Navigating WARN Act Requirements: Understanding Layoff Laws in California and Federally

When an organization that employs tens of hundreds or thousands of people shuts down or there are mass layoffs, it only hurts the employees, but also their families and entire communities. The Worker Adjustment and Retraining Notification Act (WARN Act) was enacted in 1988 to minimize these damaging effects by making sure companies tell their workers and the local area ahead of time if big layoffs or closures are coming.

The need for the WARN Act grew in the 1970s and 1980s when quick changes in industry and economic downturns led to many unexpected company closures. This left workers – and towns – without any warning and the feeling that employers should care about more than their bottom line.

Under this federal law, companies must give a 60-day notice to their workers to prepare for the financial impact of losing their jobs. The 60-days includes all calendar days, not just business or working days. This duration is considered critical to help them find another livelihood, learn new skills, and plan their financial future. The notice also helps the local government, shops, and public services to get ready for so many of their residents to lose their jobs at once.

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What is the Different Between Federal vs. California WARN Act?

Although this is a federal law and thus, applies across all states, many states have their own rules related to layoffs that provide additional protections beyond the federal WARN Act requirements.

California, for one, has a history of passing laws that offer greater protections for employees so they have better working conditions and more vigorous safety nets in case of employment termination. One reason for this is the huge and varied economy that is home to some of the biggest corporations in technology, entertainment, manufacturing, and agriculture sectors.

As a result, employers in California need to comply with more stringent requirements than under federal law. Employers operating in multiple states must be aware of and fulfil both federal and any applicable state WARN Acts to ensure full legal compliance.

Here are the key differences between the federal WARN Act and California WARN Act:

Employer Size and Employee Threshold

The federal WARN Act applies to all organizations that have 100 or more full-time employees. However, this does not include employees who have worked fewer than 6 months in the last 12 months, nor does it include employees who work an average of less than 20 hours a week.

On the other hand, California’s version is applicable to all employers with 75 or more full-time or part-time employees. There is no stipulation for how long they must have been employed, which makes the California WARN Act broader in scope and applicable to a wider range of employment situations.

Definition of Layoff Events

Under the federal WARN Act, a layoff event that triggers the requirement for employers to provide advance notice includes:

Mass Layoff: Under the federal act, a “mass layoff” is a situation where there are job losses at a single site of employment that meet either of these conditions:

  • Job losses of 500 or more: If 500 or more employees are laid off during a 30-day period, it qualifies as a mass layoff, regardless of what percentage of the total workforce this represents.
  • Job losses of fewer than 500, but at least 33% of the workforce: If fewer than 500 employees are laid off, it still qualifies as a mass layoff if the number of employees laid off represents at least 33% of the total active workforce at that site, and at least 50 employees are laid off.

Plant Closing: A permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment if the shutdown results in an employment loss for 50 or more employees during any 30-day period.

In contrast, a mass layoff in California is defined as a dismissal during any 30-day period of 50 or more employees at a “covered establishment”, regardless of the percentage of the workforce that number represents. A covered establishment in California is any industrial or commercial facility that employs, or has employed in the previous 12 months, 75 or more people; this also includes a group of locations if they are in the same region or serve a similar purpose.

“Plant closing” under the California Act refers to the shutdown of any facility (or part of it) that employs or has employed in the preceding 12 months 75 or more persons. Unlike the federal law, part-time employees are also counted in.

The California law also has a provision for “relocation”. A notice is mandatory to move a substantial part of an employer’s operation from one industrial or commercial site to another more than 100 miles away, regardless of the number of employees.

Notice Period

Both the federal and California WARN Acts require a 60-day notice period for affected employees. The federal act dictates that employers must provide a 60-day advance notice if there is going to be a mass layoff or plant closure. The clock starts ticking from the date the notice is actually received by the:

  • Employees;
  • Union representing affected employees (if any); and
  • The relevant government entities (e.g., the state dislocated worker unit and the local chief elected official)

If the employer fails to give a full 60 days’ notice, they may be required to pay each affected employee for each day of violation, which could be the days they fell short of the 60 days.

Similarly, California also requires a 60-day notice for layoffs, relocations, or shutdowns. However, the state tends to enforce this rule more sternly. There are fewer exceptions where an employer can skip giving the full 60 days’ notice compared to federal law. For example, under federal rules, employers might not need to give full notice in cases like natural disasters, but California expects strict adherence unless certain criteria are met.

What are the Exceptions to California WARN Act?

There are many exceptions allowed under the federal law where an employer may not need to provide the full 60-day notice, such as unforeseeable business circumstances. California allows some similar exceptions but the threshold for proving these exceptions is higher, i.e., employers must be able to prove that they genuinely could not have anticipated the conditions leading to a layoff or closure.

These exceptions include:

A Faltering Company

This exception applies if a company is actively seeking capital or business at the time that would allow it to keep the facility open and it reasonably and in good faith believes that giving the required notice would ruin its chance to get the capital or business.

Unforeseeable Circumstances

This refers to sudden, dramatic, and unexpected actions or conditions outside the employer’s control, such as an unpredictable economic downturn or a government-ordered closing of an employment site that occurs without prior notice. For example, if a key client cancels a major contract unexpectedly, and it results in immediate plant closing or mass layoffs, this might qualify as an exception under the California WARN Act.

Natural Disasters

Events like floods, earthquakes, droughts, storms, tidal waves, or tsunamis that directly cause a business closure or mass layoff also allow organizations to forego the 60-day-notice rule.

In both California and federal cases, these exceptions require that the employer provide as much notice as is practicable. If the notice period is less than 60 days, they must include a statement of the reason for reducing the notice period in addition to fulfilling other notice requirements. Simply put, employers must be well-prepared to substantiate their claims with clear and convincing evidence to take advantage of these exceptions, more so than under federal law.

What Information Should Be Included in the WARN Notice in California?

There are certain minimum contents as mandated by the California WARN Act for the notice to be compliant with the law. Your employer’s written notice must include:

  • Name and address of the employment site (where the plant closure, mass layoff, or relocation will occur).
  • Statement as to whether the planned action is expected to be permanent or temporary.
  • Expected date when the action will commence and the anticipated schedule for making the layoffs.
  • Job titles of positions to be affected, and the number of employees to be laid off in each job classification.
  • An indication of whether or not bumping rights exist (Bumping rights allow more senior employees in a company to retain their employment by taking positions held by less senior employees during layoffs or organizational restructuring).
  • Name and contact details of a company official to contact for further information.

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Has Your Employer Violated the California WARN Act? Contact an Employment Lawyer Today

If your employer failed to provide a WARN notice and you were laid off, make sure to get in touch with an experienced employment attorney at Hershey Law to understand your rights. You may be entitled to back pay and benefits for each day of violation, up to a maximum of 60 days. This is calculated based on your average regular rate received during the last three years of your employment or your final rate of pay, whichever is higher. Your employer may also be subject to a civil penalty of $500 for each day of violation.

Our knowledgeable attorneys can file a claim with the California Labor Commissioner’s Office on your behalf, or help you bring a private action in court against them, based on the best course of action for your situation. Call us at (310) 929-2190 or contact us online to find out how we can hold your employer accountable.