Broadly speaking, both the federal Worker Adjustment and Retraining Act (WARN Act) and its California counterpart (Cal-WARN, California Labor Code section 1400 et. seq.) require employers provide 60-days advance notice of any mass layoffs, relocations or terminations (e.g. of 50 or more employees during any 30-day period) or face significant civil penalties.  However, as California employers began complying with various federal and state quarantine orders, including California Governor Gavin Newsom’s Executive Order dated March 4, 2020 regarding COVID-19 related public emergencies, an issue arose whether these unexpected emergencies and resulting shutdowns/terminations constituted a “physical calamity” that might excuse Cal-WARN’s  advance notice requirements.

On March 17, 2020, Governor Newsom issued Executive order N-31-20 (https://www.gov.ca.gov/wp-content/uploads/2020/03/3.17.20-EO-motor.pdf) that sidestepped that particular inquiry, but crucially and helpfully, did suspend Cal-WARN’s advance notice requirements provided the employers comply with the notice requirements identified in the Executive Order.  Specifically, this Executive Order suspended Labor Code section 1401(a) (requiring 60 days advance notice before layoffs/terminations), section 1402 (liability for failure to provide these notices), and section 1403 (statutory penalties) from March 4, 2020 “through the end of this emergency.”

Significantly, however, this Executive Order did not entirely suspend the requirement that employers provide notices regarding “mass layoffs” (e.g., of 50 or more employees during any 30-day period).  Instead, this Executive Order conditioned this suspension of these provisions, including the 60-day advance notice period, on the employer providing written notice to (1) the employees of the covered establishment affected by the mass layoff/termination; and (2) 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 while these notices need not be provided 60 days in advance, the Executive Order requires (consistent with the federal WARN Act [29 U.S.C. § 2102(b)(3)]) that the employer “give as much notice as practicable and, at the time the notice is given, provides a brief statement of the basis for reducing the notification period.”  The Executive Order suggests that such COVID-19 notices state the mass layoff, relocation or termination is “caused by “COVID-19-related business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”

Furthermore, the Executive Order requires that written notices given after March 17, 2020, in addition to the other elements generally required for such notices (per Labor Code section 1401(b) and the federal WARN Act), the notice must contain 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.”

Lastly, the Executive Order directs the Labor and Workforce Development Agency (LWDA) to provide guidance to the public by March 23, 2020 regarding how to implement this order.  The Executive Order also expressly retains Labor Code section 1400’s definitions of key terms for this order.

Accordingly, employers who unfortunately find themselves needing to undertake “mass layoffs” etc. in response to COVID-19-related developments should update their otherwise applicable Cal-WARN Act notices (including the specifically required mention of UI benefits) and ensure they provide these notices to the appropriate recipients “as soon as practicable.”  Employers should also keep watch for further guidance from the LWDA and other state and federal agencies and authorities.

Do you have questions about how this update may affect you?  For further information contact:

Emily J. Fox (efox@wilsonturnerkosmo.com)

Lois M. Kosch (lkosch@wilsonturnerkosmo.com) 

Michael Kalt (mkalt@wilsonturnerkosmo.com)

Wilson Turner Kosmo’s Special Alerts are intended to update our valued clients on significant developments in the law as they occur. This should not be considered legal advice.