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March 2020

Multi-State Employers Should Take Care with Mass Layoffs and Plant Closings During State of Emergency

March 18, 2020

State of Emergency

On March 13, 2020, President Trump invoked the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. §§5121 et seq.) to declare a national emergency in response to the outbreak of the COVID-19 coronavirus pandemic.  Things are evolving quickly, and employers have not had much time to process the myriad of federal, state, and local employment and labor laws implicated during this State of Emergency.  Because there is no near-term solution to this pandemic, one federal law that many employers are having to give thought to at this time is the Worker Adjustment and Retraining Notification (WARN) Act (29 U.S.C. §§2101 to 2109), as well as its counterparts in many States.  These laws govern plant closings and mass layoffs.  Below is an overview of the Federal WARN Act’s notice requirements and a survey of State laws to help inform employers as they may be required to contemplate plant closings or mass layoffs. 

The Federal WARN Act

The Federal WARN Act typically imposes a sixty (60)-day written notice requirement ahead-of certain plant closings and/or mass layoffs.  Reduced notice periods are allowed where a closing or mass layoff is the result of unforeseen business circumstances or a natural disaster.

Covered Employers and Covered Employees:  The Act covers businesses with 100 or more full-time employees or 100 or more employees including part-time employees who work a combined 4,000 hours per week, exclusive of overtime.  The Act applies broadly to for-profit employers, non-profit employers, and public and quasi-public entities that operate apart from the regular government.  Employees entitled to notice include salaried and hourly workers, managers, and supervisory employees.

When Notice Requirements are Triggered:  Notice requirements are triggered when an employer: (1) closes a plant temporarily or permanently, or (2) undertakes a mass layoff. 

A plant closing occurs when a single site” (defined as a “single site of employment” which can be multiple buildings/locations in a reasonable geographic proximity to each other) is shut down resulting in an employment loss during any 30-day period for 50 or more full-time employees.  An employment loss is: (1) a termination other than one that is for cause, is voluntary, or constitutes retirement; (2) a layoff exceeding six months; or (3) a reduction in an employee’s hours of work by 50 percent or more in each month of any six-month period.

A mass layoff is a reduction in force that is not the result of a closing that results in an employment loss at a single site of employment” during any 30-day period of 50-499 full-time employees if they make up at least 33 percent of the active workforce for that single site or 500+ full-time employees.  Multiple losses during a 90-day period that would not alone trigger notice requirements but that together would trigger notice requirements count as a closing or mass layoff unless the employer can show that the losses are the result of separate and distinct causes and actions.

Exceptions to Notice Requirement:  Exceptions to the 60-day notice requirement exist for unforeseen business circumstances and natural disasters.  The exception for unforeseen business circumstances applies when there is a sudden, dramatic, and unexpected action or condition beyond an employer's control that was not foreseeable when notice ordinarily would have been required.  This may include unanticipated and dramatic major economic downturns and government-ordered closings of employment sites without prior notice.  The exception for a natural disaster typically applies when a closing or mass layoff is the direct result of a natural disaster.  While it is more likely that the first exception would apply in a pandemic, it is worth keeping the second exception in mind due to the fact that President Trump has activated emergency powers under the Stafford Act, which most often involves natural disasters.  Keep in mind, these exceptions may not fully eliminate the obligation to provide notice but may serve to shorten the notice period.  Employers should provide as much notice as practicable under the circumstances.  

Timing, Form, and Content of Notice:  No particular form is required for notice, but it must be specific and in writing.  It may be by mail, by personal delivery, or included with paychecks.  Additional notice is needed when a planned closing or mass layoff is extended beyond what was announced originally.  In addition to affected employees, notice must be given to the bargaining agency of represented employees, the State unit for dislocated workers, and to the local government where an employment site is located.

Other Laws and Contracts:  WARN does not supersede laws or collective bargaining agreements that provide for additional notice, rights, or remedies.  In those instances, WARN notice runs concurrently.

Penalties:  An employer who does not give notice as required may be liable for backpay and benefits for up to 60 days, and a civil penalty to a local government unit not to exceed $500 per day of violation.

