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The purpose of this blog is to examine layoff guidelines and furloughs under California law in light of the COVID-19 pandemic. In summary, the Governor’s Executive Order has suspended California law regarding layoffs.

Workers Adjustment and Retraining Notification

(“WARN” Act) Laws

Both federal and state law have safeguards in place to prevent large companies from conducting large-scale layoffs without providing adequate warning to their employees. The state and federal versions of this legislation are called the WARN Act.

  • In general, to be covered by the federal WARN Act,[1] an employer must have 100 full-time employees who have been employed six of the last 12 months preceding the date of the layoff notice.
  • To be covered by the Cal-WARN Act,[2] employers must have had 75 employees (including full and part-time employees) in the 12 months preceding the layoff notice.
  • Under both the federal and California WARN Acts, covered employers who conduct mass layoffs, plant closings/terminations, or relocations are required to provide at least 60 days’ notice to affected employees and select state and local officials.
  • Employers who fail to provide the requisite notice may be liable for back pay for each day the Act was violated, up to 60 days, as well as a civil penalty.
  • Unlike most California wrongful termination laws, which cover employees who are fired individually, the WARN Act in California covers employees who are fired in connection with:
  • Mass layoffs – the layoff of 50 or more employees in a 30-day period;[3]
  • A termination – the cessation or substantial cessation of business activities; or
  • The relocation of all or substantially all a business operation to a new location 100 or more miles away.[4]
  • Under the Cal-WARN Act, an “employee” means a person employed with the employer for at least six months of the last 12 months prior to the date on which notice is required.[5]

WARN Act Liability in Light of Covid-19

Covered employers who are forced to rapidly lay off employees or cease operations altogether due to the COVID-19 pandemic can rely on the “unforeseen business circumstances” exception to the federal WARN Act.

  • The exception allows for less than the 60-day notice requirement to employers who order closures or layoffs as a result of “sudden, dramatic, and unexpected action or condition outside the employers control.”[6]

The Cal-WARN Act does not have a similar exception for unforeseen business circumstances. Instead, it only provides exceptions for terminations or layoffs caused by physical calamity or acts of war.[7] The few exceptions include:

  • Calamity or war – no notice is required.
  • Temporary employment – no notice required if a project or undertaking of an employer has been completed, where the employees were hired with the understanding that their job temporary until the completion of the assigned project or undertaking.[8]
  • Employer seeking capital.[9]

In recognition of the rapid changes in workforce needs due to the COVID-19 emergency, California Governor Gavin Newsom issued Executive Order N-31-20, temporarily suspending the notice requirements of the state’s WARN act as of March 17, 2020.[10] Specifically, Governor Newsom has temporarily changed the following provisions[11] until the end of the current emergency:

  • All statutory and civil penalty provisions of the Cal-WARN Act are suspended.
  • Employers who seek the order’s protections must:
  • Provide notices to all affected employees, the Employment Development Department (EDD), the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or layoffs occur;
  • Give “as much notice as is practicable,” and provide a brief statement of the basis for reducing the notification period;
  • Provide the following information to each affected employee:
    • Whether the action is expected to be permanent or temporary, or if the location is closed:
      • Expected date of closing or mass layoff;
      • Indication of whether bumping rights exist;
      • Contact information of company official with more information;
      • 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 labor.ca.gov/coronavirus2019.”
      • Other relevant information to affected employees.[12]
  • The Labor and Workforce Development Agency will provide guidance regarding how the Executive Order will be implemented.
  • The order is retroactive to March 4, 2020, and applies to all covered employers who order a mass layoff, relocation or termination that is “caused by COVID-19 related business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”[13]

Leave Issues Under California Law

Since the COVID-19 pandemic began, the Department of Fair Employment and Housing (DFEH) has issued guidance regarding employees with symptoms, what employers can disclose regarding employees testing positive for COVID-19, and how to handle employees requesting leave.[14]

DFEH has requested that employers rely on the latest public health recommendations from the Centers for Disease Control and Prevention (CDC) in implementing safety.[15] These recommendations include:

  • Ensuring that sick leave policies are flexible and consistent with public health guidance and that employees are aware of and understand these policies.
  • Maintaining flexible policies that permit employees to stay home to care for a sick family member or take care of children due to school and childcare closures. Additional flexibilities might include giving advances on future sick leave and allowing employees to donate sick leave to each other.
  • Employers that do not currently offer sick leave to some or all their employees may want to draft non-punitive “emergency sick leave” policies.
  • Employers should not require a positive COVID-19 test result or a healthcare provider’s note for employees who are sick to validate their illness, qualify for sick leave, or to return to work. Healthcare provider offices and medical facilities may be extremely busy and not able to provide such documentation in a timely manner, and shortages in COVID-19 tests may prevent employees from obtaining proof of a positive testing status.
  • Being prepared to change your business practices if needed to maintain critical operations (e.g., identify alternative suppliers, prioritize existing customers, or temporarily suspend some of your operations if needed).

