Locke Lord QuickStudy: UPDATE: Cal-WARN Act Obligations Amended Per Governor’s Executive Order

Locke Lord LLP
April 27, 2020

On March 17, 2020, Governor Newsom issued an Executive Order suspending California’s mini-WARN Act (Cal-WARN) obligations for employers affected by COVID-19. From March 4, 2020, through the end of the coronavirus emergency, employers that order a mass layoff, relocation, or termination at a covered establishment need not adhere to the express requirements of California Labor Code sections 1401(a) [requiring 60 days’ written notice], 1402 [back pay and benefits penalties for Cal-WARN violations], and 1403 [additional penalties for Cal-WARN violations] on the condition that the employer:

  1. Gives written notices specified in the Cal-WARN Act (Labor Code section 1401(a)-(b));
  2. Consistent with 29 U.S.C. § 2102(b)(3), gives as much notice as is practicable and, at the time notice is given, gives a brief statement on the basis for reducing the notification period;
  3. Consistent with 29 U.S.C. § 2102(b)(2)(A) and 20 C.F.R. § 639.9(b), orders the mass layoff, relocation, or termination due to COVID-19-related “business circumstances that were not reasonably foreseeable as of the time that notice would have been required”; and
  4. For written notice given from March 17 forward, in addition to the other elements detailed in  the Cal-WARN Act (Labor Code section 1401(b)), include the following statement: “If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI).

On March 23, 2020, the California Labor and Workforce Development Agency (LWDA) issued ‎guidance on Governor Newsom’s Executive Order. ‎

Among other things, the LWDA’s guidance indicates that the COVID-19-related “business circumstances” referenced in the Executive Order will be evaluated consistent with the federal WARN Act, which includes “[a] government ordered closing of an employment site that occurs without prior notice.”  

Similarly, the LWDA’s guidance provides that the notice requirement under the Executive Order will also be evaluated consistent with the federal WARN Act.  The Executive Order requires that employers give as much notice as is practicable (i.e., reasonably possible).  What constitutes a “practicable” period for purposes of notice is a fact-intensive inquiry that includes an evaluation of delays an employer undertakes in giving notice and the period of notice actually given before termination.

Regrettably, the LWDA did not provide any guidance on how temporary furloughs arising from COVID-19-related business circumstances will be viewed as it relates to Cal-WARN.  Past guidance from the DLSE and the limited case law that exist indicate that a temporary layoff may be deemed a separation of employment under some circumstances, however, none appear to contemplate the unprecedented impact of COVID-19.  Because temporary furloughs may be considered terminations or layoffs under certain circumstances, employers should consider potential Cal-WARN and final wage obligations related to furloughing employees.  

Finally, while California employers may find some relief from the state statute, they should ensure that they do not run afoul of any applicable federal requirements.  Currently, there is no similar suspension of federal WARN Act obligations due to COVID-19, though the U.S. Department of Labor has issued an FAQ about federal WARN Act obligations as relate to COVID-19.

Because of the ever-changing COVID-19 legal environment, employers should consult with counsel for the latest ‎developments and updated guidance on these topics.‎

Visit our COVID-19 Resource Center often for up-to-date information to help you stay informed of the legal issues related to COVID-19.