See also our recent Publication Important Rules for Employers to Know in the Wake of COVID-19.

State WARN Acts and Ancillary Closing and Mass Layoff Duties

While this is intended to be a comprehensive overview of pertinent laws governing temporary or permanent closings and mass layoffs across the fifty States and Washington, D.C., these laws are nuanced and we advise that companies considering them seek legal advice prior to making decisions about closings or layoffs.

Alabama:  Follows the federal WARN Act.

Alaska:  Follows the federal WARN Act.

Arizona:  Follows the federal WARN Act.

Arkansas:  Follows the federal WARN Act.

California:  The California Labor Code §§1400-1408 requires written, 60 days’ advance notice for closings and mass layoffs for losses that affect at least 50 employees in a 30-day period at any industrial or commercial facility that employs or has employed in the preceding 12 months 75 or more persons.  Notice of a closing or mass layoff is not required in the event of a physical calamity or act of war. Note that the California Labor Code does not provide the exception for “unforeseen business circumstances” provided by the federal WARN Act, but California has adopted this exception temporarily for the period that began March 4, 2020, through the end of “this emergency” per Executive Order N-31-20 issued by Governor Gavin Newsom on March 17, 2020.  Pursuant to the Executive Order, employers still are required to provide as much notice as practicable as required by the California Labor Code, and must include this phrase:  “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.”  California also imposes administrative reporting requirements in the event of any mass layoff.  See Important Rules for Employers to Know in the Wake of COVID-19 for additional in-depth information on closings and mass layoffs under California law.

Colorado:  Follows the federal WARN Act.

Connecticut:  In addition to complying with the Federal WARN Act, certain employers that permanently shut down must pay for continued group health insurance for 120 days.  CT Gen. Stat. §31-51o.  A collective bargaining agreement that requires an employer to continue such coverage in the event of a closing supersedes the statute.

Delaware:  Delaware has expanded the federal WARN Act to apply to all employers with at least 100 full-time employees who work an aggregate of 2,000 hours per week.  19 Del. C. §1903.

District of Columbia:  Follows the federal WARN Act.

FloridaFollows the federal WARN Act.

Georgia:  Follows federal WARN Act.

HawaiiFollows the federal WARN Act.

IdahoFollows the federal WARN Act.

Illinois:  Under 820 ILCS 65/1-99, an employer must provide written 60 days’ notice of a mass layoff or employment loss.  Notice is not required in the event of a physical calamity or an act of terrorism or war.  The Act applies to employers with 75 or more full-time employees or 75 or more employees who in the aggregate work at least 4,000 hours per week exclusive of overtime.  A closing is the temporary or permanent shutdown of an employment site that results in a loss during any 30-day period of 50 or more full-time employees.  A mass layoff results in a loss during any 30-day period of at least 250 full-time employees or at least 25 full-time employees who make up at least 33 percent of the workforce.  An employer receiving economic development incentives may be required to provide additional notice.  Illinois caps damages at one-half the length of the employee’s tenure if that amount is smaller than 60 days’ worth of damages. 

Indiana:  Follows the federal WARN Act.

Iowa:  84C.1-84C.5 requires 30 days’ advance notice of a temporary or permanent shutdown or layoff that will result in a loss of 25 or more full-time employees.  State law provides notice exceptions for unforeseeable business circumstances and natural disasters.

Kansas:  Businesses in select industries must apply to the Secretary of Labor for permission to limit or cease operations.  KS Stat. Sec. 44-616.

Kentucky:  Follows the federal WARN Act.

Louisiana:  Follows the federal WARN Act.

Maine:  Employers that engage in a closing or a mass layoff are liable to eligible employees for severance pay.  26 M.R.S. §625-B.  This is mitigated if a closing or mass layoff is necessitated by physical calamity or government order.  Id

Maryland:  Maryland’s Economic Stabilization Act requires businesses to file disclosure statements when they dissolve.  Ninety (90) days’ notice, severance, benefits continuation (health care coverage for six months), and a retraining allowance up to $1,800 are encouraged for closings and mass layoffs by employers who have been in business for at least one year and have at least 50 employees where the closing or layoffs will affect 25 percent of the workforce or 15 employees, whichever is greater, over any three-month period.