What Can Employers Do?

Based upon these health recommendations and the employer’s legal obligations to provide reasonable accommodations, DFEH has issued guidance for California employers on COVID-19. In its frequently asked questions, the DFEH addresses how employers can deal with employees’ concerns about COVID-19 and still meet obligations for reasonable accommodation:[16]

  • Employers may ask employees who exhibit COVID-19 symptoms to go home. They must then provide paid sick leave and compensate the employee under paid sick leave laws.
  • Employers may ask employees if they are experiencing symptoms, but must maintain all information about the employee’s illness as confidential medical records.
  • Employers may measure the employee’s body temperature for the limited purpose of evaluating the risk that employee presents to others in the workplace.
  • Employers may ask why an employee has been absent from work and must maintain any health information as confidential medical records.
  • Employers cannot identify any employee by name if the employee is quarantined, tests positive for COVID-19, or comes into contact with someone who has the virus.[17]
  • Employers may notify affected employees in a way that does not reveal the personal health related information of an employee.
  • Employers may not confirm the health status of specific employees or communicate about employees’ health.
  • Employers may require their employees to wear personal protective equipment designed to reduce the transmission of pandemic infection.[18]

California Family Rights Act Leave

Under normal circumstances, employees may be entitled to up to twelve weeks of job protected leave under the California Family Rights Act (CFRA)[19] for their own serious health condition, or to care for a spouse, parent, or dependent child with a serious health condition.[20

Employers may require medical certification of the serious health condition from a health care provider within 15 days of the employee’s request, unless it is not practicable for the employee to do so. In the context of a pandemic, it is not typically practicable for employees to provide advance notice of the need for leave – when that need is related to pandemic – or for employees to obtain certifications when health care providers are working to address urgent patent needs.

  • Employees who are not eligible for CFRA may be entitled to accommodation if they cannot come to work because of illness related to COVID-19.
  • All employers of five or more employees are required to provide reasonable accommodations to employees with disabilities unless doing so would impose an undue hardship.[21]
  • Telework is a familiar form of accommodation. Unpaid leave can also be a form of reasonable accommodation, even when the employees are not typically entitled to CFRA leave.[22]
  • When requesting reasonable accommodations, an employer may generally request reasonable medical documentation; however, during a pandemic that is impracticable.[23] The DFEH recommends waiving such requirements until such time as the employee can reasonably obtain documentation.[24]
  • Employers must continue to provide reasonable accommodations for employees with disabilities that are unrelated the pandemic, barring undue hardship.

Furloughs and Layoffs

Businesses are facing losses in revenue and uncertainty in the future and need to evaluate their options to preserve their companies while maintaining their workforce.

Furloughs are essentially unpaid leaves of absence from work with a certain return date, reduced schedules and pay, or reduced compensation with no change in schedules, while a layoff generally means complete severance.

Under certain circumstances, the California Labor Commissioner may not see a real difference between a temporarily furloughed employee without any work and a laid off employee.

The Labor Commissioner stated that if an employer reduces an employee’s scheduled work hours to zero – and does not reschedule that employee within the same pay period – the employer has effectively laid off the employee, which triggers final pay requirements.[25] Furthermore, furloughs exceeding a de minimis amount of time will trigger an employer’s obligations to comply with Cal-WARN, just as a layoff would.[26] California caselaw has found that Cal-WARN’s use of the language “separation from a position” applies to furloughs as well; however, it provided no guidance as to what the de minimis amount of time is to trigger those Cal-WARN protections.

