Due to COVID-19, many employers have or may need to lay off numerous workers. These layoffs are likely to spark litigation so employers must be mindful of the following potential liabilities:

Liability for Failure to Follow the WARN Act

Federal

The federal Worker Adjustment and Retraining Notification, or WARN Act requires that employers with 100 or more employees give at least 60 days’ notice before closing or laying off a certain number of workers. However, there are exemptions to the 60 days’ notice.

The 60 days’ notice requirement is not triggered if a mass layoff has a duration of six months or less, or if work hours are not reduced by 50% in each month of any 6-month period. However, if the layoffs do go beyond six months, it is treated as a qualifying employment loss unless “[t]he extension beyond 6 months is caused by business circumstances . . . not reasonably foreseeable at the time of the initial layoff; and . . . notice is given at the time it becomes reasonably foreseeable that the extension beyond 6 months will be required.”

As outlined above, the 60 days’ notice requirement is not triggered if the mass layoff is caused by “sudden, dramatic, and unexpected” business circumstances not reasonably foreseeable and beyond the employer’s control. Whether a circumstance is reasonably foreseeable hinges on an employer’s “business judgment,” and that “[t]he employer must exercise such commercially reasonable business judgment as would a similarly situated employer in predicting the demands of its particular market.” The regulation has identified a government-ordered closure to be an example of a business circumstance not reasonably foreseeable. Please note that there is still a requirement to provide a WARN Notice, even if the 60-day requirement of such notice is shortened.

California

The federal WARN Act does not preempt state law or regulation therefore any additional requirements from the state must also be followed. Generally, the California WARN Act is applicable to employers that employ, or have employed in the preceding 12 months, 75 or more full-time or part-time workers. Due to COVID-19, Governor Newsom issued Executive Order N-31-20 on March 17, 2020, which conditionally suspended certain requirements in the California WARN Act.

The California Department of Industrial Relations, the Labor and Workforce Development Agency, and the Employment Development Department has provided guidance, outlining the temporary suspension of the California WARN Act’s 60-day notice requirement. Please note that there is still a requirement to provide a WARN Notice, even if the 60-day requirement of such notice is shortened. Further, the suspension of the 60-day notice only applies to employers who satisfy all of the Order’s specific conditions. These conditions include:

• The employer’s mass layoff, relocation, or termination must be caused by COVID-19-related “business circumstances that were not reasonably foreseeable at the time that notice would have been required.” A mass layoff is defined as a layoff during any 30-day period of 50 or more employees.
• The employer must provide written notices to:
  • Each employee affected by the mass layoff, relocation or termination;
  • All representatives of the affected employees (g., unions);
  • The EDD;
  • The Local Workforce Development Board; and
  • The chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs.
• The employer must provide written notice that satisfies the following requirements:
  • Gives as much notice as is practicable (e., reasonably possible) at the time notice is given to employees and their representatives.
  • Provides a brief statement as to why the 60-day notification could not be met.
  • Includes the following statement: “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 covid19.ca.gov“
  • Includes the following information:
    • Name and address of the employment site where the closing or mass layoff will occur.
    • Name and phone number of a company official to contact for further information.
    • A statement as to whether the planned action is expected to be permanent or temporary and, if the entire location is to be closed, a statement to that effect.
    • The expected date when the plant closing or mass layoff will commence and the expected date when the individual employee will be separated.
    • Job titles of positions to be affected, and the number of employees to be laid off in each job classification.
    • In the case of layoffs occurring at multiple locations, a breakdown of the number and job titles of affected employees at each location.
    • An indication as to whether or not bumping rights exist.
    • Name of each union representing affected employees, if any.
    • Name and address of the chief elected officer of each union, if applicable.

Employers can read the full text of the guidance regarding the temporary suspension of the California WARN Act’s 60-day notice at the California Department of Industrial Relations (DIR) website. The DIR website also outlines how employers may send notices.

Liability as a Result of Discrimination

Generally, layoffs or terminations are considered “adverse employment actions” on which an employee may file a claim for discrimination under federal or state anti-discrimination laws. Consequently, employers should be careful to use objective criteria’s when choosing whom to layoff. Keeping good records of the criteria and the layoff process is a must.

Discrimination based on Age

Employers ought to evaluate their layoff plans critically. Having facially neutral reasons for mass layoffs can still be a liability risk if the impact disproportionately affects a protected class, like older people. Do not have a situation where you have laid-off workers who are older and then turn around and hire younger workers to fill those positions. That type of action would expose your business to an age discrimination lawsuit.

Discrimination based on Nationality or Race

Federal and state statutes prohibit discrimination based on nationality or race. It is unlawful to target and layoff Asian Americans or people of Asian descent in the workplace during COVID-19.

If your business needs assistance, please contact Hackler Flynn & Associates.

DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.