California Adds Resources for Employers and Workers Affected by Coronavirus

By Toni Vranjes March 23, 2020
map of California

As the coronavirus pandemic continues to spread illness and anxiety, California employers are scrambling to adjust to the new circumstances. Among other things, they should be aware of state resources available to businesses and workers who are economically affected, as well as notice requirements governing layoffs and shutdowns.

The California Employment Development Department (EDD) offers benefits for eligible workers whose hours have been cut or who have been laid off. As the crisis grows, companies should inform their employees about the details of these benefits.

EDD resources also are available for struggling businesses. This includes an Unemployment Insurance Work Sharing Program that can serve as an alternative to layoffs. In addition, the state is providing tax relief for companies affected by the outbreak.

Employers should be aware of updated guidance regarding the California Worker Adjustment and Retraining Notification (Cal-WARN) Act. Under the state law, certain businesses must give 60 days' advance notice before mass layoffs or plant closings—except in certain limited circumstances. In response to the coronavirus pandemic, California Gov. Gavin Newsom issued an executive order on March 17 suspending the 60-day notice requirement during the crisis.

Unemployment and Reduced Hours

Companies should make sure their employees are aware of all unemployment-insurance benefits, said Esra Hudson, an attorney with Manatt in Los Angeles.

Employees who have been laid off or whose work hours have been cut because of the crisis can file a claim for unemployment insurance. This program offers partial wage replacement for people who are in these circumstances through no fault of their own, according to the EDD.

Furloughed workers also can apply for benefits, noted Meryl Mills, an attorney with Lewis Brisbois in Denver and Los Angeles. In a furlough, an employer temporarily reduces hours or shuts down operations with an expectation or hope that employees will return to work within a few weeks.

According to the EDD website, "If you are temporarily out of work and plan to return to the same employer, you do not need to meet the usual requirement of looking for work while you are collecting unemployment benefits."

Nevertheless, these workers still need to meet other eligibility criteria, such as being "available and ready to work," the agency said.

In a key development, Newsom waived the usual one-week waiting period for employees who lose work or are disabled as a result of the coronavirus outbreak. The announcement was part of an executive order issued on March 12.

Now, eligible workers can receive benefits for their first week of lost work. Still, it might take a few weeks for the EDD to process and issue payments, especially given the high volume of claims right now, according to Mills.

Another option for employers is the Unemployment Insurance Work Sharing Program. Businesses can reduce employees' hours and wages instead of laying them off, and those workers can receive benefits from the EDD. The goal is to help companies retain employees and to help workers stay employed during an economic downturn.

Employers affected by the pandemic can get additional help through the governor's March 12 executive order by requesting a 60-day extension for state tax filing without incurring penalties or interest.

Layoff Notice Rules Relaxed

Under the Cal-WARN Act, companies with 75 or more employees must follow specific notice requirements before closing plants or conducting mass layoffs. The act applies to all plant closures and to layoffs of 50 or more workers during a 30-day period.

Employers are required to give 60 days' advance notice of such actions—with exceptions for "physical calamity" or an "act of war."

[SHRM members-only HR Q&A: What are the requirements under Cal-WARN?]

The governor's March 17 executive order suspended that 60-day notice requirement until the end of the emergency. The suspension is retroactive to March 4.

The following conditions must be met:

  • The layoffs or shutdowns must be caused by coronavirus-related "business circumstances that were not reasonably foreseeable as of the time that notice would have been required."
  • Companies need to provide as much notice "as is practicable."
  • Written notices provided after the executive order was issued must include information about EDD unemployment-insurance benefits.

Newsom said the suspension was urgently needed as a result of the virus. "Because of the need to prevent or mitigate the spread of COVID-19, employers have had to close rapidly without providing their employees the advance notice required under California law," his executive order states.

The order is necessary given the new reality, said Ross Boughton, an attorney with FordHarrison in San Francisco. He described it as a "reasonable and prudent" response to the unprecedented nature of the pandemic and to shelter-in-place orders that limit which businesses can operate during the crisis.

Boughton noted that the California Legislature didn't envision a pandemic of this magnitude when drafting the Cal-WARN Act. For that reason, exceptions to the usual procedures are needed to allow businesses to properly respond to the situation.

Certain industries have been hit hard. The hospitality industry—which includes hotels and theme parks—is especially susceptible to mass layoffs as a result of the emergency, observed Warren Nelson, an attorney with Fisher Phillips in Irvine.

Given the fast-moving developments during the coronavirus pandemic, employers that are considering layoffs or closures should consult an attorney for guidance.

Toni Vranjes is a freelance business writer in San Pedro, Calif.



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