On March 17, 2020, California Governor Newsom issued an executive order that suspended certain provisions of the California Worker Adjustment and Retraining Notification (WARN) Act.

The goal is to provide businesses with some relief from the unprecedented actions being taken to combat the spread of COVID-19.

Retroactive as of March 4, 2020, which is when a State of Emergency was declared in California, the order will be in effect through the end of this emergency. The order suspends penalty provisions of the California WARN Act, including the noncompliance remedies of back pay, other damages, and civil penalties.

The California WARN Act is applicable to businesses that employ, or have employed in the preceding 12 months, 75 or more full-time or part-time workers. 

The Executive Order does not suspend the California WARN Act in its entirety, nor does it suspend the law for all covered employers. The Executive Order only suspends the California WARN Act’s 60-day notice requirement for those employers that satisfy the Order’s specific conditions. Employers must still provide "as much notice as is practicable."

Executive Order Highlights

The California WARN Act provides protection for employees of certain businesses engaging in layoffs and closures. Among these protections is the requirement that businesses with 75 or more employees in California provide their employees with at least 60 days' advance notice before taking action that would result in the temporary or permanent loss of employment for 50 or more employees within a 30-day period.

The California Department of Industrial Relations (DIR) has provided “Guidance on Conditional Suspension of California WARN Act Notice Requirements” web page for employers. This is the DIR’s explanation of the intent of the Executive Order:

Recognizing that employers have had to rapidly close down their businesses to prevent or mitigate the effects of the COVID-19 pandemic, but have not been able to provide their employees the usual advanced notice of at least 60 days, the Executive Order provides a conditional suspension of the usual 60-day notice requirement.
For purposes of the California WARN Act, covered establishments must provide written notice prior to:

• A mass layoff:  a layoff during any 30-day period of 50 or more employees at a covered establishment (Lab. Code § 1400(d).)
• A relocation: the removal of all or substantially all of the industrial or commercial operations in a covered establishment to a different location 100 miles or more away (Lab. Code § 1400(e).)
• A termination: the cessation or substantial cessation of industrial or commercial operations in a covered establishment (Lab. Code § 1400(f).)

It is important to keep in mind that the suspension only applies to employment actions caused by COVID-19-related "business circumstances that were not reasonably foreseeable as of the time that notice would have been required."

In addition, suspension of California WARN Act requirements is expressly conditioned on compliance with the following obligations:

1. Employers must provide written statutory notice of mass layoffs, relocations or termination to (1) the affected employees; (2) California's Employment Development Department (EDD); (3) the local workforce investment board; and (4) the chief elected official of each city and county government where the termination, relocation or mass layoff occurs.

2. The notice must contain the information required by the federal WARN Act.

3. Employers must provide "a brief statement of the basis for reducing the notification period."

4. 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 https://www.labor.ca.gov/coronavirus2019/."

In addition, the guidance states that notice to employees be given by "any reasonable method of delivery that ensures receipt of notice is acceptable (e.g., first class mail, personal delivery with optional signed receipt, electronic mail, etc.)."

Additional Employer Considerations

According to an article provided by the law firm Hughes Hubbard & Reed LLP,

“Governor Newsom's executive order does not affect the obligation to pay out PTO to terminated employees. Neither, of course, does the order affect applicability of the federal WARN Act. However, the federal statute includes an exception for ‘unforeseeable circumstances’; that exception logically would include the COVID-19 pandemic, although to date there has been no judicial or legislative interpretation so holding.”

Also, employers who need to layoff workers must establish a causal connection between the mass layoff or shutdown and COVID-19. 

In other words, if an employer was already planning a mass layoff or shutdown that would have required a California WARN notification before the onset of the COVID-19 emergency, the executive order would not apply to such a layoff or shutdown.

Finally, any layoff notices given after March 17, 2020, 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.”

The suspension relief provided by Governor Newsom’s Executive Order is retroactive to March 4 and will be effective “through the end of this emergency.” In addition, the Order also directs California’s Labor and Workforce Development Agency to issue public guidance on how the Order will be implemented.

Be Informed and Be Compliant

Maintaining updated and compliant workforce management and paid sick leave policies will help your company meet its obligations, as well as provide accuracy and timeliness. Understanding the law, automating sick leave tracking and calculations, and prioritizing accurate record keeping will make compliance a sure thing.

Another key step in maintaining HR compliance and increasing your company's cost-effectiveness is to consider outsourcing. A professional agency such as Accuchex can provide much-needed help with Human Resources needs and questions.

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If you are looking for reliable resource for your HR issues, we can help. And you can get your Free Download: California Paid Sick Leave Law to help you make an informed decision, or call Accuchex Payroll Management Services at 877-422-2824.