New Regulations Implementing The New York WARN Act

Wednesday, August 5, 2009 - 01:00

The New York Worker Adjustment and Retraining Notification Act ("NY WARN") took effect on February 1, 2009. (N.Y. Labor Law § 860, et seq .) NY WARN provides additional significant protections to New York employees beyond those provided under the federal Worker Adjustment and Retraining Notification Act ("Federal WARN"). Most notably, NY WARN: 1) requires employers to provide 90 days advance notice (rather than the 60 days required under Federal WARN) prior to implementing certain mass layoffs, plant closings, relocations (which are not covered under Federal WARN), or covered reductions in work hours; 2) applies to employers too small to be covered under Federal WARN - those with 50 or more employees (rather than 100 or more under Federal WARN); and 3) is triggered by smaller layoffs or plant closings than those triggering Federal WARN, generally affecting 25 or more employees (rather than 50 or more under Federal WARN).1

On January 30, 2009, the New York State Department of Labor issued an Emergency/Proposed Rule implementing NY WARN (the "NY Regulations") (cited in this article as § 921).2The NY Regulations clarify an employer's obligations under NY WARN. Accordingly, New York employers should familiarize themselves with the NY Regulations in order to ensure compliance with the NY WARN statute.

Required Form Of The NY WARN Notice

NY WARN requires employers to provide advance written notice of certain mass layoffs, plant closings, relocations, or covered reductions in work hours. In order to comply with NY WARN, employers must provide written notices to the New York Commissioner of Labor and the local workforce investment board in addition to the state dislocated worker unit and the chief elected official of the relevant unit of local government required under Federal WARN. In addition, New York employers must provide written notice to affected employees and their representatives - in contrast to an employer's obligations under Federal WARN to provide individual WARN notices to affected employees only when such employees have no union representative. The NY WARN statute is silent as to the required form of written notice except for a brief statement that the notices "shall includethe elements required by" Federal WARN. (N.Y. Labor Law § 860-b(2)) However, the NY Regulations set forth specific requirements for the content of a NY WARN notice, which exceed those required under Federal WARN. (§ 921-2.3)

Both NY WARN and Federal WARN require that the form of notice to employees contain the expected date each triggering event will commence ( e.g. , a mass layoff); the expected date of each individual employee's termination of employment; a statement as to whether bumping rights exist; and contact information for a company representative. However, the NY Regulations further require that the notice to employees (and their representatives) contain information concerning unemployment insurance, job training, and re-employment services for which the employees may be eligible. (§ 921-2.3(a) & (b)) This requirement may be satisfied by including an informational statement in the notice, which is contained in the NY Regulations.

The NY Regulations also contain additional requirements for the written notices that New York employers must provide to public officials. For example, unlike Federal WARN, employers must provide the New York Commissioner of Labor with, among other information, the names of all employees affected by the layoffs. (§ 921-2.3)

Also, Federal WARN permits an abbreviated form of written notice to public officials, as long as the employer maintains at the employment site a schedule of expected layoffs and relevant job titles to be made available upon request. (20 C.F.R. § 639.7(f)) The NY Regulations do not provide for any such abbreviated form of notice, and thus, detailed information concerning the job losses must actually be provided to the New York Commissioner of Labor (names and job titles of affected employees) and the local Workforce Investment Board (job titles of the affected employees and the number of affected employees in each job title). (§ 921-2.1(a) & (d))

The NY Regulations Clarify Ambiguities Contained In NY WARN

The NY WARN statute requires employers to provide 90 days notice before undertaking any "mass layoff, relocation or employment loss." (N.Y. Labor Law § 860(b)(1)) The statute's definition of "employment loss," read literally, would require New York employers to provide 90 days notice prior to involuntarily terminating the employment of even a single employee . However, the NY Regulations clarify that notice is generally triggered in the event of a "mass layoff, plant closing, relocation, or a covered reduction in work hours" - not in the event of an individual employee's employment loss. (§ 921-2.1(a))

The NY Regulations provide further clarification concerning the applicability of various exceptions to NY WARN's notice requirement. Specifically, the NY WARN statute provides that - "[i]n the case of a plant closing"- an employer need not comply with the 90 days notice requirement, such as when the need for notice is not "reasonably foreseeable" at the time notice would have been required, or when the employer is actively seeking capital to prevent job losses and the employer believes that the giving of notice would have precluded the employer from obtaining the capital. However, the NY Regulations clarify that the NY WARN statute's exceptions to the 90-day notice requirement are not merely applicable in the case of a plant closing, but also in the event of a mass layoff, relocation, or covered reduction in work hours. (§ 921-6.1 - 6.4)

Delivery Of WARN Notices

The NY WARN statute contains only a brief statement concerning acceptable methods of delivery of WARN notices to affected employees - specifying that mailing the notice to an employee's last known address by first-class or certified mail or including the notice in an employee's paycheck are acceptable methods. (N.Y. Labor Law § 860-b(4)) The NY Regulations clarify that notice must be provided "using a reasonable and timely method of delivery designed to ensure its receipt." Although email is commonly used by most employers to communicate important information to employees, the NY Regulations expressly prohibit email as a form of delivery of a NY WARN notice. (§ 921-2.2)

