California’s WARN Act Modified for Employment Actions Taken in Response to COVID-19

By way of Executive Order, California Governor Gavin Newsom suspended, until the end of the COVID-19 emergency, enforcement of the state’s WARN Act (Cal-WARN) in connection with mass layoffs or shutdowns brought about by COVID-19, and which would otherwise trigger Cal-WARN’s 60-day paid notice requirement.

Generally, Cal-WARN requires employers who have employed 75 or more employees within the preceding 12-month period to provide 60 days’ notice to employees before conducting a mass layoff (50 or more employees in a 30-day period), relocation, or termination (plant closure or other cessation of operations). Cal. Lab. Code §§ 1400, 1401. In addition, unlike the federal WARN Act, the Cal-WARN has been applied to employee furloughs, including those that last less than six months.

Governor Newsom’s executive order allows California employers to avail themselves of an “unforeseeable business circumstances” exception to the notice obligation, an exception previously available only under the federal WARN Act. The federal exception is incorporated by reference into the executive order. It may be asserted where the mass layoff or shutdown is caused by “sudden, dramatic, and unexpected action or condition outside the employer’s control.”

The executive order does not categorically exempt employers from compliance with the state law. To avail themselves of the exception, employers must:

• Provide the requisite written notices to employees impacted by the mass layoffs or shutdown, and state and local government,
• Provide as much paid notice as possible, and to explain in writing to the impacted employees and state and local government why full notice cannot be given, and
• Expressly notify employees of their eligibility for unemployment insurance benefits (the written 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).

Employers must establish a causal connection between the mass layoff or shutdown and COVID-19. For example, if an employer was already planning a Cal WARN-triggering mass layoff or shutdown before the onset of the COVID-19 emergency, the executive order would not apply to such a layoff or shutdown.

The Order directs the Labor & Workforce Development Agency (LWDA) to provide, by March 23, guidance to the public on how the Order’s provisions are to be implemented.