California Executive Order Allows Businesses To Assert An “Unforeseeable Business Circumstances” Exception to California WARN Act For Events Caused By COVID-19; Notice Must Be As Soon As Practical.

California maintains its own “mini” WARN Act, Labor Code section 1400, et seq., which requires employers with 75 or more employees to give 60 days’ notice prior to mass layoffs, substantial relocations, or termination of operations at a covered establishment.  Unlike the federal WARN Act, California’s statute also applies to furloughs as few as three weeks, according to a 2017 Court of Appeal decision in Int’l. Bhd. of Boilermakers, etc. v. NASSCO Holdings Inc., 17 Cal. App. 5th 1105, 226 (2017).  Also, unlike the federal WARN Act, California does not have an unforeseeable business circumstances or natural disaster exception to the 60-days’ notice requirement.

These peculiarities to California’s statute had the potential to cause thousands of employers now needing to conduct layoffs or furloughs in the face of the unprecedented and unforeseeable disruption caused by the COVID-19 pandemic to violate the California WARN Act because providing 60-days’ notice was not practical.

However, on March 18, 2020, Governor Newsom issued Executive Order N-31-20 (“Order”) recognizing that combatting the rapid spread of COVID-19 has forced many employers “to close rapidly without providing their employees the advance notice required under California law.”  To help employers navigate this hurdle, the Order suspends California’s 60-day notice period from March 4, 2020 through the end of the COVID-19 emergency on the condition that the employer:

1. Gives the written notices specified in Labor Code section1401 (a)-(b);


2. Consistent with the federal WARN Act, gives as much notice as is practicable and provides (at the time of the notice) a brief statement of the basis for reducing the notification period;


3. Orders the mass layoff, relocation, or termination is caused by COVID-19-related “business circumstances that were not reasonably foreseeable as of the time that notice would have been required;” and


4. Includes the following statement in the notice: “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.”

Any employer of California-based employees faced with conducting layoffs or furloughs during this global crisis should take care to provide notice which complies with California’s Executive Order N-31-20.