By way of Executive Order, California Governor Gavin Newsom suspended, until the end of the COVID-19 emergency, enforcement of the state’s WARN Act in connection with mass layoffs or shutdowns caused by COVID-19, and which would otherwise trigger the WARN Act’s 60-day paid notice requirement. This is an extraordinary development.
The executive order allows employers to avail themselves of an “unforeseeable business circumstances” exception to the notice obligation, an exception previously available only under the federal WARN Act. The federal exception is incorporated by reference into the executive order. It may be asserted where the mass layoff or shutdown is caused by “sudden, dramatic, and unexpected action or condition outside the employer’s control.”
The executive order does not completely exempt employers from compliance with the state law. Specifically, to avail themselves of the exception, employers must:
- Provide the requisite written notices to employees impacted by the mass layoffs or shutdown, and state and local government
- Give as much paid notice as possible, and to explain in writing to the affected employees and state and local government why full notice cannot be given, and
- Expressly notify employees of their eligibility for unemployment insurance benefits
Employers must establish a causal connection between the mass layoff or shutdown and COVID-19. For example, if an employer was already planning a Cal WARN-triggering mass layoff or shutdown before the onset of the COVID-19 emergency, the executive order would not apply to such a layoff or shutdown.
Further guidance from the California state agency that oversees Cal WARN is expected next week, and we will update this alert accordingly.