The California “WARN Act” – Protections for Employees After Mass Layoffs

The California WARN Act (short for Worker Adjustment and Retraining Notification Act) is a regulation that requires covered employers to provide workers and local government officials with at least 60 days’ notice before one of the following three triggering events:

1) mass layoff	termination of 50 or more employees in a 30-day period
2) plant closure	cessation (or substantial cessation) of business activities
3) major relocation	relocation of all (or substantially all) of a business operation to a new location 100 or more miles away1

Employers who fail to provide notification must provide their laid-off employees with back pay and benefits for the period of the violation (which means the amount of time by which their advance notice fell short of 60 days).²

Here at Shouse Law Group, we have represented countless people who were wrongfully terminated in violation of the WARN Act and other state and federal laws. We have a long track record of winning our clients substantial monetary settlements – often without a trial.

Below, our California labor and employment law attorneys answer the following frequently asked questions:

• 1. What does the California WARN Act require of employers?
• 2. Which employees are covered?
• 3. What are my rights if my employer violates the WARN Act?
• 4. What is the difference between the California and federal WARN Acts?
• Additional resources

If you have further questions after reading this article, we invite you to contact us at Shouse Law Group.

1. What does the California WARN Act require of employers?

The California Worker Adjustment and Retraining Notification Act (the “WARN” Act), Labor Code 1400 – 1408 LC, requires covered employers to provide sixty (60) days advance notice (“warn notice”) to employees and certain government entities before conducting any of the following:

1. A mass layoff;
2. A relocation; or
3. A termination (plant closure).³

If an employer fails to provide 60 days advance notice of one of these events, then employees who lose their job in connection with the event will have the right to sue the employer for a WARN Act violation.⁴

So essentially, the WARN Act is a legislature-created exception to the general rule of at-will employment in California.

1. Mass layoff

A mass layoff is defined under the California WARN Act as the elimination of

1. fifty (50) or more jobs
2. during any thirty (30)-day period, due to lack of work or lack of funds.⁵

2. Relocation

A relocation means moving all or substantially all of the commercial or industrial operations at a given location to a new location at least one hundred (100) miles away.⁶

3. Termination

Finally, a termination (plant closure) means the cessation or substantial cessation of industrial or commercial operations.⁷

Example

Kevin works at a fulfillment center for a small e-commerce company in Riverside County, California.

The company announces that it will be relocating the fulfillment center to a location in Arizona, 200 miles away. The company tells Kevin he can have the same job at the new location, but Kevin is unable to move because of his wife’s job in Riverside County.

Thirty days after announcing that it is moving, the company closes Kevin’s workplace and moves to Arizona.

Kevin has a claim against his employer for an Act violation because it gave him less than the sixty days’ CAL-WARN notice of a relocation.

Note that a furlough of 50 or more employees may also trigger WARN Act obligations. Learn about the difference between layoffs and furloughs.

2. Which employees are covered?

Generally speaking, the California WARN Act, Labor Code 1400 et seq., applies to all California employees of whom both of the following are true:

1. The employee has been employed by the employer for at least six (6) of the twelve (12) months preceding the date on which notification would be required; and
2. The number of employees is seventy-five (75) or more people, or the employer has employed that many at any point within the preceding twelve (12) months.⁸

Example: The restaurant Julio works for lets him know that it is going out of business and he will lose his job in two weeks.

Julio has worked for the restaurant for the past three years. The restaurant is part of a small local chain that has a total of 50 employees.

Julio does not have the right to the 60-day notice requirement because the number of full-time employees there is fewer than 75.

Even within these parameters, there are a few exceptions to the California WARN Act notice obligation requirement.

Calamity or war

First, the WARN Act does not apply to mass layoffs, relocations or terminations that are made necessary by a physical calamity, natural disaster or an act of war. No notice is required in these situations.⁹

Example: Stacey works in a small factory in coastal California. A severe earthquake strikes the area and damages the factory. Her employer lays off most employees indefinitely while the factory is rebuilt.

In this case, Stacey’s employer is not required to give her or other affected employees sixty days’ advance notice of the layoff.

Temporary employment

Second, California’s WARN Act does not apply to mass layoffs or terminations that occur because a project or undertaking of an employer has been completed, where the employees were hired with the understanding that their job would only last as long as the project or undertaking did. (So, for example, when the shooting of a movie is completed and the cast and crew all lose their jobs, the Act does not apply.)

Similarly, the Act does not apply to seasonal employees who were hired with the understanding that their employment would be seasonal and temporary – for example,

• farmworkers picking a particular crop, or
• employees at a seasonal vacation resort.¹⁰

Employer seeking capital

Finally, a California employer is not required to give notice under the Act for termination or relocation if all of the following are true:

1. At the time when the employer would have been required to give notification, it was actively seeking capital or business;
2. The capital or business would have enabled the employer to avoid or postpone a relocation or termination; and
3. The employer reasonably and in good faith believed that giving notice would have prevented it from obtaining the capital or business.¹¹

Example: Mandy runs a startup video game production company with around a hundred employees. The company has failed to turn a profit. Mandy thinks that she will be forced to close the company and lay off all the employees soon.

But then she talks to an investor who is interested in putting a large sum of money into the company. This would be enough to keep the company going for several more years. Mandy reasonably thinks that if the investor knew how close she was to shutting the company, then he would not want to invest in it, so she keeps quiet about that.

After almost going through with the investment, the investor suddenly backs out.

The company is out of cash, and Mandy is forced to lay off all her employees two weeks later.

Mandy was in talks with the investor in the hopes of saving the company 60 days before the termination. Therefore, she does not owe her employees compensation under the Act.

3. What are my rights if my employer violates the WARN Act?

If you lose your job because of a mass layoff, relocation or plant closure without 60 days’ notice, and the WARN Act applies, then you have the right to sue your employer for damages.

Damages

Damages under the Act are different from damages in most California wrongful termination cases. An employee whose employer violates the Act is entitled to:

• Back pay for the period of the WARN Act violation, at the average regular rate the employee received during the last three (3) years of his/her employment OR the employee’s final pay rate (whichever is higher);
• Possibly a $500 civil penalty for every day of the violation; and
• The value of any benefits that the employee would have been entitled to during the period of the violation–including the cost of any medical expenses that s/he incurs that would otherwise have been covered under employer-provided health insurance.¹²

Also, the amount of damages you will receive will be reduced by the following amounts:

• Any wages your employer paid you during the period of the violation; and
• Any voluntary and unconditional payments your employer made to you that were not made to satisfy any legal obligation.¹⁴

Finally, if you prevail in a lawsuit against your employer under the California WARN Act, the court may award you attorney’s fees on top of the damages.¹⁵

Length of WARN Act violation

The period of the WARN Act violation is the smaller of the following:

• The period of time between 60 days before you lost your job, and the day you were actually notified you were losing your job in the mass layoff, relocation or plant closure; or
• One-half of the number of days you were employed by the employer.¹³

Example: Tom’s company, where he has worked for several years, announces that it is closing the location where Tom works and laying off all employees. The layoffs occur 30 days after the announcement.

Tom’s family loses their employer-provided health insurance as soon as he is laid off. The following week, Tom’s son fractures his wrist. This puts Tom on the hook for over ten thousand dollars in uninsured medical expenses.

Under the California WARN Act, the company should have given Tom 60 days’ notice of the facility closure. So Tom may sue his company for 30 days’ (the difference between 30 and 60) worth of back pay and the value of the benefits he would have received during that time.

The company also owes him for the medical expenses he incurred due to his son’s injury.

In our experience representing workers terminated in violation of the WARN Act, it is important to act quickly. Often we can resolve cases simply by sending the offending employer a strongly-worded demand letter. Though if necessary, we are prepared to take the matter to trial in pursuit of the largest settlement available under the law.

4. What is the difference between the California and federal WARN Acts?

The California WARN Act (Labor Code 1400 – 1408 LC) is generally more employee-friendly than the federal law’s WARN Act under 29 United States Code (“U.S.C.”) 2101 et seq. (This is the case with most other California labor laws as well, such as wrongful termination laws and workplace harassment laws.)

Therefore, most California employees who are eligible for damages under the California Act will choose to sue in California Superior Court under that law, rather than in federal court under the federal Act.

The following chart summarizes the major differences between the federal and California laws:

Federal WARN Act	California WARN Act
Applies to employers with at least 100 employees not including part-time (or including part-time if all employees work at least 4,000 hours/week).16	Applies to employers with at least 75 employees at any point in the past 12 months.
Defines mass layoff as involving either: 1) at least 500 employees, or 2) at least 33% of employees, with a minimum of 50 employees.17	Defines mass layoff as involving at least 50 employees within a 30-day period.
Specifies that plant closure/termination must involve at least 50 employees, not including part-time employees.18	No minimum headcount for definition of plant closure/termination.
Does not apply to relocations if the employer offers the employee a job at a new site within “reasonable commuting distance, or the employer offers the employee a job at a new site anywhere and the employee accepts.19	Applies to any relocation to a location more than 100 miles away.
Exception for businesses that are forced to lay off employees or close because of business circumstances that were not reasonably foreseeable 60 days prior.20	No exception for unforeseeable business circumstances.
Wronged employees are entitled to their back pay and benefits for the violation period up to 60 days, but no more than half the number of days the employer employed the worker.21	Wronged employees may be eligible for a daily civil penalty of $500. They may also get back pay at their final rate or at their three-year average rate of pay (whichever is greater). Employers must also pay for any medical bills that would have been covered under the employee benefit plan. The employer’s liability extends for 60 days or half the number of days they employed the worker – whichever is smaller.

Whether we bring your lawsuit under state or federal law depends on the specific circumstances of your case. After consulting with you, we would advise you – based on our past experience – which route is most likely to be successful and yield the largest monetary rewards.

Additional resources

For more information, refer to the following:

• Worker Adjustment and Retraining Notification (WARN) Information for Employers – Information by California’s EDD (Employment Development Department).
• Rapid Response Services for Laid-off Workers – Discussion and contact information by the U.S. Department of Labor.
• The layoff survival guide: What to do before, during and after – Guide by the Washington Post.
  
• What To Do After Being Laid Off – Article by the Harvard Business Review.
• A Practical Guide to Getting Laid Off – Piece from Vox.

---

Legal References: