COVID-19 UPDATE: As of March 4, 2020, California businesses subject to the WARN Act that have been affected by the coronavirus pandemic no longer have to give 60 days notice to workers before mass layoffs. Instead, businesses are required to give affected employees as much notice as practicable plus a statement explaining the basis for lessening the notification period.
Businesses may give less than 60 days notice only when COVID-19 caused “business circumstances that were not reasonably foreseeable as of the time that notice would have been required.” The notice must also contain this 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.
Read the Executive Order N-31-20, signed by California Governor Gavin Newsom on March 17, 2020. The Order remains in effect until California’s state of emergency ends. Learn more about the Labor and Workforce Development Agency.
The California WARN Act (short for Worker Adjustment and Retraining Notification Act) is a regulation that requires employers to provide workers and local government officials with at least sixty (60) days notice before a mass layoff, a plant closure or a major relocation. Employers who fail to provide notification must provide their laid-off employees with back pay and benefits for the period of the violation (which means the amount of time by which their advance notice fell short of 60 days). 1 2
Which employees are protected by the California WARN Act
Unlike most California wrongful termination laws, which cover employees who are fired individually, the WARN Act in California covers employees who are fired in connection with
- a mass layoff (defined as the layoff of 50 or more employees in a 30-day period),
- a termination (defined as the cessation or substantial cessation of business activities), or
- the relocation of all or substantially all of a business operation to a new location 100 or more miles away.3
These requirements apply only to California employers who have employed at least seventy-five (75) employees in the past twelve (12) months.4
What is the difference between the California and the federal WARN Acts?
The California law is similar to–and in fact, was modeled after–the federal WARN Act.
But the California law extends protection to a wider range of laid-off employees. Therefore, most employees whose WARN Act rights were violated after a layoff or plant closure will want to sue their employer under the California law.5
Below, our California labor law attorneys answer the following frequently asked questions:
- 1. What does the California WARN Act require of employers?
- 2. Which employees are covered?
- 3. What are my rights if my employer violates the WARN Act?
- 4. What is the difference between the California and federal WARN Acts?
If you have further questions after reading this article, we invite you to contact us at Shouse Law Group.
1. What does the California WARN Act require of employers?
The California Worker Adjustment and Retraining Notification Act (the “WARN” Act), Labor Code 1400 – 1408 LC, requires covered employers to provide sixty (60) days’ advance notice (“warn notice”) to employees and certain government entities before conducting any of the following:
- A mass layoff;
- A relocation; or
- A termination (plant closure).6
(So essentially, the WARN Act is a legislature-created exception to the general rule of at-will employment in California.)
A mass layoff is defined under the California WARN Act as the elimination of fifty (50) or more jobs during any thirty (30)-day period, due to lack of work or lack of funds.
A relocation means moving all or substantially all of the commercial or industrial operations at a given location to a new location at least one hundred (100) miles away.
Finally, a termination (plant closure) means the cessation or substantial cessation of industrial or commercial operations.7
If an employer fails to provide 60 days’ advance notice of one of these events, then employees who lose their job in connection with the event will have the right to sue the employer for a WARN Act violation.
Example: Kevin works at a fulfillment center for a small e-commerce company in Riverside County, California.
The company announces that it will be relocating the fulfillment center to a location in Arizona, 200 miles away. The company tells Kevin he can have the same job at the new location, but Kevin is unable to move because of his wife’s job in Riverside County.
Thirty days after announcing that it is moving, the company closes Kevin’s workplace and moves to Arizona.
Kevin has a claim against his employer for an Act violation because it gave him less than sixty days’ notice of a relocation.
2. Which employees are covered?
Generally speaking, the California WARN Act, Labor Code 1400 et seq., applies to all California employees of whom both of the following are true:
- The employee has been employed by the employer for at least six (6) of the twelve (12) months preceding the date on which notification would be required; and
- The number of employees is seventy-five (75) or more people, or the employer has employed that many at any point within the preceding twelve (12) months.8
Example: The restaurant Julio works for lets him know that it is going out of business and he will lose his job in two weeks.
