The WARN Act: California Layoff Notice

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California Warn Act

Mass layoffs are regulated by state and federal governments, in California, this is known as the California WARN Act, and the federal equivalent is known as the Federal WARN Act. In recent years, companies worldwide have been participating in mass layoffs and furloughing many employees. Because a mass layoff is always a possibility for workers, many employees have begun to develop anxiety around being laid off, impacting productivity and morale.

Because of the fear surrounding the unforeseeable business circumstances that may lead a company to need to lay off employees, federal and local government officials have created a set of regulations that govern how and when a company must provide advance notice before a mass layoff occurs.

While there are differences in the exact specifics of each act be it state or federal, the WARN Act requires that a company provide advance notice of a plant closing or mass layoff to the affected employees and government officials. This written notice exists to help employees have time to seek alternative employment or finish any training requirements to gain similar jobs.

This article will overview the California WARN Act and compare it to the Federal WARN Act to demonstrate the ways that both California and the federal government seek to protect workers as they transition to new employment.

Worker Adjustment and Retraining Notification Act (WARN Act) in California

The WARN Act is shorthand for the California Worker Adjustment and Retraining Notification Act, which requires that covered establishments notify employers that they are going to participate in a plant closing or mass layoff. There are a variety of important provisions that trigger warn act obligations and will help to outline the requirements under California law.

Covered Employers

The first important provision of the California WARN Act is the definition of a covered establishment. This outlines when a company is an employer subject to required notice. Under the California Labor Code Section 1400(a), a covered establishment has employed seventy-five or more full or part-time employees within the last 12 months. For a WARN notice to be required, the employees must have been employed for at least six of the last twelve months.

Event Requiring Notice

The next important provision is the event that triggers the required notice, which can be a mass layoff, relocation, or plant closure. A plant closing that affects any number of employees triggers the notice requirements. Alternatively, a layoff notice only needs to be given if 50 or more employees will be laid off within 30 days. There is no requirement or exception based on the percentage of the total workforce applying to layoffs. Finally, a notice must be given if there is a relocation of employees or business operations that is 100 miles or more and affects any number of employees.

A common issue here is the case where a business lays off two or more groups equal to 50 or more employees but does so outside of the 30-day timeframe. When companies do this, the range extends to 90 days, and a WARN notice is required unless the company can prove that each layoff constitutes separate and distinct actions and causes that were not intended to evade the WARN Act requirements.

Notice Requirements

Under the California Act, WARN notices must be given 60 days before the intended date of a layoff, plant closure, or relocation. This notice must be delivered in writing either by personal delivery, mail, or in a paycheck, but a ticketed or preprinted notice that is normally attached to a paycheck does not work for a notice.

The notice must be provided to the affected employees or their union representative, the California Employment Development Department, the local workforce development board or local workforce investment board, and the chief elected official of each city and county government in which the layoff will take effect. Additionally, they will need to include any people that need to be notified under the Federal Warn Act.

The notices are kept on the California government’s website and are updated every Tuesday and Thursday, excluding holidays. They can be found here.

Exceptions for Situations that Would Otherwise Require Notice

There are several instances where a WARN notice is not required, even if it would otherwise trigger a notice.

Temporary or Seasonal Employees

A WARN notice is not required if the workers were hired for a specific project and they complete that project in certain industries, such as the motion picture industry. Additionally, seasonal employees who were hired with the understanding that their employment was intended to be seasonal do not need the required notice if the seasonal work has been completed.

Physical Calamity

A WARN notices is not required when the closure or layoff is the result of a physical calamity or an act of war.

Actively Seeking Capital

If an employer was actively seeking capital in the days leading up to a closure, and the WARN notice would have interfered with the ability to acquire capital and possibly avoid such closing, they are not required to provide notice under California’s WARN Act. This exception is very specific and does not apply to layoffs.

Jurisdiction for a WARN Act Violation

Under the California Labor Code Section 1404, a suit may be brought before any court of competent jurisdiction if a covered employer fails to follow the WARN Act rights. It also allows for reasonable attorney’s fees.

Possible Damage Reward and Liability

The WARN Act allows a court to award $500 per day for each day of the violation and back pay for an employee at the employee’s final rate or a 3-year average, whichever is higher. The employer can also be held liable for medical expenses incurred that would have been covered by the employee benefit plan, but this liability is limited to either 60 days or one-half the number of days of the employment, whichever is shorter.

Federal WARN Act

California has modeled parts of its WARN Act after the federal Worker Adjustment and Retraining Notification Act, or the Federal WARN Act. The Federal Act obligations are similar in many ways but have several key differences.

Covered Employers

A covered establishment affected by the Federal WARN Act is limited to companies with 100 or more full-time employees that have been employed for at least six of the last twelve months. This differs from California, both in requiring more employees and requiring the employer to only count full-time employees.

This Act excludes the regular national, state, and locally recognized Indian tribal governments.

Event Requiring Notice

Under Federal law, a plant closure only triggers notice if the closure affects 50 or more employees. For layoffs, if a business intends to lay off 50 to 499 employees, the requirements are only triggered if the number of employees is equal to or greater than 33% of the total full-time workforce at a single site of employment. A layoff of more than 500 employees requires notice regardless of the percentage of the workforce made up of the affected employees. All of these must take place within 30 days. No relocation notice is required.

Notice Requirements

Federal law requires that the notice of employment loss is given 60 days before as well. It includes notifying the state-dislocated worker unit and chief elected officials in the state and local government. The requirements for delivery are very similar.

Exceptions for Situations that Would Otherwise Require Notice

The Federal WARN Act has several similar, and a few different exceptions.

Relocation Offer

An employer may offer a position at another worksite within a reasonable commuting distance to avoid a WARN notice if it would otherwise be required.

Natural Disaster

Federal law exempts required notice when the closure or layoff is the result of a natural disaster.

Unforeseen Business Circumstances

This act also explicitly excludes unforeseen business circumstances that lead to closure or layoffs. This option is explicitly not allowed under the California WARN Act to stop companies from being able to evade the requirements through a claim of bad business.

Jurisdiction for a WARN Act Violation

The jurisdiction for enforcement under the Federal WARN Act is the United States district courts. It too allows a court to award reasonable attorney’s fees.

Possible Damage Reward and Liability

The Federal WARN Act allows an employee to recover back pay and benefits for the period of the violation, up to 60 days. However, there is a similar requirement to limit the back pay and benefits to half the number of days the employee was employed.

Both of these acts allow employees to prepare for their employment loss and find ways to move forward after their job is lost. While they are not perfect, the combination of the Federal and California WARN Act gives employees the chance to land on their feet rather than being taken by surprise.

Final Thoughts

The California WARN Act exists to protect employees who may be affected by a mass layoff of 50 or more employees, worksite relocation, or plant closure. The goal is to give those employees the time to prepare and adjust to the transition. But as with all laws and regulations, some exceptions do apply.

The California WARN Act does not contradict the Federal WARN Act but merely adds to it. It applies to a wider range of employers than federal law and imposes larger penalties for violations.

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