California Suspends State WARN Law Amid COVID-19 Pandemic

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On March 17, 2020, California Governor Gavin Newsom issued Executive Order N-31-20, temporarily suspending the state's WARN Act. Under both the federal and California WARN Acts, covered employers¹ who order a mass layoff, plant closing/termination, or relocation are required to provide at least 60 days' notice to affected employees and select state and local officials. Employers who fail to provide the requisite notice may be liable for back pay up to each day the Act was violated (up to 60 days), as well as a civil penalty.

Covered employers who are forced to rapidly lay off employees or cease operations altogether in light of the COVID-19 pandemic can rely on the "unforeseen business circumstances" exception to the federal WARN Act, which provides an exception to the 60-day notice requirement to employers who order closures or layoffs caused by some "sudden, dramatic, and unexpected action or condition outside the employer's control." 20 CFR § 639.9. Unfortunately for California employers, the California WARN Act does not contain a similar "unforeseen business circumstances" exception; instead, only providing exceptions for terminations or layoffs caused by a "physical calamity" or an "act of war."

Recognizing that the COVID-19 Emergency has caused "rapid changes in workforce needs," Governor Newsom issued Executive Order N-31-20, which temporarily suspends Labor Code sections 1401(a), 1402, and 1403 until the end of the current emergency. These provisions include the statutory and civil penalty provisions of the California WARN Act. The Executive Order is retroactive to March 4, 2020, and applies to all covered employers who order a mass layoff, relocation or termination that is "caused by COVID-19-related 'business circumstances that were not reasonably foreseeable as of the time that notice would have been required.'"

Employers who seek to avail themselves of the Executive Order protections must:

(i) provide notices to all affected employees, the California EDD, the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or layoff occurs;

(ii) give "as much notice as is practicable," and provide a brief statement of the basis for reducing the notification period; and

(iii) for written notices given after March 17, 2020, in addition to the other elements required by 29 U.S.C. §§ 2101, et seq, the 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). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019."

The Executive Order also orders the Labor and Workforce Development Agency to provide guidance regarding how the Executive Order will be implemented no later than March 23, 2020

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.