Julio has worked for the restaurant for the past three years. The restaurant is part of a small local chain that has a total of 50 employees.
Julio does not have the right to the 60-day notice requirement because the number of full-time employees there is fewer than 75.
Even within these parameters, there are a few exceptions to the California WARN Act notice requirement.
Calamity or war
First, the WARN Act does not apply to mass layoffs, relocations or terminations that are made necessary by a physical calamity, natural disaster or an act of war. No notice is required in these situations.9
Example: Stacey works in a small factory in coastal California. A severe earthquake strikes the area and damages the factory. Her employer lays off most employees indefinitely while the factory is rebuilt.
In this case, Stacey’s employer is not required to give her sixty days’ advance notice of the layoff.
Second, California’s WARN Act does not apply to mass layoffs or terminations that occur because a project or undertaking of an employer has been completed, where the employees were hired with the understanding that their job would only last as long as the project or undertaking did. (So, for example, when the shooting of a movie is completed and the cast and crew all lose their jobs, the Act does not apply.)
Similarly, the Act does not apply to seasonal employees who were hired with the understanding that their employment would be seasonal and temporary–for example, farmworkers picking a particular crop, or employees at a seasonal vacation resort.10
Employer seeking capital
Finally, a California employer is not required to give notice under the Act for termination or relocation if all of the following are true:
- At the time when the employer would have been required to give notification, it was actively seeking capital or business;
- The capital or business would have enabled the employer to avoid or postpone a relocation or termination; and
- The employer reasonably and in good faith believed that giving notice would have prevented it from obtaining the capital or business.11
Example: Mandy runs a startup video game production company with around a hundred employees. The company has failed to turn a profit. Mandy thinks that she will be forced to close the company and lay off all the employees soon.
But then she talks to an investor who is interested in putting a large sum of money into the company. This would be enough to keep the company going for several more years. Mandy reasonably thinks that if the investor knew how close she was to shutting the company, then he would not want to invest in it, so she keeps quiet about that.
After almost going through with the investment, the investor suddenly backs out.
The company is out of cash, and Mandy is forced to lay off all her employees two weeks later.
Mandy was in talks with the investor in the hopes of saving the company 60 days before the termination. Therefore, she does not owe her employees compensation under the Act.
3. What are my rights if my employer violates the WARN Act?
If you lose your job because of a mass layoff, relocation or plant closure without 60 days’ notice, and the WARN Act applies, then you have the right to sue your employer for damages.
Damages under the Act are different from damages in most California wrongful termination cases. An employee whose employer violates the Act is entitled to:
- Back pay for the period of the WARN Act violation, at the average regular rate the employee received during the last three (3) years of his/her employment OR the employee’s final pay rate (whichever is higher); and
- The value of any benefits that the employee would have been entitled to during the period of the violation–including the cost of any medical expenses that s/he incurs that would otherwise have been covered under employer-provided health insurance.12
The period of the WARN Act violation is the smaller of the following:
- The period of time between 60 days before you lost your job, and the day you were actually notified you were losing your job in the mass layoff, relocation or plant closure; or
- One-half of the number of days you were employed by the employer.13
Example: Tom’s company, where he has worked for several years, announces that it is closing the location where Tom works and laying off all employees. The layoffs occur 30 days after the announcement.
Tom’s family loses their employer-provided health insurance as soon as he is laid off. The following week, Tom’s son fractures his wrist. This puts Tom on the hook for over ten thousand dollars in uninsured medical expenses.
Under the California WARN Act, the company should have given Tom 60 days’ notice of the facility closure. So Tom may sue his company for 30 days’ (the difference between 30 and 60) worth of back pay and the value of the benefits he would have received during that time.
The company also owes him for the medical expenses he incurred due to his son’s injury.
