WARN Act CA (Mass Layoff Protection for Workers)

California WARN Act protections require covered employers to give 60 days’ notice before mass layoffs, relocations, or plant closures. Affected workers may recover back pay, lost benefits, medical costs, civil penalties, and attorney’s fees when notice requirements are violated.

By Douglas Wade, Attorney

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Table of Contents

1. Introduction

2. Employer Responsibilities

Introduction

The California Worker Adjustment and Retraining Notification Act, or WARN Act for short, mandates that covered companies give employees and local government representatives at least sixty days’ notification before they experience one of these triggering events:

Triggering Events for the WARN Act

1. Mass layoffs: Firing fifty or more workers within 30 days

2. Plant closure: The termination (or significant termination) of commercial operations

3. Major relocation: Moving all or nearly all of a company’s operations to a new site that is at least 100 miles distant

Employers who neglect to give CA WARN notice are required to reimburse laid-off workers for lost benefits and wages for the duration of the infraction (the amount of time their advance notification was short of sixty days).

Employer Responsibilities

Before engaging in any of the following, covered employers are required by the California WARN (Worker Adjustment and Retraining Notification) Act, Labor Code 1400–1408, to give employees and specific government agencies sixty days’ notice (the “WARN notice”).

Large-scale layoff
Relocation
Factory closure, or termination

Workers who lose their employment as a result of an employer’s failure to give sixty days’ notification of one of such occurrences may file a WARN Act lawsuit against the company.

In other words, the WARN Act is effectively an exception to California’s basic at-will employment law enacted by the legislature.

1. Mass layoffs

According to the California WARN Act, a mass layoff occurs when fifty or more jobs are eliminated during the course of thirty days, either as a result of a shortage of work or funding.

2. Relocation

Moving all or almost all of the commercial or industrial operations from one place to another that is at least one hundred miles away is referred to as a relocation.

3. Termination

Lastly, a termination (factory closure) refers to the major or complete suspension of commercial or industrial operations.

Example

Kevin is employed in Riverside County, California, at a fulfillment facility for a small online retailer.

The business declares that the fulfillment facility will be moved 200 miles away to a site in Arizona. Kevin’s wife has a job in Riverside County. He cannot relocate. The employer offers him the same position at the new site, though.

The corporation closes Kevin’s workplace and relocates to Arizona thirty days after making the announcement.

Because his company failed to give him the required sixty days’ CA WARN notice of a relocation, Kevin has a motion against it for violating the Act.

Keep in mind that WARN Act responsibilities may also be triggered by a furlough of fifty or more employees.

Covered Workers

In general, all California employees who meet both of the following criteria are covered by the California WARN Statute, Labor Code 1400.

The worker has worked for the company for a minimum of six of the twelve months before the date that notification would be necessary.
There are seventy-five or more staff members, or the employer has had that number of workers at any time within the last twelve months.

Example

Julio’s employer informs him that the restaurant is closing and that he will be losing his position in two weeks.

For the previous three years, Julio has been employed at the restaurant. The restaurant is a part of a tiny local franchise that employs fifty people in total.

Since there are fewer than 75 full-time employees, Julio is not entitled to the sixty-day notice requirement.

The California WARN Act’s notice obligation requirement has a few exceptions, even within these bounds.

1. Disaster or War

First, mass layoffs, relocations, and terminations necessitated by a physical disaster, natural calamity, or act of war are exempt from the WARN Act. In certain circumstances, no warning is necessary.

For instance, Stacey is employed at a small plant in California’s coastal region. The plant sustains damage after a powerful earthquake strikes the region. While the plant is being renovated, the majority of her employer’s workers are laid off indefinitely.

In this instance, Stacey’s employer is exempt from providing sixty days’ notice of the termination to her or any other impacted employees.

