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  • Writer's pictureDavis Yu

California Layoffs on the Rise: What are your protections?

August 5, 2020


COVID-19 (also known as the coronavirus pandemic) has had massive impacts on the job market, leaving many furloughed or laid off. Unemployment rates vary across the nation; however, California continues to experience a high number of unemployment claims week over week with the recent unemployment rate at 14.9% in June. With Governor Gavin Newsom’s recent re-closing of businesses and the continued spread of the virus, many fear that furloughs will become permanent, thus increasing the unemployment rate. After a layoff or furlough occurs, it is important for employers to be aware of their obligations and employees to understand their rights and protections.


What is the difference between a layoff and furlough?


The terms “layoff” and “furlough” have common usage meanings. As employers transition and modify their workforce due to COVID-19’s economic impact, it is important for employees to be fully aware of the terms of their status with the organization.


A layoff is an involuntary permanent separation from your employer and a termination of the current position. This permanent separation occurs through no fault of the employee and may be due to a company restructuring or closing down, or in this case, experiences in loss of revenue due to the COVID-19 pandemic.

A furlough refers to an employee’s unpaid temporary leave of absence from a position or reduced working hours. The duration of the furlough is at the discretion of the employer and when the furlough ends, the employee is expected to return to work or restore their previous working hours.

What are your rights and protections after a layoff?

Final Check

Under California Labor Code section 201, an employee who is laid off is entitled to receive their final paycheck at the time of termination. The final paycheck should include any accrued, unused vacation or paid time off. California Labor Code section 227.3. Sick leave may or may not be included.

If an employer does not make this timely payment, waiting time penalties will ensue in accordance with California Labor Code section 203. An employee who has yet to receive their final check will be entitled to their daily wage for each day the employer is late, up to a maximum of 30 days.

Severance Pay

Generally in most cases, employers are not required to provide their employees with severance packages following a layoff. Some companies or organizations may possess severance policies in which case you may receive a severance package. Employers typically include a severance agreement that requires an employee's review of the terms and signature. Prior to signing, it is recommended to fully review and understand the terms of the agreement and consult with an attorney, if needed.

Benefits

Once an employee is laid off, employee benefits including health insurance are terminated unless an employer applies an extension. However, employees can opt to stay on their employer’s health insurance plan through the Consolidated Omnibus Budget Reconciliation Act (COBRA) or select their own plan through Covered California.


What are your rights and protections after a furlough?

Furloughs often occur when employers are looking to cut back on workplace-related costs and refer to an unpaid leave from employment. Furloughed employees do not usually receive a final paycheck or paid-out vacation time since they are still employed. In some instances such as when a furlough has no definite return date and employees continue to remain unpaid, they may be entitled to final wages including accrued and unused vacation and paid time off.

Benefits

During a furlough, employees do not usually receive pay but they may often keep their employment benefits including health insurance. Some health plans may require that you continue to cover your share of contribution although employers may allow for flexibility in deferring contributions.

What are WARN/Cal-WARN Notice Requirements?


Under the federal Worker Adjustment and Retraining Notification Act (WARN), employers are required to provide advanced notice and planning mechanisms to their employees in the event of a mass layoff or plant closure. Employers, with 100 or more full-time employees, must provide at least 60 days' advanced written notice to affected employees of a “mass layoff” or “plant closing.” 20 CFR. § 639.2.

California has specific WARN laws (Cal- WARN) and requirements for providing notice. According to a California appellate court, the court determined that short-term furloughs and layoffs are subject to Cal-WARN.


Cal-WARN applies to any “covered establishment” (any industrial or commercial facility or part thereof) that employs or employed 75 or more persons (including full and part-time employees) within the preceding 12 months. At least 60 days' advanced notice is required when a mass layoff occurs during any 30-day period of 50 or more employees. Notice must be given to employees who have been employed by the employer for at least 6 of the 12 months preceding the date on which notice is required. Notice must also be given for relocation or termination of industrial or commercial operations in a covered establishment.

However, there are instances, including COVID-19- related business circumstances, in which advanced notice of massive layoffs is not reasonably foreseeable prior to or at the time notice would have been required. Governor Newsom responded on March 17 when he issued Executive Order N-31-20. Instead of the 60-day notice requirement, the Order requires employers to provide notice as soon as practicable. Additionally, the employer must provide a brief statement of the basis for reducing the notification period and the following statement in regards to unemployment benefits: “If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019.” Employers who are faced with the decision to lay off employees or close down must consider all of their obligations including final pay and notice requirements under WARN and Cal-WARN to avoid any liability and heavy penalties.

For employees who have or recently experienced a layoff, furlough, or reduced hours, you may be eligible to receive unemployment benefits and are encouraged to file an unemployment claim as soon as possible.


The content within this article is intended for informational purposes only. The article should not be construed as legal advice or a legal opinion based on any specific facts or circumstances. For specific questions related to this article, please consult with a licensed attorney.





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