California’s Worker Adjustment and Retraining Notification Act, more commonly known as WARN, provides protection to employees, their families and even communities by requiring employers to notice before a plant closing or mass layoff. Notice is to be provided 60 days in advance of a plant closing or mass layoff.
Employers covered under the California WARN Act are those with 75 or more full-time or part-time employees. Under the federal WARN, employees must have been employed for at least six of the 12 months preceding the date of required notice to be counted. California Labor Code Section 1400 (a) and (h).
For mass layoffs, employers must give notice if 500 or more employees will be laid off during a 30-day period. Employers must also give notice if 50 or more employees are laid off, and that group makes up at least one-third of the employer’s workforce. Similarly, for site shutdowns, employers must give notice if a shutdown will result in an employment loss for 50 or more employees during any 30-day period. An employment loss is defined as: (1) a termination; (2) a layoff exceeding 6 months; or (3) a reduction in hours of more than 50% in each month of any 6-month period.
A temporary layoff also requires proper notice. A recent case, International Brotherhood v. NASSCO, held that an employer has the obligation to provide notice under WARN even if the intended layoff is temporary. The court in this case noted that, as the definition of Act’s phrase, “separation from the position” in Labor Code Section 1400(c), does not suggest a severance from the employment relationship must occur before the notice duty triggers, but instead encompasses a temporary job loss, even if some form of employment relationship continues and the employees are given a return date.
But what does a violation under the WARN Act mean for an employee? First, there is a possible civil penalty of $500 a day for each day of the violation. Employees may receive back pay to be paid at employee’s final rate or 3-year average rate of compensation, whichever is higher. In addition, employer is liable for cost of any medical expenses incurred by employees that would have been covered under an employee benefit plan. The employer is liable for period of violation up to 60 days or one-half the number of days the employee was employed whichever period is smaller. California Labor Code Sections 1402 and 1403.
There are important reasons for employers to provide notice to employees of a mass layoff or plant closing. At least with proper notice, employees may have a better opportunity to find a new job sooner.