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LAWSUIT PREVENTION FOR EMPLOYERS

BE FOREWARNED: The California WARN Act Requires Several Written

Notices Before Employees Can Be Laid Off

Legal Issue:  An emergency executive order issued by Governor Newsom on March 17, 2020 suspended the normal rule set forth in the California WARN (Worker Adjustment and Retraining Notification) Act.  This prohibits employers of 75 or more employees from implementing a “mass layoff” without 60 days’ advance written notice to employees.

The governor’s action acknowledged that many employers have been forced to close their businesses or to curtail their operations due to “shelter in place” mandates issued by state and local governments.  This has made it impossible to provide their employees with the 60 days’ written notice normally required by the California WARN Act.  As a result, the executive order suspends the normal rule on condition that covered employers satisfy several requirements.

Because failure to scrupulously comply with these conditions subjects employers to the full range of penalties for violating California’s WARN Act, a brief discussion of that statute is in order.

California’s WARN Act

California’s WARN statute (Labor Code, sections 1400-1408) applies to “covered establishments,” which are defined as “any industrial or commercial facility or part thereof that employs, or has employed within the preceding 12 months, 75 or more persons.”

The law prohibits covered employers from implementing a “mass layoff, relocation, or termination at a covered establishment” unless written notice of the action is given at least 60 days before it takes effect.  This notice must be provided to employees of the covered establishment, the Employment Development Department and several other specified individuals and entities, and must include several specific informational elements in order to be valid.

Penalties for failure to provide the required notification include, for each employee:

1. Back pay at the average regular rate of compensation received by the employee during the last three years of employment, or the employee’s final rate of compensation, whichever is greater, and

2. The monetary value of any benefits to which the employee would have been entitled had his/her employment not been lost, including the cost of any medical expenses incurred by the employee that would have been covered under an employee benefit plan.

Employer liability depends on the duration of the employer’s violation, up to a maximum of 60 days.  Additional penalties may include up to $500 for each day of the violation. The law can be enforced by employees who were denied proper notice, an employee representative or a government entity. Claims can be initiated by individual plaintiffs, or in the form of a class action lawsuit.  Courts are authorized to award attorneys’ fees to a prevailing plaintiff.

A Federal WARN statute applies to employers of 100 or more employees, and imposes similar, but not identical, requirements on employers.

Gov. Newsom’s Executive Order 

In March, Gov. Gavin Newsom temporarily suspended the 60-day notice requirements incorporated in the California WARN Act.  However, the Order does not suspend the WARN act entirely, or for all covered employers.  It suspends the 60-day notice requirement only for those employers that fully satisfy the conditions specified in the body of the Order.  These include:

1. The layoff, relocation or termination must be caused by COVID-19-related circumstances not foreseeable when the normal (60 days’) notice would have been required;
2. The employer must provide detailed, written notices to employees affected by the layoff, as well as several additional individuals and entities;
3. The required written notice must be provided as soon as reasonably possible; and
4. Include all elements of information specified in the Order.

Conclusion

In order to avoid the substantial liability exposure imposed by the California WARN Act, employers must comply with the specific conditions of the emergency executive order, specifically including the detailed written notice requirements.  This must be provided at the earliest possible time. For employers who have not yet provided the required notices, or are uncertain if they have been submitted properly, the best advice is, “there is no time like the present.”

Please call my office for expert legal advice on these and related matters.

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Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over 38 years. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives. He has a remarkable record of success.

For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well.

You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them. http://www.jaygputnam.com/newsletter/

This newsletter is not intended as a substitute for legal advice and its content is provided for discussion purposes only.  Any suggestions or recommendations must be assessed by competent legal counsel to be sure the unique requirements of each workplace are properly considered.