2. Temporary Work

Second, if an employer’s project or endeavor is finished and the employees were employed with an understanding that their employment would only continue as long as the task or undertaking did, California’s WARN Act is not applicable to widespread layoffs or terminations. (For instance, the Act isn’t applicable if a film’s production is finished and all of the actors and staff lose their jobs.)

Similarly, seasonal workers who were recruited with the knowledge that their job would be transitory and seasonal are exempt from the Act. For instance:

Farmworkers harvesting a certain crop.
Workers at a resort that is open seasonally.

3. Employer Looking for Funding

Lastly, if all of the following apply, a California employer is exempt from the Act’s notification requirements for relocation or termination:

The employer was actively looking for funding or business at the time it would have had to provide CA WARN notice.
The employer could have avoided or postponed a move or termination with the help of the capital or business.
Giving notification would have stopped the employer from gaining the funds or business, the employer clearly and honestly believed.

Example

Mandy manages a new video game development company that employs about 100 people. The business has not made a profit. Mandy believes that she will soon have to shut down the business and fire every employee.

However, she then speaks with an investor who wants to contribute a sizable amount of money to the business. This would be sufficient to sustain the business for a number of additional years. Mandy keeps quiet about it because she logically believes that the investor wouldn’t be interested in making an investment in the business if he realized how near she was to closing it.

The investor abruptly withdraws after nearly completing the investment.

Your Rights

You have the legal right to take legal action against your employer for damages if the WARN Act is applicable and you lose your employment due to a mass layoff, relocation, or factory shutdown without 60 days’ notice.

1. Damages

The Act’s damages are not the same as those in the majority of wrongful termination instances in California. When an employer breaches the Act, an employee has the following rights:

Back pay for the WARN Act violation period is calculated using either the employee’s last pay rate or the mean regular rate they received over the last three years of work, whichever is greater.
For each day of the infraction, there can be a $500 civil fine.
The amount of any benefits to which the worker would have been eligible during the time of the infraction, including any medical costs incurred that would have been paid by the company’s health insurance.

Additionally, the following sums will be deducted from the damages you will be awarded:

Any pay you received from your employer during the infraction.
Any unconditional, voluntary payments your company provided to you that weren’t required by law.

Lastly, the court may grant you attorney’s fees in addition to damages if you win a lawsuit under the provisions of the California WARN Act against your company.

2. Duration of the WARN Act Violation

The shorter of the following is the duration of the WARN Act violation:

The interval between the 60 days prior to your termination and the day on which you were informed that your employment will be terminated due to a plant closure, relocation, or mass layoff.
Half of the total number of days that you worked for the company.

Example

Tom’s employer, where he has been employed for a number of years, declares that it will be closing its site and terminating every employee. Thirty days following the announcement, the layoffs take place.

As soon as Tom is laid off, his family’s employer-provided health insurance is terminated. Tom’s son breaks his wrist the next week. Tom will now be responsible for more than $10,000 in uninsured medical costs.

The business was required by the California WARN Act to notify Tom of the facility closure sixty days in advance. Tom may therefore file a lawsuit against his employer to recover 30 days’ worth of back pay (the difference between thirty and sixty) as well as the amount of benefits he would have earned during that period.

The medical costs he incurred as a result of his son’s accident are also owed by the company.

Acting promptly is paramount, based on our experience representing employees who were fired in breach of the WARN Act. Sending a firmly worded demand letter to the guilty company is often sufficient to resolve cases. Nonetheless, we are ready to go to trial if needed to get the biggest settlement permitted by law.

Federal Law

Compared to the federal law’s WARN Act (Title 29 United States Code 2101), the California WARN Act is usually more employee-friendly. (This also applies to the majority of other California labor regulations, including those pertaining to workplace harassment and wrongful termination.)

Therefore, rather than suing in federal court according to the federal Act, the majority of California employees who are entitled to damages pursuant to the California Act will opt to do so in California Superior Court.

These are the main distinctions between California and federal law.

