Brief Description: Requiring notice of mass layoffs.

Sponsors: Representatives Hudgins, Campbell, Kenney, Conway, Wood, Upthegrove, Flannigan, McCoy, Cooper, Berkey, Simpson, Hunt, Romero, Veloria, Dunshee, Cody and Edwards.

Hearing Date: 2/27/03

Staff: Jill Reinmuth (786-7134).

Background:

Under state law employers are not required to give employees advance notice of certain events that result in employment loss. Under the federal Worker Adjustment and Retraining Notification Act (the WARN Act), however, such notice is required. The major provisions of the federal law are as follows:

Notice Requirement

In general, 60 days' notice of a plant closing or mass layoff is required. A plant closing is a shutdown that results in an employment loss during any 30-day period of 50 or more employees. A mass layoff is a reduction in force that results in an employment loss during any 30-day period of either: 33 percent of the employees, and at least 50 or more employees; or at least 500 employees. Employment loss means termination, a layoff of more than six months, or a reduction in hours of more than 50 percent during each month of a 6-month period.

The notice requirement applies to employers (business enterprises) that employ 100 or more employees. The number of employees excludes part-time employees (employees employed for less than 20 hours per week, or less than six of the last 12 months).

The notice requirement mandates that employers give notice to a representative of the affected employees or, if there is no representative, the affected employees. Employers must also give notice to the state or the state entity responsible for "rapid response activities", and the chief elected official of the local government in which the triggering event is to occur.

Exceptions - Less Notice Permitted

Less than 60 days' notice is permitted if exceptions for faltering companies, unforeseeable business circumstances, or natural disasters apply.

The faltering company exception applies if the employer was actively seeking capital or business which, if obtained, would have enabled the employer to avoid or postpone the plant closing and the employer reasonably and in good faith believed that giving the notice required would have precluded the employer from obtaining the capital or business. (This exception does not apply in the event of a mass layoff.)

The unforeseeable business circumstances exception applies if the plant closing or mass layoff is due to business circumstances that were not reasonably foreseeable at the time 60 days' notice would have been required.

The natural disaster exception applies if the plant closing or mass layoff is due to a natural disaster.

Exceptions - Notice Not Required

Notice is not required if exceptions for temporary facilities, temporary employment, or strikes, or lockouts apply.

The temporary facility exception applies if the closing is of a temporary facility, and the employees were hired with the understanding that their employment was limited to the duration of the facility.

The temporary employment exception applies if the closing or layoff is related to the completion of a project, and the employees were hired with the understanding that their employment was limited to the duration of the project.

The strike or lockout exception applies if the closing or layoff is a strike or lockout.

Enforcement and Administration

Enforcement is through the courts. Employees, their representatives, and units of local government may bring civil actions against employers believed to be in violation of the notice requirement. Rules are prescribed by the federal Secretary of Labor.

Damages and Civil Penalties

An employer may be required to pay an employee "back pay" and benefits for each day of a violation, up to a maximum of 60 days. The amount of damages is reduced for any wages paid to the employee for the period of the violation, any other payments made to the employee, and any payments made to third parties on behalf of and attributable to the employee for the period of the violation.

An employer that fails to give notice to the local government is subject to a civil penalty of $500 for each day of the violation. The employer is not subject to civil penalties if it pays damages owed to affected employees within three weeks of the plant closing or mass layoff.

Summary of Bill:

State law is established to require employers to give employees advance notice of certain events that result in employment loss.

Notice Requirement

In general, 60 days' notice of a mass layoff, relocation, or termination is required. A mass layoff is a layoff during any 30-day period of 50 or more employees. A relocation is the removal of operations to a location 100 or more miles away. Termination is the cessation of operations.

The notice requirement applies to employers (owners and operators of industrial or commercial facilities) that employ, or have employed within the last 12 months, 75 or more persons. The number of employees excludes employees employed for less than six of the last 12 months.

In addition to affected employees, employers must also give notice to the state Employment Security Department, the local workforce investment board, the chief elected official of the local government in which the triggering event is to occur, and the Legislature.

Exceptions - Notice Is Not Required

Notice is not required if exceptions for faltering companies, physical calamities, or war apply.

The faltering company exception applies if the Department of Labor and Industries that the employer was actively seeking capital or business which, if obtained, would have enabled the employer to avoid or postpone the mass layoff, relocation, or termination, and the employer reasonably and in good faith believed that giving the notice required would have precluded the employer from obtaining the capital or business.

The physical calamity or war exception applies if the mass layoff, relocation, or termination is necessitated by a physical calamity or an act of war.

Enforcement and Administration

Enforcement is through the courts. Employees, their representatives, and local governments may bring civil actions against employers believed to be in violation of the notice requirement. A prevailing plaintiff may be awarded attorneys' fees.

The Department of Labor and Industries (Department) administers the law and investigates alleged violations. In investigations and other proceedings, the Department may examine an employer's books and records. The Department must adopt rules necessary to carry out the law, including the elements of the notice. The rules specifying the content of the notice under state law must be consistent with such rules under the federal WARN Act.

Damages and Civil Penalties

Damages are similar to federal law. An employee may be awarded "back pay" and benefits for each day of violation, up to a maximum of 60 days. The amount of damages is reduced for any wages paid to the employee for the period of the violation, any other payments made to the employee, and any payments to third parties on behalf of and attributable to the employee for the period of the violation. Damages are not "wages" for purposes or unemployment compensation.

An employer that fails to give notice to the Employment Security Department, the local workforce development council, and the local government official is subject to a civil penalty of $10 per employee for each day of the violation. The employer is not subject to civil penalties if it pays damages owed to affected employees within three weeks of the mass layoff, relocation, or termination. Civil penalties are paid into the Unemployment Trust Fund.

Rules Authority: The bill requires the Department of Labor and Industries to adopt rules necessary to carry out the bill's provisions, including rules specifying the content of the notice.

Appropriation: None.

Fiscal Note: Requested on February 19, 2003.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.