Urgent: Governor Newsom Issues Executive Order to Address Cal-Warn Concerns In Coronavirus Crisis

In an effort to address some of the issues presented by California’s WARN Act in connection with the COVID-19 crisis, Governor Newsom has issued Executive Order N-31-20 partially suspending certain provisions of Cal-WARN. As we reported here, the wording of California’s WARN Act exposes employers temporarily closing or engaging in layoffs due to COVID-19 to liability for back pay, the value of benefits, penalties of $500 per day and attorneys’ fees. Unlike the federal WARN Act, California’s version has no exception for unforeseen business circumstances and requires every facility that employs or employed 75 or more persons within the last 12 months to give 60 days of written notice to the employees and certain government officials before any mass layoff that will result in a loss of employment for 50 or more people in any 30 day period. Cal-WARN also applies to the closing of a facility, which is defined as the “cessation or substantial cessation of industrial or commercial operations” in a covered facility. This means that, where a covered facility will be shutdown, it is not necessary that 50 or more people be impacted for 30 days.

In apparent recognition of this problem, Governor Newsom has issued Executive Order N-31-20 which suspends the statute but still requires that employers meet certain notice requirements. Specifically, covered facilities that order a mass layoff, closing or relocation as a result of COVID-19 business circumstances that were not reasonably foreseeable at the time notice would have been required must still provide written notice to employees and government officials. The written notice to be provided is the same as the notice required by Labor Code sections 1401(a)-(b), and must be sent with as much notice as is practicable and with a brief statement as to the reason for the reduced notice period. In addition, any notice sent beginning on March 18, 2020 or thereafter must include the following: “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.” The Executive Order also requires that the Labor and Workforce Development Agency issue guidance to the public as to how the order will be implemented by no later than March 23, 2020.

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