BILL ANALYSIS
AB 842
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
William W. Monning, Chair
AB 842 (Swanson) - As Introduced: February 26, 2009
SUBJECT : Employment: mass layoffs, relocations, and
terminations.
SUMMARY : Amends existing law that requires employers to
provide advance notice of a mass layoff, relocation or
termination. Specifically, this bill :
1 Increases the notice requirement for a triggering event from
60 to 90 days.
2)Requires notice to also be provided to the Labor and Workforce
Development Agency (LWDA), the Department of Industrial
Relations (DIR), and the employees' representative and/or
union.
3)Requires the LWDA to:
a) Maintain a guide of benefits and services which may be
available to dislocated workers.
b) Maintain a guide of economic development benefits and
services which may be available to employers in order to
avert mass layoffs or other triggering events.
4)Requires the LWDA to transmit these guides to a covered
employer upon the filing of an advance notice of mass layoff
or other triggering event.
5)Requires covered employers who have filed a notice to provide
its employees with such information concurrent with or
immediately after providing the notice.
6)Requires that, in order for an employer to be exempt from the
notice requirement under an existing "actively seeking
capital" exemption, the employer must have been actively
seeking capital or business in consultation with specified
public entities.
7)Specifies that any information provided to such entities
AB 842
Page 2
during such consultation shall be kept confidential.
8)Specifies that no more than ten percent of the civil penalties
provided under current law shall be used to fund the
activities of LWDA required by this bill.
9)Requires employers that give notice to provide sufficient
meeting space for the provision of rapid response activity, as
defined, and to allow providers of such services and affected
employees to meet for not less than one hour for such services
to be provided.
10)Provides that employees shall be compensated at their regular
rate of pay for the meeting described above.
EXISTING STATE LAW :
1)Provides that an employer must give 60 days written notice of
a mass layoff, relocation or termination to employees, the
Employment Development Department, the local workforce
investment board, and the chief elected official of each
affected city and county government.
2)Specifies that this requirement applies to any industrial or
commercial facility that employs 75 or more people. A mass
layoff includes any layoff of 50 or more persons during a
30-day period.
3)Defines "employee" to mean a person employed by the employer
for at least 6 of the last 12 months prior to the notice date.
4)Provides that such notice is not required if the layoff,
relocation or termination is necessitated by physical calamity
or act of war.
5)Exempts employers in the broadcasting, motion picture and
construction industries, as specified, from complying with the
notification requirements in this bill if the closing or
layoff is the result of the completion of a particular
project.
6)Exempts employers employing workers where the employees were
hired with the understanding that their employment was
AB 842
Page 3
seasonal and temporary.
7)Exempts employers who qualify under an exception for employers
actively seeking capital or business, as specified.
8)Provides that an employer already required to give such notice
under federal law must include in its state notice the
elements as required under federal law.
9)Provides that an employer failing to give required notice is
liable to each employee who lost employment for back pay and
the value of benefits for the period of the employer's
violation, up to 60 days.
10)Provides that such liability shall be reduced by:
a) Payment of any wages, except for vacation monies accrued
prior to the employer's violation;
b) Any amount paid by the employer, not required to have
been, paid to satisfy any other legal obligation; or,
c) Any payments made by employer to a third-party trustee.
11)Provides that employers who fail to give notice are subject
to a civil penalty of up to $500 for each day of violation,
but only if they fail to make the required restitution to
their employees.
12)States that those who may bring a civil action to establish
that an employer is liable under this statute include a local
government or an employee representative. The court would
have the discretion to reduce the amount of the employer's
liability if the employer establishes that it acted in good
faith and had reasonable grounds to believe that it was not
violating the law.
EXISTING FEDERAL LAW requires 60 days notice of a mass layoff at
certain workplaces, pursuant to the Worker Adjustment and
Retraining Notification (WARN) Act.
FISCAL EFFECT : Unknown
COMMENTS : This bill makes a number of changes to the state law
version of the federal WARN Act. The state law was enacted in
AB 842
Page 4
2003.
First, this bill makes various changes to the notice itself.
The bill extends the notice period from 60 to 90 days. The bill
also requires notice to also be provided to LWDA, DIR, and the
employees' representative and/or union.
Second, the bill requires LWDA to prepare a guide of services
available to both employers and employees and requires these
guides to be provided upon notice. The bill specifies that a
portion of current civil penalty revenue will be used for these
administrative tasks.
Finally, the bill requires employers that give notice to provide
sufficient meeting space for the provision of rapid response
activity, as defined, and to allow providers of such services
and affected employees to meet for not less than one hour for
such services to be provided. The bill also provides that
employees shall be compensated at their regular rate of pay for
the meeting described above.
