WARN Act CA (Mass Layoff Protection for Workers)

California WARN Act protects workers, their families, and communities by requiring companies to give a 60-day notice to the affected workers, state, local representatives before a mass layoff or closing a plant.

By Douglas Wade, Attorney

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Table of Contents

1. What is the WARN act in California?

2. What workers does the WARN Act protect?

3. What is the difference between the federal WARN act and the California WARN act?

4. What must employers do under the California WARN Act?

5. What are an employee’s rights?

6. How do the federal and state WARN Acts differ?

What is the WARN act in California?

Short for Worker Adjustment and Retraining Notification Act, California WARN Act is a law that mandates that employers in the state provide a minimum of sixty days’ notice to local government official and employees prior to:

The closure of a plant
A mass layoff
A large relocation

If an employer does not offer sufficient notification, he or she is required to supply laid-off workers with benefits and back pay for the violation period. This is the quantity of time by which their notice fell short of the required sixty days. Companies considering a mass layoff should contact our employer law attorney to ensure compliance with California WARN Act notice requirement.

What workers does the WARN Act protect?

As opposed to the other wrongful termination laws in California, which protects workers who are individually fired, the WARN act in California protects workers who are fired in the following contexts:

A termination, which is defined as the end of business activities.
A mass layoff, which is defined as fifty or more workers being terminated in a period of 30 days.
The relocation of most or all of the business to a separate location that is at least 100 miles away.

The above requirements are only relevant for employers in California who have employed a minimum of 75 workers over the past calendar year.

What is the difference between the federal WARN act and the California WARN act?

The WARN Act in California was modeled, in fact, after the federal version. However, the California WARN Act offers protection to a greater range of terminated workers. Thus, the majority of workers whose rights are violated following a plant closure or layoff will consider suing their employer as is their right under the law in California.

What must employers do under the California WARN Act?

The WARN Act in California falls under section 1400-1408 of the Labor Code, and it demands that relevant employers give 60 days of advance notice to workers and particular government agencies prior to doing the following actions:

A relocation
A mass layoff
A plant closure/termination

Should an employer not provide the required 60 days’ notice before doing one of the above actions, the workers who lose their positions due to the action are entitled to sue the employer for a violation of the California WARN Act.

In essence, the WARN notice in California is legislation that functions as an exception to California’s general at-will employment rule.

Mass layoff

Under the WARN Act in California, a mass layoff is defined as getting rid of a minimum of fifty jobs over a period of thirty days, as a result of either lack of funds or lack of work.

Relocation

A WARN Notice in California is necessary for a company moving the majority of industrial or commercial operations of a business to a new location that is a minimum of one hundred miles away from the original location.

Termination

Last, a plant closure, or termination, indicates the cease of a business’ commercial or industrial operations triggers a WARN Notice in California.

Example: Jamie is employed at a fulfillment warehouse for a large online commerce business in Irvine, California. The company sends an email that announces the fulfillment warehouse will be relocated to San Jose, a distance of well over 300 miles. The company informs Jamie that he can keep his job at the new location, but Jamie cannot move due to his wife’s job in Irvine. Thirty days after the email, the company shuts down the warehouse and moves to the new location. Jamie has a claim against the company for a violation of the WARN Act since it gave him fewer than sixty days’ notice of a relocation to an area over 100 miles away.

It should be noted that a furlough of a minimum of fifty workers can also trigger obligations under the WARN Act in California.

Covered workers

In general, the WARN Act in California covers all employees in California who meet the following two requirements:

The worker has been employed by the company for a minimum of a half year before the notification date.
The number of workers amounts to 75 or more individuals, or the company has employed that amount at some point during the previous calendar year.

Example: Claire works at a restaurant in Woodland Hills. One day, the restaurant informs Claire that it is going out of business, and she will lose her job the next week. Claire had worked at the restaurant for two years. The restaurant is part of a small chain that employs fifty people total. Under the WARN Act, Claire is not entitled to a 60-day notice since the number of full-time workers is less than 75.

However, there are some exceptions to the WARN Act in California that may nullify these requirements.

Calamity of war

If there is a natural disaster, war, or other physical calamity, the California WARN Act will not apply to relocations, terminations, or mass layoffs that are deemed necessary. In these situations, no notice is required.

Example: Ned works in a factory along the California coast. A major earthquake strikes the region and causes severe damage to the factory. His employer terminates most of the workers while the factory is reconstructed. In this situation, Ned’s employer does not have to provide sixty days’ notice to the employees.

Temporary employment

Also, the WARN Act in California does not apply to terminations or mass layoffs that happen because a company undertaking or project has been finished, where the workers were hired to complete the project and would not be retained thereafter. For instance, when a movie finishes shotting, and the crew and cast all lose their positions, the Act is not applicable.

Likewise, the Act is not applicable for seasonal workers who are hired with the understanding that their position is temporary and seasonal. For example, the following:

Workers at a seasonal resort on the beach.
Farm laborers picking fruit in the summer.

Employer looking for capital

An employer in California does not have to give notice as required under the WARN Act for relocation or termination if the following are all true:

The business or capital would have allowed the employer to postpone or avoid a termination or relocation;
The employer was looking for business or capital at the time they were required to provide notification;
The employer reasonably believed that providing notice would have jeopardized finding business or capital.

Example: Alec is the owner of a startup interior design company with one hundred workers. Sadly, the business has not made a profit. Alec worries that he will have to shut down the company and lay off the workers in the next few weeks. But then he speaks with an investor who is interested in giving the company a large amount of capital. This would be enough to sustain the business for the next few years. Alex thinks that if this investor was aware how close he was to closing the business, they would not want to pursue their investment. For this reason, he does not mention it. Soon after, the investor backs out. Out of money, the company must close, and Alec has to lay off all his employees a week later. Alec was negotiating with the investor sixty days prior to the termination, hoping to preserve the company. Thus, he does not owe the workers compensation according to the Act.

What are an employee’s rights?

If an employee loses their job due to a mass layoff, plant closure, or relocation without a notice 60 days out, the California WARN Act may be applied. The employee is then entitled to sue their company for damages.

Under the WARN Act in California, damages are distinct from the majority of wrongful termination cases in California. An employee may expect the following:

Back pay at the normal rate the worker received over the last 3 years of employment or their final payrate (whatever is larger).
A potential $500 penalty for each day of the violation.
Any benefits the worker would have received during the violation period, including medical costs that should have been covered by employer-provided insurance.

In addition, the value of damages an individual receives will be reduced by these amounts:

Any wages the company paid during the violation period.
Any unconditional and voluntary payments the company made to the employee that were not meant to fulfill a legal obligation.

If an employee succeeds in their lawsuit against the company, the court might award attorney’s fees in addition to the damages.

The violation period of the California WARN Act is the lesser of the following:

The length of time between sixty days before the individual lost their job, and the date they were notified of the termination, plant closure, or relocation.
½ of the number of days the employee worked for the employer.

Example: Marie’s company, where she has been employed for five years, decides to close the store where she works and is laying off all the workers. The layoffs happen 30 days following the announcement. Marie’s family loses their health insurance when she is laid off. The next week, Marie’s daughter breaks her arm. This means Marie must pay for ten thousand dollars in uninsured medical expenses. According to the WARN Act, Marie’s company should have provided 60 days’ notice of the store closure. Marie may therefore sue the company for 30 days’ worth of back pay, as well as the value of the benefits she should have gotten during that period. The company also owes Marie foe the medical expenses she covered due to her daughter’s injury.

When there has been a violation of the WARN Act, it is vital to act quickly. A lawyer can typically resolve this kind of case by sending a demand letter to the employer. If needed, a lawyer will take the issue to trial to obtain a settlement for the employee.

How do the federal and state WARN Acts differ?

In general, California’s WARN Act is more friendly toward employees than that of the federal government. In fact, labor laws in California tend to be more generous toward employees with regard to workplace harassment and wrongful termination.

Thus, the majority of employees in California who deserve damages under the state’s WARN Act Notice will decide to sue their company in California Superior Court, instead of in federal court.

Federal WARN Act

Relevant to companies with a minimum of 100 workers, excluding part-time (including part-time if all workers perform at least 4,000 hours of work/week.)
A mass layoff is defined as the firing of a minimum of 500 workers or at least 1/3 of workers, with a minimum of 50 workers.
Termination or plant closure has to involve a minimum of 50 employees, excluding part-time employees.
Not applicable to relocations if the company offers the worker a position at the new location within a reasonable commuting distance, or the company offers a new job at any site and the worker accepts.
Companies are pardoned if they were forced to close or lay off workers for business situations that were not avoidable sixty days before.
Wronged workers have the right to benefits and back pay for the period of violation up to 60 days, but no more than ½ the number of days the worker was employed.

California WARN Act

Relevant to companies with a minimum of 75 workers at any time in the previous year.
Mass layoff is defined as involving a minimum of 50 workers over a period of 30 days.
Plant closure or termination does not require a minimum headcount.
Applies to relocation of 100 miles or more.
No exception is provided for unpredictable business situations.
Wronged workers may receive a $500 civil penalty. They could also receive back pay at their 3-year average rate or their final rate (whatever is bigger). Companies also need to pay for any medical costs that should have been covered under the company’s health insurance plan. The company’s liability lasts for 60 days or ½ the number of days the worker was employed (whatever is smaller).

Whether a lawsuit is brought under federal or state law is dependent on the particular case.

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