Everything You Need to Know About California Layoff Laws

Receiving notice that you are subject to a layoff can be unexpected and cause undue stress and anxiety. Unfortunately, downsizing and workforce reductions are harsh realities for many employees.

After the initial shock wears off, you’ll likely have many questions—what are my rights? Is this legal? What are they legally obligated to provide regarding transition assistance and severance?

Knowing your rights when dealing with a layoff can help you best ensure that your employer isn’t taking shortcuts at your expense during an already stressful situation. Here’s what you need to know about California layoff laws.

The California WARN Act is The State’s Primary Layoff Law

The California WARN Act is a state law that complements the federal WARN Act. While the federal law applies to employers with 100 or more full-time employees, the California WARN Act has a broader scope, covering “covered establishments” that employ or have employed 75 or more full-time and part-time employees in the preceding 12 months.

Under the California WARN Act, employers are required to provide a 60-day advance written notice before initiating a plant closure, mass layoff, or relocation. In other words, employers must continue receiving their wages for another 2 months from the notice of the WARN Act layoff. The purpose of this notice is to give affected employees and their families time to prepare for the potential loss of employment, seek alternative job opportunities, and, if necessary, obtain skills training or retraining to remain competitive in the job market.

What Qualifies as a Layoff?

According to the law, a mass layoff is defined as a layoff of 50 or more employees within a 30-day period, regardless of the percentage of the workforce affected.

It’s important to note that the California WARN Act has a broader scope than the federal law, covering “covered establishments” that employ or have employed 75 or more full-time and part-time employees in the preceding 12 months.

When Does the 60-Day Time Clock Start?

Employers must give a WARN notice at least 60 calendar days before any planned plant closure or mass layoff. However, if all employees are not terminated on the same date, the 60-day notice requirement starts from the date of the first individual termination within a 30-day or 90-day period.

In other words, a worker’s last day of employment is considered the date of that worker’s layoff, and the 60-day notice period should begin before that date.

Who is Required to Receive a WARN Act Notice?

Under California’s WARN Act requirements, employers must provide advance notice to employees who have worked at least 6 of the previous 12 months when conducting a mass layoff impacting 50 or more employees within a 30-day period at a covered establishment.

While contracted employees, part-time and seasonal employees do not count towards triggering the WARN Act requirements, they are still entitled to receive a WARN Act notice if one is issued.

If your employer is required to provide a WARN Act notice, it must be given to the following parties:

1. Affected employees or their representatives (e.g., labor unions)
2. The California Employment Development Department (EDD)
3. The Local Workforce Development Board
4. The chief elected officials of each city and county government within which the layoff, relocation, or plant closing occurs

By ensuring that these various parties receive the WARN Act notice, the law aims to provide a comprehensive network of support and resources for affected employees during this challenging transition.

Consequences of WARN Act Violations

Failure to comply with the California WARN Act can result in severe consequences for employers, including:

1. Civil penalties of up to $500 per day for each day of violation
2. Payment of back pay and benefits to affected employees for the period of the violation (up to 60 days or one-half the number of days the employee was employed, whichever is smaller)
3. Reimbursement of medical expenses that would have been covered under employee benefit plans
4. Potential liability for reasonable attorney’s fees and costs if the affected employees file a successful lawsuit

It’s important to note that the statute of limitations for filing WARN Act claims in California is three years from the date of the violation.

California Severance Pay Laws

California law does not legally require employers to provide severance pay to terminated employees. Whether severance is offered is up to each company’s specific policies.

It is important to remember that if your employer asks you to sign a severance agreement after informing you of a WARN Act layoff, the employer must provide you additional monetary compensation beyond the 2 months offered for the WARN Act layoff.

Many companies offer severance packages, but the terms can vary greatly – from a lump sum equating to a few weeks’ pay to extended salary continuation for several months. Some severance agreements include benefits continuation while others are simply cash payouts.

If your employer extends you a severance offer, review it carefully. In many cases, accepting severance means signing a release waiving your rights to pursue legal claims against the company related to your termination. Our employment lawyers can advise if the package is truly fair compensation or if you have grounds to negotiate further.

Final Wages and Benefits

California labor laws have specific requirements for employers when paying final wages and addressing benefits after a layoff or termination.

According to Labor Code Sections 201 and 202:

• Employees who are discharged must be paid all wages due at the time of termination, including any earned but unused vacation pay.
• Employees who quit without notice must be paid within 72 hours. Those providing at least 72 hours’ notice must receive their final pay on the last day worked.
• Final wages must be paid at the place of termination or the company office in the county where the employee worked.
• Employers that willfully fail to provide final wages on time can face penalties of continuing wages for up to 30 days under Labor Code section 203.

As for benefits, there is no requirement in California that employers pay out accrued sick leave balances. However, employers must provide information about continuing health insurance coverage through COBRA or other options.

Unemployment Insurance Benefits

One of the first items to handle after losing your job is filing for unemployment insurance benefits through California’s Employment Development Department (EDD). As long as you meet the earnings requirements from your former employer, you’ll be entitled to partial wage replacement on a weekly basis while you search for a new job.

Your employer is legally obligated to provide you with the necessary paperwork and documentation to support your unemployment claim when you’re laid off. However, many employers might try to deny your unemployment claims to keep their insurance rates down.

If your unemployment benefits application is denied or delayed, our employment lawyers can fight for your rightful claim and ensure you receive the financial assistance you qualify for. Having an advocate on your side substantially increases your chances of an approved claim.

What Should You Do If You Believe Your Rights Have Been Violated?

If you believe your employer has violated the California WARN Act or any other employment law, it is crucial to seek legal advice from an experienced employment law attorney.

At TONG LAW, our team of skilled lawyers can review your case, advise you on your legal rights and options, and represent you in any legal proceedings against your employer.

We are dedicated to protecting the rights of employees and ensuring that they receive the fair treatment and compensation they deserve under the law.

Contact us today to schedule a consultation.