Governor Newsom Signs Executive Order Temporarily Relaxing California’s WARN Act Reporting Requirements in Response to COVID-19 Pandemic

03.18.2020

As the COVID-19 pandemic continues, employers around the country must brace themselves for its unprecedented economic impact.  As a result, some employers will implement reductions in workforce, layoffs, and reduction in employee hours and pay—which may require advance notice requirements under both state and federal Worker Adjustment and Retraining Notification (“WARN”) Acts.

In response, on March 17, 2020, California’s Governor Gavin Newsom, signed an Executive Order relaxing the California WARN Act advance notice requirements for California employers faced with the harsh reality of layoffs brought about by COVID-19 closures. 

Governor Newsom’s Executive Order

Governor Newsom’s March 17, 2020 Executive Order relaxes the sixty (60) day advance notice requirement for covered California employers performing terminations, mass layoffs, and relocations due to COVID-19.  The Executive Order covers the period that began March 4, 2020, when a State of Emergency was declared in California due to COVID-19 and remains in place “through the end of this emergency.”

The Executive Order addresses an ambiguity under California WARN by adopting the “unforeseen business circumstances” exception from the federal WARN.  Prior to the adoption of this Executive Order, it was unclear whether a pandemic such as the current COVID-19 would qualify as an exception to California WARN.   

Although the Executive Order suspends California Labor Code sections 1401(a), 1402, and 1403, the Executive Order provides some additional conditions—all of which must be satisfied.  The covered employer must still:

• Give written notice to:

1. The affected employees;
2. The representative of the employees, if applicable;
3. The Employment Development Department,
4. The local Workforce Investment Board (now called the Local Workforce Development Area (“LWDA”) or Local Workforce Development Board (“LWDB”), and
5. The chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs.

• Include in its notice the elements required by the federal WARN Act (29 U.S.C. Section 2101 et seq.), as well as 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.”

• Provide as much advance notice as practicable, and at the time notice is given, provide a brief statement of the basis for reducing the notification period; AND
• Include in the notice that the mass layoff, relocation, or termination caused by COVID-19-related business circumstances were not reasonably foreseeable as of the time that notice would have been required.

The Executive Order also provides that by March 23, 2020, the Labor and Workforce Development Agency shall provide guidance to the public regarding how this Executive Order will be implemented.

Employers facing decisions to cut their workforce due to the COVID-19 pandemic should be familiar with the basics of both California and federal WARN Acts, which we have summarized below.

California WARN Coverage

Under California WARN (California Labor Code section 1400 et seq.), covered employers, those with seventy-five (75) or more persons, part-time employees included, must give employees, their representatives (if any), and state/local agencies sixty (60) days advance notice before instituting a mass layoff, relocation, or termination. 

California WARN defines “mass layoff” as a layoff of fifty (50) or more employees at a covered establishment during any thirty (30) day period. 

California WARN defines “layoff” as a “separation from a position for lack of work or lack of funds.” 

Under California WARN, for purposes of mass layoffs, “employee” means a person employed by an employer for at least six (6) months of the twelve (12) months preceding the date on which notice is required.

Federal WARN Coverage

The federal WARN Act covers employers with 100 or more employees (excluding part-time employees, who are defined as those working fewer than 20 hours per week, or fewer than 6 of the previous 12 months).  Federal WARN also requires 60 day advance notice and is triggered by a plant closure or mass layoff. 

Under federal WARN, a plant closure means the permanent or temporary shutdown of a single site of employment or facility that results in an “employment loss” for 50 or more employees (excluding part-time employees, who are defined as those working fewer than 20 hours per week, or fewer than 6 of the previous 12 months). 

A “mass layoff” is defined as a reduction in force (other than a plant closing) that results in an employment loss at a single site of employment during any 30-day period for at least 33 percent of the employees and at least 50 employees (excluding part-time employees), or at least 500 employees (excluding part-time employees). 29 USC Section 2101(a)(3).

The “unforeseeable business circumstances” exception under section 3(b)(2)(A) of federal WARN applies to plant closings and mass layoffs caused by business circumstances that were not reasonably foreseeable at the time that 60-day notice would have been required.  The exception allows reduced-time notice.  29 USC Section 2102(b)(2)(A).  This is the same exception Newsom’s Executive Order temporarily adopted. 

When further guidance is published we will update this Alert.  In the meantime, should you have any questions about the Executive Order and its relevance to your business, please contact us.

Thanks to Justin R. Peters, Law Clerk, for assisting with the preparation of this Alert.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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