New Jersey may have started a trend. As of April 10, covered New Jersey employers must now comply with new requirements under the New Jersey mini-WARN Act (see our blog here). New York and California are giving chase, with proposed amendments to New York State’s WARN Act regulations, New York State’s WARN Act, and California’s WARN Act. And New York employers should take note: New York’s WARN Portal is set to go live this month.
Proposed Amendments to NYS WARN Regulations–And a New NYS WARN Portal
The New York State Department of Labor has proposed amendments to the New York State WARN Act (“NYS WARN”) regulations that are intended to account for the post-pandemic workforce, including clarifying how remote work impacts NYS WARN compliance and simplifying language to ensure employers understand their obligations under the law. The Department of Labor is accepting comments to the proposed regulations until May 30, 2023.
Key items in the proposed amendments to the NYS WARN regulations include:
- Remote employees included in threshold count: The employers covered by NYS WARN has been expanded to include any employer who employs 50 or more full-time employees, who work at the single site of employment plus individuals that work remotely but are based at the employment site, which may include remote employees in New York as well as other states.
- Certain notices must be provided electronically: Notices being sent to the New York State Department of Labor Commissioner (“Commissioner”) must be provided electronically and are no longer required to have original signatures.
- Notice must include additional information: The notice to the Commissioner must include more detailed information about the affected employees, including telephone numbers, job titles, and whether they are paid on an hourly, salary or commission basis. The notice to affected employees must include any other information relevant to their separation, such as information related to any financial incentives an employee may receive if they remain employed by the employer until the effective date of the employment loss, as well as available dislocated worker information.
- The exceptions for notice are changing:
- Faltering company exception reduced: The faltering company exception will apply only to plant closings, and will no longer apply to mass layoffs, relocations or reductions in hours.
- Unforeseeable business circumstances exception expanded: The unforeseeable business circumstances exception will be expanded to expressly include in certain circumstances a public health emergency (including a pandemic) or a terrorist attack.
- Exception to notice requires determination by Commissioner: The 90-day notice period can be reduced in limited circumstances (including under the faltering company, unforeseeable business circumstances, and natural disaster exceptions) only if:
- The employer submits a request for consideration for eligibility of an exception to the Commissioner within 10 business days of providing the required notice under NYS WARN to the Commissioner (unless the Commissioner grants an extension);
- The employer provides a reason for reducing the notice period in addition to any other documents the Commissioner may require; and
- The Commissioner determines that the employer has established all of the elements of the claimed exception.
- The calculation of back pay is being clarified for hourly employees: The calculation to be used to determine the average rate of compensation and final rate of compensation for hourly employees is clarified. Such calculation uses the number of hours worked instead of the number of days worked. The days worked method of calculation should still be used for non-hourly employees.
- The use of payment in lieu of notice is being clarified: Liability for an employer’s failure to give the required notice to employees under NYS WARN will be reduced by amounts paid to an employee in lieu of notice, except where the following conditions are met (then such payments will be considered wages for the notice period):
- There is an employment agreement or uniformly applied company policy that requires the employer to give the employee a certain amount of notice before a layoff or separation;
- The employee is laid off without the required notice; and
- The employer pays the employee an amount equal to the employee’s wages and any benefits for the required notice period.
Governor Kathy Hochul also recently announced plans to launch a new NYS WARN Portal. The upgraded online tool will allow employers to submit documentation, provide lists of impacted workers, and send other important information directly to the New York State Department of Labor in real time, in an effort to help employers give affected employees more time to transition and seek new employment opportunities. The portal is expected to go live in April.
New York State’s Proposed Legislation
Separately, on March 8, 2023, S5617 was introduced to the New York Senate, which will amend NYS WARN if it is passed and signed into law. The proposed legislation is similar to (and even more expansive in some instances than) the recent changes we’ve seen with New Jersey’s mini-WARN act, which we blogged about here. A similar bill, S4845A, was introduced in New York’s 2021-2022 legislative session, and stalled in committee. Whether S5617 fares any better remains to be seen.
The proposed bill seeks to amend NYS WARN as follows:
- The employers covered by NYS WARN will be expanded to include affiliates and include any business enterprise that employs 50 or more employees, whether full-time or not (currently it requires employment of 50 or more full-time employees).
- The threshold for a “mass layoff” triggering NYS WARN will be reduced significantly. Under the proposed bill, a “mass layoff” means the termination of 20 or more employees in a 30-day period. Currently, a mass layoff means (i) the termination of 25 or more employees comprising 1/3 of the workforce, or (ii) the termination of 250 or more employees.