Work Sharing

As an alternative to furloughs, employers can sign up for Work Sharing programs through the EDD.[27] Work Sharing is a way of supplementing an employee’s wages when their wages and hours have been significantly reduced due to economic reasons. It is essentially a hybrid between employment and unemployment. For example, an employer could implement a Work Sharing plan reducing the work week of all employees from five days to four days (20 percent reduction). Those employees would then be eligible to receive 20 percent of their weekly unemployment insurance benefits. This is a solution for employers seeking to keep their employees on while avoiding legal gray areas.

Note on AB 5

In the midst of dealing with COVID-19’s impact on employers, AB 5 is still in effect as of 2020, and generally prohibits the use of independent contractors to provide physical therapy services. As discussed in our recent Blog Post, Assembly Bill 5 –Saying Goodbye to Independent Contracting, there is currently no viable and lawful way for an independent contractor physical therapist to treat patients of another practice without incurring the risks and penalties of enforcement.

What to Expect Next

Employers need to stay in close contact with their legal counsel because of the constantly evolving legal atmosphere and other employment issues arising from COVID-19. For further questions or assistance, please contact Simas & Associates at 888.999.0008 or info@simasgovlaw.com.

footnotes:

[1] 20 CFR § 639, et seq.

[2] Id. at § 1402.

[3] A “layoff” means a separation from a position for lack of funds or lack of work. (Lab Code § 1400.)

[4] Id.

[5] Id.

[6] 20 CFR § 639.9.

[7] Lab Code § 1401.

[8] Id. at § 1400 (Act does not apply to seasonal employees who were hired with the understanding that their employment would be seasonal and temporary).

[9] Lab Code § 1402.5

Employer is not required to give notice under the WARN Act for termination or relocation if all of the following are true:

  1. At the time when the employer would have been required to a WARN Act 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 reasonable and in good faith believed that giving WARN Act notice would have prevented it from obtaining the capital or business.

[10] Executive Order N-31-20, https://www.gov.ca.gov/wp-content/uploads/2020/03/3.17.20-EO-motor.pdf. (Accessed April 7, 2020).

[11] Lab Code §§ 1401(a), 1402, 1403.

[12] These written notices must comply with requirements of Labor Code Section 1401(b), which in turn requires federal WARN Act language per 29 U.S.C. § 2101. See 20 C.F.R. § 639.7.

[13] Executive Order N-31-20.

[14] https://hrwatchdog.calchamber.com/2020/03/dfeh-issues-employment-information-covid-19/.

[15] CDC, Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19), https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html. (Accessed April 7, 2020).

[16] See DFEH, Employment Information of COVID-19, https://www.dfeh.ca.gov/wp-content/uploads/sites/32/2020/03/DFEH-Employment-Information-on-COVID-19-FAQ_ENG.pdf.

[17] Employers should take further steps at the direction of the local public health department that may include closing the worksite, deep cleaning, and permitting or requiring telework.

[18] An employee with a disability needs a related reasonable accommodation, the employer should provide these, absent undue hardship.

[19] Gov. Code § 12945.2 (California Family Rights Act mirrors the federal Family and Medical Leave Act).

[20] COVID-19 will qualify as a serious health condition if it results in inpatient care or continuing treatment or supervision by a health care provider. It may also qualify as a serious health condition if it leads to conditions such as pneumonia.

[21] Undue hardship factors include: the number of employees, the size of the employer’s budget, and the nature of the business or operation.

[22] Whether the illness related to COVID-19 rises to the level of disability is a fact-based determination.

[23] EEOC, What You Should Know About the ADA, the Rehabilitation Act, and COVID-19, https://www.eeoc.gov/eeoc/newsroom/wysk/wysk_ada_rehabilitaion_act_coronavirus.cfm. (Accessed April 7, 2020).

[24] DFEH, Employment Information on COVID-19, https://www.dfeh.ca.gov/wp-content/uploads/sites/32/2020/03/DFEH-Employment-Information-on-COVID-19-FAQ_ENG.pdf. (Accessed April 7, 2020).

[25] DLSE Opinion Letter (May 4, 1993); DLSE Opinion Letter (May 30, 1996); Lab Code § 201.

[26] International Brotherhood of Boilermakers, etc. v. NASSCO Holdings, Inc., 17 Cal. App. 5th 1105 (2017). The court found that a four- or five-week furlough is not de minimis and constitutes a “separation from a position” within the meaning of Cal-WARN, triggering its notice requirements.

[27] Employment Development Department, Work Sharing Program, https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm.