AB 2957 California W.A.R.N. Act

1. AB 2957 California W.A.R.N. Act Legal Presentation Ernesto Garcia March 12, 2003 Mgmt 610

3. Federal WARN Act of 1988 The WARN Act provides protection to employees, their families, and communities by requiring employers to give affected employees written notice at least 60 days in advance of any plant closing or mass layoff. Not all plant closings and mass layoffs are subject to the WARN Act The WARN Act provides protection to employees, their families, and communities by requiring employers to give affected employees written notice at least 60 days in advance of any plant closing or mass layoff. Advance notice provides employees and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these employees to successfully compete in the job market. The WARN Act also provides for notice to State dislocated worker units so that dislocated worker assistance can be promptly provided and to local elected officials so they may prepare a community response. In general, California employers are covered by the WARN Act if they have 100 or more employees, not counting employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than 20 hours a week. Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Regular federal, State, and local government entities that provide public services are not covered. Employees entitled to notice under the WARN Act include hourly and salaried workers, as well as managerial and supervisory employees. Business partners are not entitled to notice. What Triggers Notice Plant Closing: A covered employer must give notice if an employment site (or one or more facilities or operating units within an employment site) will be permanently or temporarily shut down, and the shutdown will result in an employment loss for 50 or more employees during any 30-day period. This does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. Mass Layoff: A covered employer must give notice if there is to be a mass layoff which does not result from a plant closing, but which will result in an employment loss at the employment site during any 30-day period for 500 or more employees, or for 50-499 employees if they make up at least 33 percent of the employer�s active workforce. Again, this does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. Who Must Receive Notice If the WARN Act applies to you, written notice 60 days in advance of any plant closing or mass layoff must be given to the following: Representative(s) of affected employees or affected employees. State Dislocated Worker Unit (Automation and Local Support Section, Workforce Investment Division). The chief elected official of the unit of local government in the area where the plant closing or mass layoff will occur. The WARN Act provides protection to employees, their families, and communities by requiring employers to give affected employees written notice at least 60 days in advance of any plant closing or mass layoff. Advance notice provides employees and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these employees to successfully compete in the job market. The WARN Act also provides for notice to State dislocated worker units so that dislocated worker assistance can be promptly provided and to local elected officials so they may prepare a community response. In general, California employers are covered by the WARN Act if they have 100 or more employees, not counting employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than 20 hours a week. Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Regular federal, State, and local government entities that provide public services are not covered. Employees entitled to notice under the WARN Act include hourly and salaried workers, as well as managerial and supervisory employees. Business partners are not entitled to notice. What Triggers Notice Plant Closing: A covered employer must give notice if an employment site (or one or more facilities or operating units within an employment site) will be permanently or temporarily shut down, and the shutdown will result in an employment loss for 50 or more employees during any 30-day period. This does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. Mass Layoff: A covered employer must give notice if there is to be a mass layoff which does not result from a plant closing, but which will result in an employment loss at the employment site during any 30-day period for 500 or more employees, or for 50-499 employees if they make up at least 33 percent of the employer�s active workforce. Again, this does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. Who Must Receive Notice If the WARN Act applies to you, written notice 60 days in advance of any plant closing or mass layoff must be given to the following: Representative(s) of affected employees or affected employees. State Dislocated Worker Unit (Automation and Local Support Section, Workforce Investment Division). The chief elected official of the unit of local government in the area where the plant closing or mass layoff will occur.

4. Recent Cases

5. AB 2957 California W.A.R.N. Act Business Closures: New Notice / New Penalties / New UI Tax Liability Purpose Effective Date Coverage Exceptions Remedies Good Faith Investigation Consequences Purpose: Precludes employers from ordering a mass layoff, relocation, or termination, as defined, of an industrial or commercial facility employing a prescribed number of people, without first giving 60 days' notice to affected employees and specified government agencies. Effective Date: January 1, 2003 Coverage: Applies to 1) employers with 75 or more employees; 2) layoffs during any 30-day period affecting 50 or more employees; 3) relocation of all or substantially all of the industrial or commercial operations in a covered establishment to a different location 100 miles or more away. Exceptions: An employer would not be required to comply with the 60-day notice requirement established by this bill if: (1) the employer is actively seeking capital or business that would enable the employer to avoid or postpone a relocation or termination, and (2) the employer reasonably and in good faith believed that giving the 60 days' notice would preclude the employer from obtaining the capital or business. Remedies: Provides for civil penalties against an employer who fails to provide the required notices. Gives courts discretion to provide attorney's fees to employees who bring a civil action to enforce the provisions of this bill. Good Faith Investigation: Gives courts discretion to reduce the amount of an employer's liability if the employer conducted a reasonable investigation in good faith and had reasonable grounds to believe that it was not violating the law. Consequences: Employer who fails to give notice and is not subject to exceptions is liable to each employee who was entitled to a notice for: Back Pay The value of the costs of any benefits the employee lost Liability under this section is limited to the period of the employer�s violation, either up to a maximum of 60 days or one-half of the number of days the employee was employed by the employer (whichever is smaller). An employer may also be subject to a civil penalty of $500 for each day of the employer�s violationPurpose: Precludes employers from ordering a mass layoff, relocation, or termination, as defined, of an industrial or commercial facility employing a prescribed number of people, without first giving 60 days' notice to affected employees and specified government agencies. Effective Date: January 1, 2003 Coverage: Applies to 1) employers with 75 or more employees; 2) layoffs during any 30-day period affecting 50 or more employees; 3) relocation of all or substantially all of the industrial or commercial operations in a covered establishment to a different location 100 miles or more away. Exceptions: An employer would not be required to comply with the 60-day notice requirement established by this bill if: (1) the employer is actively seeking capital or business that would enable the employer to avoid or postpone a relocation or termination, and (2) the employer reasonably and in good faith believed that giving the 60 days' notice would preclude the employer from obtaining the capital or business. Remedies: Provides for civil penalties against an employer who fails to provide the required notices. Gives courts discretion to provide attorney's fees to employees who bring a civil action to enforce the provisions of this bill. Good Faith Investigation: Gives courts discretion to reduce the amount of an employer's liability if the employer conducted a reasonable investigation in good faith and had reasonable grounds to believe that it was not violating the law. Consequences: Employer who fails to give notice and is not subject to exceptions is liable to each employee who was entitled to a notice for: Back Pay The value of the costs of any benefits the employee lost Liability under this section is limited to the period of the employer�s violation, either up to a maximum of 60 days or one-half of the number of days the employee was employed by the employer (whichever is smaller). An employer may also be subject to a civil penalty of $500 for each day of the employer�s violation

6. Federal vs. California WARN Act No concept of �covered employer� under the CA WARN Act requiring complicated count of employees What Qualifies as mass layoff �Mass layoff, relocation or termination vs. �Plant closing or mass layoff� �Employment loss� In contrast to the federal act which defines employer as any business enterprise that employs: a) 100 or more employees, excluding part-time employees; or b) 100 or more employees who in the aggregate work at least 4,000 hours per week (exclusive of hours of overtime), the relevant term under the new CA act is �covered establishment,� which is simply defined as any �industrial or commercial facility that employs, or has employed within the preceding 12 months, 75 or more persons.� 29 USC � 2101. Under the CA act, a mass layoff is a �layoff during any 30-day period of 50 or more employees at a covered establishment.� In contrast, a mass layoff under the federal act is defined as �a reduction in force, not the result of a plant closing, which results in an employment loss at a single site during any 30-day period for at least a) 33% of the active employees and at least 50 employees, or b) 500 or more employees.� 29 USC � 2101. In contrast to the federal act, a Warn notice is triggered under the new CA act when there is either a �mass layoff, relocation or termination.� (See above for definitions.) Under the federal act, a Warn notice is triggered when there is either a �plant closing or mass layoff.� 29 USC � 2102. Plant closing is defined as �the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees.� 29 USC � 2101. The federal act notes that an �affected employee� are those �reasonably expected to experience an employment loss as a consequence of a proposed plant closing or mass layoff.� An employment loss is defined as a) an employment termination, other than for cause, voluntary departure, or retirement, b) a layoff exceeding 6 months, or c) a reduction in hours of work of more than 50 percent during each month of any 6-month period.� 29 USC � 2101. In contrast, the new CA act does not go into such detail. In contrast to the federal act which defines employer as any business enterprise that employs: a) 100 or more employees, excluding part-time employees; or b) 100 or more employees who in the aggregate work at least 4,000 hours per week (exclusive of hours of overtime), the relevant term under the new CA act is �covered establishment,� which is simply defined as any �industrial or commercial facility that employs, or has employed within the preceding 12 months, 75 or more persons.� 29 USC � 2101. Under the CA act, a mass layoff is a �layoff during any 30-day period of 50 or more employees at a covered establishment.� In contrast, a mass layoff under the federal act is defined as �a reduction in force, not the result of a plant closing, which results in an employment loss at a single site during any 30-day period for at least a) 33% of the active employees and at least 50 employees, or b) 500 or more employees.� 29 USC � 2101. In contrast to the federal act, a Warn notice is triggered under the new CA act when there is either a �mass layoff, relocation or termination.� (See above for definitions.) Under the federal act, a Warn notice is triggered when there is either a �plant closing or mass layoff.� 29 USC � 2102. Plant closing is defined as �the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees.� 29 USC � 2101. The federal act notes that an �affected employee� are those �reasonably expected to experience an employment loss as a consequence of a proposed plant closing or mass layoff.� An employment loss is defined as a) an employment termination, other than for cause, voluntary departure, or retirement, b) a layoff exceeding 6 months, or c) a reduction in hours of work of more than 50 percent during each month of any 6-month period.� 29 USC � 2101. In contrast, the new CA act does not go into such detail.

7. Pros & Cons Pros: Allows employees to: Allow employees to seek and obtain alternative jobs Seek training or retraining to compete in job market Cons: If no policies are in place Company might be liable for all employees who qualify

8. Recommendations

9. Questions?