1. Application

Federal WARN Act

Applies to companies with at least 100 workers, excluding part-timers (or including part-timers if all workers put in a minimum of 4000 hours a week).

California WARN Act

Applies to companies that have at least seventy-five workers at some time within the previous 12 months.

2. Mass layoffs

Federal WARN Act

Specifies mass layoff as including either: 1) a minimum of 500 staff members, or 2) a minimum of 33% of staff members, with a minimum of fifty people.

California WARN Act

Describes a mass layoff as one that affects at least 50 workers over the course of 30 days.

3. Termination

Federal WARN Act

Stipulates that at least 50 workers, excluding part-timers, must be involved in a plant closure or termination.

California WARN Act

There is no minimum number of employees required to define factory closure or termination.

4. Relocation

Federal WARN Act

Not applicable to relocations when the company provides the worker a position at a new location within a reasonable traveling distance, or the firm offers the worker a job at a new location anywhere, and the worker accepts.

California WARN Act

Pertains to any move that takes place more than one hundred miles away.

5. Unexpected business circumstances

Federal WARN Act

Businesses that must close or lay off employees due to unforeseeable business conditions within 60 days are exempt.

California WARN Act

Unexpected business circumstances are not an exception.

6. Back Wages and Benefits

Federal WARN Act

Employees who have been wronged are entitled to back wages and benefits for up to 60 days during the violation duration, but not more than half of the total number of days the employee was employed by the company.

California WARN Act

Employees who have been wronged may be subject to a $500 daily civil penalty. Additionally, they may receive reimbursement at either their final rate or their 3-year average rate of pay, whichever is higher. Any medical expenses that would normally have been covered by the worker’s benefit plan must also be paid by the employer. The duration of the employer’s liability is 60 days or fifty percent of the number of days the employee was employed, whichever is less.

Bumping Rights

According to the company’s policy or bargaining agreement, WARN Act bumping rights allow an employee to take the place of another employee in the event of a layoff or other job-related action. Bumping rights, to put it simply, is a system of seniority that allows workers with greater seniority whose positions are eliminated to replace (bump) colleagues with lower seniority to ensure that the employees who eventually lose their jobs are not the workers whose jobs were eliminated.

1. Workers’ Rights According to Bumping Rights

The WARN Act mandates that if your company has a bumping rights system in place but there’s no union contract in place, the employer must make an effort to identify the people who may eventually lose their employment as a consequence of the bumping system and give them the WARN notification. The employer is required to notify the current employees in the positions that are being terminated if it cannot fairly identify those employees.

2. WARN Notice When It’s Not Possible to Identify Affected Workers

The business must notify the workers whose positions would be destroyed as an outcome of the plant closure or mass layoff if, at the moment the WARN Act notification is needed, it is not feasible for the company to determine who could be reasonably expected to be fired. It is not suitable for a business to offer a blanket CA WARN notice to every employee, but the employer may decide to give more notice to individuals who are likely to be impacted by the seniority system.

3. Union & Bumping Rights

When giving a WARN notification to a union representative, the employer does not have to specify who might be bumped. Employers must discuss bumping rights in notifications to non-union employees in accordance with the WARN Act.

The existence of bumping rights must be indicated in this notification, but the specific people who might be eligible for bumping rights in years to come must not be mentioned. As previously stated, to offer individual CA WARN notice, an employer must make a sincere attempt to identify and notify employees who will truly lose their jobs due to the seniority system.

Does the business have to disclose to workers the method it used to determine who gets termination notices? Does seniority or length of employment matter?

No. Bumping disclosure is not needed under the WARN Act except when there is a system in place for decreasing the workforce, either as a requirement of a collective bargaining agreement or a firm policy. The employer may choose which employees to fire based on its business needs.

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WARN Act CA (Mass Layoff Protection for Workers)

Introduction

Employer Responsibilities

Covered Workers

Your Rights

Federal Law

Bumping Rights

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