- The scope of employees that count toward the 20-employee threshold for a “mass layoff” will be expanded:
- Both employees “at” a single site of employment and “reporting to” the single site of employment must be counted, which may include remote employees in New York as well as other states. Currently, the threshold for a mass layoff includes employees “at” the single site of employment.
- Both part-time and full-time employees are counted toward the threshold. Currently only full-time employees count toward the threshold.
- Employees who resign in anticipation of a facility closing, relocation or mass layout will be counted.
- Employees placed on furloughs lasting more than 3 months are counted. Currently, the threshold for a mass layoff applies only if the furlough is for more than 6 months.
- The threshold for a “facility closing” (which was retitled from “plant closing”) triggering NYS WARN has been reduced to 20 or more employees (currently 25 employees), and will now include part-time employees.
- The exclusions for employer notice requirements for the closing of a facility will be significantly reduced, including removing the faltering business and foreseeability exceptions, and reforming the natural disaster exception, which will require employers to apply to the New York State Department of Labor for relief from liability due to violations directly caused by a natural disaster (as opposed to the current “blanket” natural disaster exception).
- The ability of the Commissioner to have discretion to reduce penalties for employers for certain acts or omissions concerning notice requirements for mass layoffs, relocations or employment loss that occurred in good faith will be eliminated.
- The 60-day period for determining back pay and other liabilities for certain employees who experience employment loss will be removed, which means that employers could be liable for the full 90-day notice period required under NYS WARN.
- The attorney general has the express power to take certain action to assist employees in receiving back pay and other liabilities and expressly states that employees cannot waive liability under NYS WARN unless supervised by a court or the Commissioner.
- In addition to notice, covered employers will be required to provide severance pay, equal to 1 week of pay for each full year of employment to each terminated employee, and an additional 4 weeks of severance pay when the employer fails to give timely notice.
The bill is currently in the Senate’s Labor Committee, and if passed and signed into law in its current form, would take effect immediately. Stay tuned for additional developments.
Proposed Changes to Cal-WARN Act (AB 1356)
California legislators have proposed a new bill which would amend California’s Worker Adjustment and Retraining Act (“Cal-WARN Act”). The new bill recently underwent its first round of amendments in assembly. In its current form, the bill will:
- Increase the required WARN notice to 90 days from the current 60 days;
- Change the definition of “covered establishment” to include both a single location or a group of locations, including any facilities located in California;
- Note: California legislators appear to have borrowed the concept for this proposed change from New Jersey’s recently amended mini-WARN Act (see our blog posts here and here).
- It is not yet clear if this change will effectively eliminate California’s version of a “single site of employment.” Currently, Cal-WARN only applies to “covered establishments” which employ or have employed 75 or more employees at that establishment. With this change, small worksites with less than 75 employees in California may need to be aggregated for WARN trigger purposes, regardless of physical proximity to each other.
- Change the definition of “mass layoff” to include employees “at, or reporting to” a covered establishment (again, copying the language from New Jersey’s mini-WARN Act); and
- Prohibit employers from offering employees a general release agreement, waiver of claims, or non-disparagement / non-disclosure agreement, unless (1) employers offer the employees reasonable consideration in addition to the notice / pay in lieu of notice / Cal-WARN damages that employees already are entitled to under Cal-WARN; and (2) the agreement states in clear and unequivocal language that the consideration being offered to the employees is in addition to anything of value to which the individuals already are entitled under Cal-WARN.
- Non-compliance with this new prohibition would result in a civil penalty of up to $500 per violation.
While still in the early stages of the legislative process, the bill’s similarity to other states’ mini-WARN Acts (i.e. 90 days’ notice and new definitions of “covered establishments” and “mass layoff”) are likely to be favorably received by the California legislature. On April 12, 2023 the Assembly’s Labor & Employment Committee voted on and passed the bill, and re-referred it to the Committee on the Judiciary.
- If the proposed NYS WARN regulations are finalized in their current form, employers should:
- Familiarize themselves with the new regulations.
- If considering a reduction in force, consult with trusted employment counsel far in advance to determine whether they are covered employers under NYS WARN in light of their remote workforce, to assess any new notice obligations, and to assist with the documentation required to prove eligibility of an exception to the 90-day notice requirement.
- Employers considering a reduction in force should stay alert for changes to NYS WARN and Cal-WARN. Check back here for updates, and reach out to your Baker McKenzie employment attorney for help navigating reduction in force or cost-cutting measures across the US and around the world.