Question and Answers: What You Need to Know Before Conducting a Group Layoff
Question and Answers: What You Need to Know Before Conducting a Group Layoff

Recent mass layoffs by tech companies, such as Twitter and Meta, have made headlines.  The massive layoff by Twitter on November 4, 2022 has already resulted in a lawsuit filed by former Twitter employees for violations of the federal Worker Adjustment and Retraining Notification (“WARN”) Act.  The WARN Act requires certain employers to provide 60-day advance notice in cases of qualified plant closings and mass layoffs, allowing employees and their families with transition time to seek alternate employment or skills training.

Many states, including California, have their own versions of the WARN Act.  The California WARN Act applies to any employer who directly or indirectly owns and operates an industrial or commercial facility with 75 or more full-time employees within the preceding 12 months of an event that requires notice under the Act.

Who is Required to Provide WARN Notification and to Which Employees?

WARN notification is required when employers conduct a mass layoff, relocation, or termination.  A mass layoff occurs when 50 or more employees are laid off during any 30 day period.  Relocation refers to the removal of operations to a location 100 or more miles away.  Termination occurs when an employer ceases operations or substantially ceases operations at an industrial or commercial facility.

Employees covered by the California WARN Act include all affected hourly and salaried employees who work for at least 6 months of the 12 months preceding the triggering event.  Notice must also be provided to those affected who are on workers’ compensation, medical, pregnancy disability, or other leaves.  The California WARN Act does not apply to employees who were hired with an understanding that their employment was seasonal and temporary or employees in certain industries where their employment was limited to a particular project or undertaking.  See California Labor Code section 1400(g)(1).

Exceptions to the California WARN Act exist for a faltering business that is seeking capital to avoid or postpone a shutdown, physical calamity, or an act of war.

How does an Employer Provide Sufficient WARN Notification?

Under the California WARN Act, notice must be provided in clear and concise language to all affected employees, consistent with the federal WARN Act.  The federal WARN Act provides that notice must include the following:

(1) a statement of whether the layoff is permanent or temporary;

(2) the date when the layoff will commence;

(3) an indication of whether or not bumping rights exist (rights of an employee with more seniority to bump those with less seniority); and

(4) contact information for a company official where the employee can obtain further information.

Employers must also notify the Employment Development Department, the local workforce investment board, as well as the chief elect official of the city and county government where the mass layoff, relocation, or termination is to occur.  If the affected employees are represented by a union, specific notice and bargaining with the union may also be required.

What are the Penalties for Violating the WARN Act?

The penalties for violations of the WARN Act are steeper in California than under federal law.  The federal WARN Act requires an employer who violated the Act to provide the employees with back pay and benefits for the period of up to 60 days.  The California WARN Act requires an employer to provide the employees with back pay, benefits, and provides for a civil penalty of $500 per day.  In addition, employees who file a lawsuit for violations of the California WARN Act may be entitled to reasonable attorneys’ fees and costs.

Before conducting a mass layoff, you should consult with the authors or your trusted counsel at AALRR to ensure compliance with the WARN Act.

This AALRR post is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. © 2022 Atkinson, Andelson, Loya, Ruud & Romo

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