COVID-19, stating that strict compliance with the various statutes and regulations specified in the Order would “prevent, hinder, or delay appropriate actions to prevent and mitigate the effects of the COVID-19 pandemic.” Specifically, the Order states that “the need to prevent or mitigate the spread of COVID-19” has caused employers to “close rapidly without providing their employees the advance notice required under California law.”

Therefore, to limit employer liability due to the realities of a pandemic, the March 17 Executive Order declares that for the period “that began March 4, 2020 through the end of this emergency, Labor Code sections 1401(a), 1402, and 1403 are suspended for an employer that orders a mass layoff, relocation, or termination at a covered establishment,” subject to the following conditions:

  1. As required by Labor Code Section 1401(a)-(b), an employer must still (1) give written notice to all employees affected by an order for a layoff, relocation or termination, and to the Employment Development Department, 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; and (2) include in such notice the elements required by the federal Worker Adjustment and Retraining Notification (WARN) Act;
  2. An employer must give as much notice as is “practicable” and, at the time such notice is given, provide a brief statement of the basis for reducing the notification period;
  3. An employer orders such “a mass layoff, relocation, or termination” that is caused by COVID-19-related “business circumstances that were not reasonably foreseeable as of the time that notice would have been required;” and
  4. For written notice given after March 17, 2020, an employer must include the following statement in the notice: “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.”

Thus, while the March 17 Executive Order provides relief on the requirement of 60 days’ notice, it still requires that some notice be provided, consistent with the requirements of the federal WARN Act.

Further, the March 17 Executive Order instructs the Labor & Workforce Development Agency to provide guidance by March 23, 2020, regarding how this Executive Order will be implemented. A copy of the Executive Order can be found here.

Employers should continue to consult with counsel as they consider application of the Executive Order together with “Shelter in Place” Orders being issued by various counties across California. Manatt’s Employment and Labor team will continue to monitor updates in this regard, including any additional guidance that is issued by the Labor & Workforce Development Agency.

For regular updates on the major challenges companies are facing, please visit our COVID-19 resources page and subscribe for timely updates in your inbox here.

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