Also, the amount of damages you will receive will be reduced by the following amounts:
- Any wages your employer paid you during the period of the violation; and
- Any voluntary and unconditional payments your employer made to you that were not made to satisfy any legal obligation.14
Finally, if you prevail in a lawsuit against your employer under the California WARN Act, the court may award you attorney’s fees on top of the damages.15
4. What is the difference between the California and federal WARN Acts?
The California WARN Act (Labor Code 1400 – 1408 LC) is generally more employee-friendly than the federal law’s WARN Act. (This is the case with most other California labor laws as well, such as wrongful termination laws and workplace harassment laws.)
Therefore, most California employees who are eligible for damages under the California Act will choose to sue in California Superior Court under that law, rather than in federal court under the federal Act.
The following chart summarizes the major differences between the federal and California laws:
|Federal WARN Act||California WARN Act|
|Applies to employers with at least 100 employees not including part-time (or including part-time if all employees work at least 4,000 hours/week)16||Applies to employers with at least 75 employees at any point in the past 12 months|
|Defines mass layoff as involving either: 1) at least 500 employees, or 2) at least 33% of employees, with a minimum of 50 employees17||Defines mass layoff as involving at least 50 employees|
|Specifies that plant closure/termination must involve at least 50 employees, not including part-time employees18||No minimum headcount for definition of plant closure/termination|
|Does not apply to relocations if the employer offers the employee a job at a new site within “reasonable commuting distance, or the employer offers the employee a job at a new site anywhere and the employee accepts19||Applies to any relocation to a location more than 100 miles away.|
|Exception for businesses that are forced to lay off employees or close because of business circumstances that were not reasonably foreseeable 60 days prior20||No exception for unforeseeable business circumstances|
We have local employment law offices in and around Los Angeles, San Diego, Orange County, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.
- Labor Code Section 1401 — [Notice requirements. (“(a) An employer may not order a mass layoff, relocation, or termination at a covered establishment unless, 60 days before the order takes effect, the employer gives written notice of the order to the following: (1) The employees of the covered establishment affected by the order. (2) The Employment Development Department, 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. (b) An employer required to give notice of any mass layoff, relocation, or termination under this chapter shall include in its notice the elements required by the federal Worker Adjustment and Retraining Notification Act (29 U.S.C. Sec. 2101 et seq.). (c) Notwithstanding the requirements of subdivision (a), an employer is not required to provide notice if a mass layoff, relocation, or termination is necessitated by a physical calamity or act of war.”)
- Labor Code 1402 — Failure to give required notice; liability of employer. (“(a) An employer who fails to give notice as required by paragraph (1) of subdivision (a) of Section 1401 before ordering a mass layoff, relocation, or termination is liable to each employee entitled to notice who lost his or her employment for: (1) Back pay at the average regular rate of compensation received by the employee during the last three years of his or her employment, or the employee’s final rate of compensation, whichever is higher. (2) The value of the cost of any benefits to which the employee would have been entitled had his or her employment not been lost, including the cost of any medical expenses incurred by the employee that would have been covered under an employee benefit plan. (b) Liability under this section is calculated for the period of the employer’s violation, up to a maximum of 60 days, or one-half the number of days that the employee was employed by the employer, whichever period is smaller. (c) The amount of an employer’s liability under subdivision (a) is reduced by the following: (1) Any wages, except vacation moneys accrued prior to the period of the employer’s violation, paid by the employer to the employee during the period of the employer’s violation. (2) Any voluntary and unconditional payments made by the employer to the employee that were not required to satisfy any legal obligation. (3) Any payments by the employer to a third party or trustee, such as premiums for health benefits or payments to a defined contribution pension plan, on behalf of and attributable to the employee for the period of the violation.”)