According to the author, this bill is intended to ensure that
workers have timely and meaningful notice of major job loss in
order to plan accordingly and find other work. This legislation
is especially critical when the economy is suffering and more
employees are losing their jobs. This bill seeks to make a
number of improvements to the state WARN Act.
The author states that at the very least, we should ensure that
workers who are losing their jobs through no fault of their own
are provided as much advance warning and job services as
possible.
OTHER STATES:
The State of New York recently enacted its own state-law version
of the federal WARN Act. The legislation went into effect on
February 1, 2009. In some respects, the New York law is more
expansive than the California WARN Act.
For example, the New York law applies to employers that have 50
or more employees. In addition, the New York law requires
employers to provide affected employees with a minimum or 90
days advanced written notice.
AB 842
Page 5
ARGUMENTS IN SUPPORT :
Supporters state that it is clear that long-term job losses and
displacement have become more severe than when the WARN Act was
established in 2002. Dislocations occur with more frequency and
in smaller increments and job insecurity reaches beyond the
blue-collar worker and deep into the ranks of the better
educated. Each month in California last year, more than 1
million job separations occurred while an almost equal number of
new hires occurred. Unfortunately, after a worker finds a new
job, more often they are employed or reemployed below their
skill levels, and full-time reemployment often means a
significant loss in earnings (17 percent on average) and the
loss of health benefits.
Supporters argue that he best possible outcome of a potential
lay off is stopping it from ever happening. However, early
notice of imminent layoff and effective investment of public
resources can save jobs. In the case of a layoff, early warning
that alerts public agencies, workers, and unions can help
workers get the right assistance, get retrained, and get back
into good jobs. They contend that this bill will help workers
get the devastating news that they will lose their jobs earlier
by giving workers ninety days instead of just sixty days notice.
This will give them that much more time to reorient themselves
with the labor market and begin to plan how to provide for their
families.
Supporters also note that this bill includes language to help
employees find and apply for services after a layoff has
occurred. Workers need to know how to apply for COBRA benefits,
where to go to be retrained, how to apply for unemployment
benefits, and where to get counseling help to name a few. This
bill will require the Labor and Workforce Development Agency to
keep a guide to these and other services on their website at all
times so that employees have a place to turn for advice. It is
also important to educate employers before a layoff about
resources available to them. By providing employers, after a
WARN notice is filed, with a guide of possible sources of
AB 842
Page 6
capital to stay in business, employers might be able to keep
some workers employed, off the unemployed rolls, and out of the
Unemployment Insurance system. This makes the WARN Act not just
a last resort for employees, but also a tool that employers
could use to help find a way to keep their workforce from
shrinking.
Finally, supporters argue that this bill will attempt to get the
information workers need to move forward in the easiest way
possible. Under the bill, employers will be required to allow
their laid off employees to meet at the jobsite with the state's
rapid response teams for at least one hour of a workday. These
rapid response teams are dispatched to give vital information to
laid off workers about where to turn for assistance after being
laid off.
ARGUMENTS IN OPPOSITION :
The California Grocers Association (CGA) argues that during
these difficult economic times, employers are working hard to
retain employees and protect the jobs they provide. They
contend that the provisions of this bill, ironically, will make
that effort more difficult. Companies that know they face a
full three month delay between the difficult decision to close a
tore location and the actual closure could be forced to begin
the process prematurely to ensure compliance with the law and to
protect against liability. In addition, CGA argues that the
requirement that an employer make space available for rapid
response activities and that employees be compensated for time
spent in such activities could create a financial burden on the
company that makes it impossible to remain open
The California Chamber of Commerce argues that California
employers are already unreasonably subjected to more stringent
requirements than the federal WARN Act requires. They contend
that this bill further disadvantages California employers by
ignoring key federal provisions, further expanding employer
administrative requirements and increasing exposure to
liability. This bill makes doing business in California more
onerous at a time when California should be seeking solutions to
the current economic challenges rather than creating new costs
and liabilities for employers.
PRIOR LEGISLATION :
This bill is similar to the last version of AB 1989 (Swanson)
AB 842
Page 7
from last session. As introduced, AB 1989 made a number of
other changes to the state law, including changing the
definition of events triggering the notice requirement, adding
"offshoring" as a triggering event, and increasing the civil
penalty under current law. However, the bill was subsequently
amended to eliminate these provisions and as amended in the
Senate was virtually identical to this bill. AB 1989 was held
in the Senate Committee on Appropriations.
REGISTERED SUPPORT / OPPOSITION :
Support
California Correctional Supervisors Organization
California Labor Federation, AFL-CIO
California School Employees Association
California State Employees Association
Peace Officers Research Association of California
Opposition
California Chamber of Commerce
California Grocers Association
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091