Governor Newsom Suspends Key Provisions of Cal-WARN

Written by Brian Ragen and Daniel Innamorati 

On March 17, 2020, Governor Gavin Newsom issued Executive Order EO N-31-20 suspending key provisions of the California Worker Adjustment and Retraining Notification Act (“Cal-WARN”) in the wake of the COVID-19 pandemic.

Why This Matters

The Executive Order effectively eliminates Cal-WARN’s requirement that employers provide 60 days’ notice for mass layoffs, relocations and cessations of business related to COVID-19.  These events have become widespread as business shut their doors for public health reasons, and compliance has been rendered virtually impossible in many instances.

Background

For the uninitiated, Cal-WARN requires “covered establishments” (defined as work locations that have employed 75+ employees in the preceding twelve months) to provide employees and certain government officials 60 days’ notice of any “mass layoff” (defined as layoff of 50+ employees in any 30-day period), “relocation” (defined as transfer of all or substantially all operations 100+ miles) or “termination” (defined as cessation of all or substantially all operations).  See Cal. Lab. Code §§ 1401-1402.  “Employee” in this context means a person employed by an employer for at least six months of the 12 months preceding the date on which notice is required.  Employers may also offer employees pay in lieu of notice for all or a portion of the 60-day period.

Cal-WARN contains an exception to the notice or pay-in-lieu requirements for “a physical calamity or act of war,” but it is not clear that COVID-19 would satisfy this exception.  (The federal version of WARN contains an exception for “unforeseeable business circumstances,” which COVID-19 would almost certainly satisfy.)

Because COVID-19 is forcing many businesses to lay off employees or cease operations immediately for public health reasons, Governor Newsom is suspending the 60 days’ notice requirement, subject to certain limitations discussed below.

Key Takeaways

Governor Newsom’s Executive Order contains the following key takeaways:

  • The suspension of Cal-WARN’s 60-day notice requirement is retroactively effective March 4, 2020 and will continue “through the end of this emergency.”
  • The mass layoff, relocation or cessation of operations must be caused by “COVID-19-related business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”
  • Employers still must provide the required notices to employees and government officials, but employers are not strictly bound by the 60-day advance notice period.
  • Instead, employers should give “as much notice as is practicable,” and “provide a brief statement of the basis for reducing the notification period.”
  • For notices issued to employees after March 17, 2020, employers must include language that states, “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 Labor and Workforce Development Agency (“LWDA”) has until March 23, 2020 to issue public guidance how the Executive Order will be implemented.

If employers comply with the conditions listed above, they should be able to eliminate liability under Cal-WARN for failure to provide a full 60 days’ notice when otherwise required.  It also appears reasonably clear that most employers with COVID-19-related layoffs, relocations or cessations of operations can avoid liability under the federal version of WARN due to its “unforeseeable business circumstances” exception.  But employers should consult with experienced legal counsel about their obligations.

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