Massachusetts:  Follows the federal WARN Act and additionally encourages voluntary standards in closing situations.  Employers that are financed, insured, or subsidized by a quasi-public agency must accept these standards.  MA Gen. Laws Ch. 149 §182.

Michigan:  In addition to complying with the federal WARN Act requirements, under the Michigan Employment Security Act, Michigan requires written notice to the Workforce Development Agency and the State of Michigan (WDASOM) Workforce Innovation and Opportunity Act (WIOA) Title I Section.

Minnesota:  In addition to following the federal WARN Act, State law encourages businesses considering a closing or substantial layoff to give notice as early as possible and requires employers providing WARN notice to report to the Workforce Development commissioner the names, addresses, and occupations of terminated employees.  Minn. Stat. §116L.976.

Mississippi:  Follows the federal WARN Act.

Missouri:  Follows the federal WARN Act.

Montana:  Follows the federal WARN Act.

Nebraska:  Follows the federal WARN Act.

Nevada:  Follows the federal WARN Act.

New Hampshire:  In addition to following the federal WARN Act, N.H. Rev. Stat. Ann. 282-A:45-a requires fact-finding for temporary or permanent mass layoffs, and notice if an employer lays off or expects to lay off 25 or more individuals in the same calendar week for an expected duration of seven days or more.

New Jersey:  Currently follows the federal WARN Act, but New Jersey’s WARN law was amended January 21, 2020, to require that companies with 100 or more employees (including part-time workers) pay severance for mass layoffs (a closing affecting 50 or more employees).  The Act increases the minimum notice period from 60 days to 90 days.  If an employer fails to provide notice, an employee is entitled to four weeks of pay in addition to any other recoverable amounts.  The Act expands the definition of employer and prohibits a waiver of the right to severance.  The Act takes effect July 19, 2020.

New Mexico:  Follows the federal WARN Act.

New York:  N.Y. Lab. Law §§860 et seq. is stricter than the federal WARN Act.  It requires 90 days’ notice and applies to companies with 50 or more employees where either 250 full-time employees from a site will be affected or at least (25) employees if that number makes up at least 33 percent of the site.

North Carolina:  Follows the federal WARN Act.

North Dakota:  Follows the federal WARN Act.

Ohio:  Follows the federal WARN Act.

Oklahoma:  Follows the federal WARN Act.

Oregon:  Follows the federal WARN Act.

Pennsylvania:  Follows the federal WARN Act.

Rhode Island:  Follows the federal WARN Act.

South Carolina:  Follows the federal WARN Act.

South Dakota:  Follows the federal WARN Act.

Tennessee:  Tennessee’s Plant Closing and Reduction in Operations Act applies to partial or full closings or other management decisions that result in a reduction of at 50 employees over a three-month period within a factory, plant, office, or other facility in which employees produce goods or provide services. 

Texas:  Follows the federal WARN Act.

Utah:  Follows the federal WARN Act.

Vermont:  Vermont’s Notice of Potential Layoffs Act adds state-level notification requirements to the federal WARN Act requirements. 

Virginia:  Follows the federal WARN Act.

Washington:  Follows the federal WARN Act.

West Virginia:  Follows the federal WARN Act.

Wisconsin:  Wisconsin requires that notice be given of temporary or permanent closings that affect the following numbers of employees at an employment site or within a single municipality (excluding new or low-hour employees) where an employer has 50 or more workers:  25 percent of the work force or 25 employees (whichever is greater) or 500 employees.  If an employer fails to provide notice, an employee can recover the pay or the value of any benefits he/she would have received during the recovery period, including the cost of medical treatment. 

Wyoming:  Follows the federal WARN Act.

Conclusion

COVID-19 poses substantial and unprecedented challenges to employers, and legal obligations may change as circumstances evolve.  Gordon Rees Scully Mansukhani is tracking carefully how every State across the country and Washington, D.C. are responding to the pandemic, and stands ready to answer your specific questions and to help ensure compliance with laws in your community.  

Visit our COVID-19 Hub for ongoing updates.

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