- Labor Code 1400 — Construction of chapter; definitions; application of chapter. (“The definitions set forth in this section shall govern the construction and meaning of the terms used in this chapter: (a) “Covered establishment means any industrial or commercial facility or part thereof that employs, or has employed within the preceding 12 months, 75 or more persons. . . . (c) “Layoff means a separation from a position for lack of funds or lack of work.(d) “Mass layoff means a layoff during any 30-day period of 50 or more employees at a covered establishment. (e) “Relocation means the removal of all or substantially all of the industrial or commercial operations in a covered establishment to a different location 100 miles or more away. (f) “Termination means the cessation or substantial cessation of industrial or commercial operations in a covered establishment. . . .(h) “Employee means a person employed by an employer for at least 6 months of the 12 months preceding the date on which notice is required.”)
- Compare California WARN Act, Labor Code 1400 -1408 LC, to federal Act, 29 United States Code (“U.S.C.”) 2101 et seq.
- Labor Code 1401 LC — Notice requirements, endnote 1 above.
- Labor Code 1400 LC — Construction of chapter definitions; application of chapter, endnote 3 above.
- Labor Code 1401 LC — Notice requirements, endnote 1 above.
- Labor Code 1400 LC — Construction of chapter; definitions; application of chapter. (“(g)(1) This chapter does not apply where the closing or layoff is the result of the completion of a particular project or undertaking of an employer subject to Wage Order 11, regulating the Broadcasting Industry, Wage Order 12, regulating the Motion Picture Industry, or Wage Order 16, regulating Certain On-Site Occupations in the Construction, Drilling, Logging and Mining Industries, of the Industrial Welfare Commission, and the employees were hired with the understanding that their employment was limited to the duration of that project or undertaking. (2) This chapter does not apply to employees who are employed in seasonal employment where the employees were hired with the understanding that their employment was seasonal and temporary.”)
- Labor Code 1402.5 LC — Exemption from notice requirements; conditions. (“(a) An employer is not required to comply with the notice requirement contained in subdivision (a) of Section 1401 if the department determines that all of the following conditions exist: (1) As of the time that notice would have been required, the employer was actively seeking capital or business. (2) The capital or business sought, if obtained, would have enabled the employer to avoid or postpone the relocation or termination. (3) The employer reasonably and in good faith believed that giving the notice required by subdivision (a) of Section 1401 would have precluded the employer from obtaining the needed capital or business.”)
- Labor Code 1402 LC — Failure to give required notice; liability of employer, endnote 2 above.
- Labor Code 1404 LC — Civil actions against employer. (“A person, including a local government or an employee representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction. The court may award reasonable attorney’s fees as part of costs to any plaintiff who prevails in a civil action brought under this chapter.”)
- 21 U.S.C. 2101(a)(1). (“(a) Definitions As used in this chapter— (1) the term “employer means any business enterprise that employs— (A) 100 or more employees, excluding part-time employees; or (B) 100 or more employees who in the aggregate work at least 4,000 hours per week (exclusive of hours of overtime) . . . .”)
- 21 U.S.C. 2101(a)(3). (“(3) the term “mass layoff means a reduction in force which—(A) is not the result of a plant closing; and (B) results in an employment loss at the single site of employment during any 30-day period for— (i)(I) at least 33 percent of the employees (excluding any part-time employees); and (II) at least 50 employees (excluding any part-time employees); or (ii) at least 500 employees (excluding any part-time employees) . . . .”)
- 21 U.S.C. 2101(a)(2). (“(2) the term “plant closing means the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees . . . .”)
- 21 U.S.C. 2101(b)(2). (“(b) Exclusions from definition of employment loss: . . . (2) Notwithstanding subsection (a)(6), an employee may not be considered to have experienced an employment loss if the closing or layoff is the result of the relocation or consolidation of part or all of the employer’s business and, prior to the closing or layoff—(A) the employer offers to transfer the employee to a different site of employment within a reasonable commuting distance with no more than a 6-month break in employment; or (B) the employer offers to transfer the employee to any other site of employment regardless of distance with no more than a 6-month break in employment, and the employee accepts within 30 days of the offer or of the closing or layoff, whichever is later.”)
- 21 U.S.C. 2102(b)(2)(A). (“(b)(2)(A) An employer may order a plant closing or mass layoff before the conclusion of the 60-day period if the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”)