Extending Notice Of A Closing Or Layoff Beyond The 90-Day NY WARN Period

The NY WARN statute does not specify the actions an employer must take if it postpones a mass layoff or plant closing beyond the 90-day period set forth in the written notice. However, the NY Regulations set forth the following procedure (similar to the procedure set forth under Federal WARN) for extended notice: If, after notice has been given, an employer decides to delay the plant closing, mass layoff, etc. for less than 90 days , the employer must provide an additional notice "as soon as possible after the decision to postpone" is made, and such notice need only: 1) reference the prior NY WARN notice; 2) provide the date to which the planned action is being postponed, and 3) state the reasons for the postponement. If the postponement is for 90 days or more , "a new notice which otherwise complies with all the requirements" of NY WARN must be provided. The NY Regulations further prohibit "rolling notice, in the sense of routine periodic notice" given regardless of whether layoffs are impending and with the "intent to evade the purpose" of NY WARN. (§ 921-3.2)

Enforcement

The NY Regulations provide additional details concerning NY WARN's enforcement mechanism. The NY WARN statute provides for an administrative procedure whereby the New York Commissioner of Labor determines whether a violation of NY WARN has been committed. The NY Regulations establish an administrative process pursuant to which such claimed violations will be adjudicated. Specifically, an employer who receives a notice of violation may appeal (within 20 days) by requesting an administrative hearing. Such hearings will be conducted by a designated officer of the Commissioner who is not bound by "statutory rules of evidence or by technical or formal rules of procedure." If, based on the recommendation of the hearing officer, the Commissioner determines that an employer has violated NY WARN, the Commissioner will issue an order that will include any assessed penalties. (§ 921-7.4) Thereafter, an employer may file an appeal under Article 78 of the New York Civil Practice Law and Rules (within 30 days) of the Commissioner's order in the Appellate Division of the New York Supreme Court. (§ 921-7.5)

In addition, the NY WARN statute provides that an employer who fails to give proper notice is subject to a civil penalty of no more than $500 "for each day of the employer's violation." (N.Y. Labor Law § 860-h(1)) The NY Regulations clarify that this penalty is "imposed in the aggregate and not individually for each affected employee or other party that failed to receive notice." (§ 921-7.2)

Clarifying Definitions

Although the NY WARN statute contains only a limited section of defined terms, the NY Regulations contain an expansive section of more than a dozen definitions - some of which clarify key terms set forth in the statute. For instance:

• " Affected employees " The definition of "affected employees" ( i.e. , employees entitled to receive WARN notice) has been clarified to mean an employee who may reasonably be expected to experience an employment loss - not only as a consequence of a plant closing or mass layoff (as provided in the NY WARN statute) - but also as a consequence of a relocation or covered reduction in hours by the employer. Consistent with Federal WARN, the definition also clarifies that "affected employees" include 1) individually identifiable employees who will likely lose their jobs because of bumping rights or other factors; and 2) a managerial and supervisory employee, but not a business partner, or a consultant, or a contract employee who has a separate employment relationship. (§ 921-1.1(a));

• " Employer " The definition of "employer" ( i.e. , employers with 50 or more employees who are generally covered by NY WARN) has been supplemented - consistent with Federal WARN (which applies to employers with 100 or more employees) - to provide, among other things, that independent contractors and subsidiaries owned by a parent may be treated as separate employers depending upon the degree of their independence from the parent. Also, the definition clarifies that - while the federal, state and units of local government are not covered "employers" under NY WARN - private for-profit and not-for-profit businesses contracting with the government are "employers." (§ 921-1.1(d));

• "M ass layoff " The NY WARN statute generally defines a "mass layoff" as occurring when 25 or more full-time employees, representing 33 percent of the workforce, or at least 250 full-time employees, are laid off during a 30-day period. The NY Regulations clarify that an employee's layoff "shall commence on the date on which he or she is no longer employed by the employer," and that the "period of employment shall not be extended by the employer's payment of severance pay," vacation or similar benefits to the employee. (§ 921-1.1(g));

• " Plant closing " The NY WARN statute generally defines a "plant closing" as the "permanent or temporary shutdown" of a single site of employment with 25 or more employees. Consistent with Federal WARN (which applies to shutdowns affecting 50 or more employees), the Regulations supplement the definition to provide that 1) an employment action resulting in the effective cessation of production or the work performed by a unit, even if a few employees remain, is a "shutdown"; and 2) a temporary shutdown triggers the notice requirement if the minimum number of "terminations, layoffs exceeding six months, or reductions in work hours" would constitute an "employment loss." (§ 921-1.1(j))

Conclusion

New York employers who have prepared Federal WARN notices in the past should take note of the more stringent requirements set forth in the NY WARN statute and NY Regulations. These significant additional requirements demand the attention of New York employers, particularly in the current economic climate. 1 For a more fulsome discussion of the substantive provisions of NY WARN, see "Employers Be Forewarned: New York Enacts Stricter WARN Act," by Kenneth P. Gavsie and Elisheva M. Hirshman (Weil Gotshal's Employer Update - Winter 2008-2009).

2 As of the publication date of this article, the NY Regulations were available on the N.Y. Department of Labor's website at the following address: http://www.labor.state.ny.us/workforcenypartners/warn/pdfs/text.pdf

Lawrence J. Baer is Counsel and Kenneth Gavsie is an Associate in Weil, Gotshal & Manges' Litigation Department and members of the Employment Litigation Practice Group, representing employers in all aspects of labor and employment law.

Please email the authors at lawrence.baer@weil.com or kenneth.gavsie@weil.com with questions about this article.