Temporary Exception to WARN Act for COVID-19 (Coronavirus)

  • California Governor Gavin Newsom issued Executive Order N-31-20 on March 17, 2020, temporarily suspending the requirements of the California Worker Adjustment and Retraining Notification Act (CalWARN Act) for the duration of the current COVID-19 emergency, subject to certain conditions.

The COVID-19 emergency has federal, state and local governments trying to mitigate the spread of the coronavirus by directing individuals to stay home when possible and avoid public gatherings, or issuing “shelter in place” orders. Many employers have had to make drastic changes to their operations, sometimes being forced to quickly downsize or close altogether.

Currently, California’s WARN Act requires employers of covered establishments to provide 60 days’ advance notice to affected employees when they must order a mass layoff, relocation or termination. If employers don’t comply with the Act’s requirements, they can potentially be held liable for up to 60 days of back pay and the value of benefits for all laid off employees plus additional civil penalties recoverable under the Private Attorneys General Act.

The Governor recognized the impossible dilemma for employers during these emergency circumstances and issued the executive order suspending the 60 days’ advance notice requirement (Labor Code section 1401(a)) and the provisions of the California WARN Act that impose liability and penalties (Labor Code sections 1402 and 1403) for the duration of the COVID-19 emergency, subject to certain conditions specified in the order, including:

  1. Employers must still give written notice of mass layoffs, relocations or termination consistent with California WARN Act requirements, meaning notice must be given to (1) the affected employees and (2) to the California Employment Development Department (EDD), the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation or mass layoff occurs.
  2. Consistent with the federal WARN Act, employers must give as much notice as practicable and, at the time the notice is given, provide a brief statement of the basis for reducing the notification period.
  3. The layoff, relocation or termination must be caused by COVID-19-related “business circumstances that were not reasonably foreseeable as of the time that notice would have been required.” (The order cites and borrows language from the federal WARN Act’s unforeseen business circumstance exception.)
  4. For written notices given after the date of the Executive Order, March 17, 2020, in addition to the other required elements, 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 https://www.labor.ca.gov/coronavirus2019/.”

State Guidance Implementing Executive Order

  • The Governor’s order directed the Labor and Workforce Development Agency to issue guidance on how the order should be implemented. On March 23, 2020, the state issued guidance in a Q&A format addressing and clarifying some of the requirements listed above.

Regarding the order’s requirement that the layoff/termination must be caused by COVID-19-related “business circumstances that were not reasonably foreseeable at the time that notice would have been required,” the state’s guidance confirms that the “business circumstances” should be understood to be consistent with the identical exemption under the federal WARN Act. It also notes that the U.S. Department of Labor has interpreted such “business circumstances” to include “[a] government ordered closing of an employment site that occurs without prior notice.”

The state’s CalWARN guidance also clarifies that the requirement for employers to give notice “as soon as practicable,” or reasonably possible, is meant to be consistent with the same provision of the federal WARN Act. Courts have observed that there is no bright-line rule on what constitutes a “practicable” notice period; it depends on the employer’s unique factual circumstances. Employers subject to CalWARN requirements should consult with legal counsel regarding their specific circumstances if they are facing a COVID-19-related mass layoff/termination.

The guidance also specifies that the notice must include:

  • Name and address of the employment site where the closing or mass layoff will occur.
  • Name and phone number of a company official to contact for further information.
  • Statement as to whether the planned action is expected to be permanent or temporary and, if the entire location is to be closed, a statement to that effect.
  • Expected date of the first separation, and the anticipated schedule for subsequent separations.
  • Job titles of positions to be affected, and the number of employees to be laid off in each job classification.
  • In the case of layoffs occurring at multiple locations, a breakdown of the number and job titles of affected employees at each location.
  • An indication as to whether or not bumping rights exist.
  • Name of each union representing affected employees, if any.
  • Name and address of the chief elected officer of each union, if applicable.

CalChamber has developed the WARN Notice to Employees (California) — COVID-19 Exception and WARN Notice to State/Local Officials (California) — COVID-19 Exception. Only use these forms to notify employees and state/local officials of mass layoffs, relocations or terminations that are directly caused by COVID-19-related business circumstances.

Another important practical issue the state addressed was how employers are required to distribute the CalWARN notices. According to the guidance, notices are distributed as follows:

To Employees: When providing the required notice, any reasonable method of delivery that ensures receipt of notice is acceptable (e.g., first class mail, personal delivery with optional signed receipt, electronic mail, etc.).

To EDD: Please send an email to eddwarnnotice@edd.ca.gov and include the following information:

  • The notice (as an attachment or within the body of the e-mail);
  • Contact information for an employer representative in the event that EDD needs information; and
  • The name of the employer in the subject of the email.

Attachments should be compatible with Microsoft Office or Adobe Reader software.

An employer may request acknowledgment of the receipt of their notification by including an acknowledgement request in the e-mail.

To the Local Workforce Development Board and Chief Elected Officials: Your Local Workforce Development Area (Local Area) will assist you in contacting the chief elected officials in those communities affected by the planned layoff or closure. Visit the Local Area listing by county website for information on how to contact your Local Area Board.

Employers can read the full text on the DIR website.

Employers must note that the Executive Order is specific to CalWARN requirements. Federal WARN requirements are still in effect and employers subject to the federal law must still comply with its notice requirements. Employers should consult with legal counsel about their notice obligations under state law, federal law and the new executive order.