Legal Updates

New Law Increases Litigation Risk For New York Employers Undertaking Plant Closings, Mass Layoffs, And Relocations

In this turbulent economy, employers are becoming increasingly susceptible to lawsuits arising from reductions in force.  A new law compounds this problem for New York employers by imposing stringent – and somewhat confusing – notice requirements in the event of a plant closing, mass layoff, or relocation.

While the New York State Worker Adjustment and Retraining Notification Act (“NY WARN Act”) is based on the federal Worker Adjustment and Retraining Notification Act (“Federal WARN Act”), its obligations are more restrictive and its text is less precise, making the NY WARN Act a litigation trap for unwary employers in the Empire State.

The 90-Day Notice Requirement

The NY WARN Act requires that employers provide 90 days’ advance written notice of a qualifying event, which includes a plant closing, mass layoff, or relocation.  An “employer,” for purposes of this law, is any business enterprise that employs either (a) 50 or more employees in New York State, excluding part-time employees, or (b) 50 or more employees in New York State who in the aggregate work at least 2,000 hours per week, inclusive of overtime.

Employers must provide this notice to (1) all affected employees, (2) their union representatives, (3) the New York Department of Labor, and (4) the local workforce investment board where the work site is located.  All such notices must be provided on the employer’s “official letterhead” and signed by “an individual with authority to represent the employer.”

Key features of the notice requirement include:

• affected employees and their union representatives must be given information about unemployment insurance, job training and re-employment services;
• the New York Department of Labor must be given the names of all affected employees and their job titles;
• none of the notices may be given by email; and
• the notice given to employees “must be provided in a language understandable to the employee.”

Plant Closings, Mass Layoffs – And Mass Confusion

The NY WARN Act defines a “plant closing” as the permanent or temporary shutdown of a single site of employment, or the shutdown of one or more facilities or operating units within a single site, if the shutdown results in an employment loss at the single site during any 30-day period for at least 25 employees, excluding part-time employees.

A “mass lay-off” is defined as a reduction in force resulting in an employment loss at a single site of employment during any 30-day period for (1) at least 33% of the employees (but at least 25 employees) at the site, other than part-time employees, or (2) at least 250 employees, other than part-time employees, regardless of whether they comprise 33% of the employees at the site.

Oddly, the New York statute inexplicably fails to identify a plant closing as an event that triggers the 90-day notice requirement, stating only that an employer “may not order a mass layoff, relocation, or employment loss” unless notice is given.  Adding to the confusion, the New York statute defines “employment loss” to include the termination of a single employee.  We suspect that these oddities resulted from a drafting error, and most commentators agree.

Relocations

If an employer relocates all or substantially all of its operations to a location at least 50 miles from the current location, then the 90-day notice requirement applies.  However, if the employer offers to transfer the employees to a different work site within a “reasonable commuting distance,” then the 90-day notice requirement does not apply.

The statute’s definition of “reasonable commuting distance” further adds to the confusion – and to the risk of noncompliance.  Specifically, a “reasonable commuting distance” cannot “exceed that which can be reasonably traveled in one and one-half hours when the site of employment is being moved to a location within the City of New York or on Long Island, or one hour when the site of employment is being moved to any other location in the state.”

Exceptions And Remedies

Like the Federal WARN Act, the New York statute provides certain exceptions to the 90-day notice requirement, including in the instance of (1) a faltering company, (2) unforeseeable business circumstances, (3) a natural disaster, (4) a strike or lockout, and/or (5) the closure of a temporary facility or project.

Violations of the NY WARN Act are enforced by the New York Commissioner of Labor.  Remedies include civil penalties of $500 per day, as well as back wages and lost benefits for the time period in which notice should have been given to affected employees.

Departures From The Federal WARN Act

The NY WARN Act departs from the Federal WARN Act in numerous significant ways.  The key distinctions include:

• The Federal WARN Act requires 60 days’ advance written notice of a qualifying event, but the New York statute extends the notice period to 90 days;
• The Federal WARN Act applies to employers with 100 or more full-time employees or their equivalent, but the New York statute lowers this threshold to 50;
• The Federal WARN Act defines “plant closing” to require an employment loss for at least 50 full-time employees, but the New York statute lowers this threshold to 25; and
• The Federal WARN Act defines “mass layoff” to require an employment loss at a single site for either (a) 33% (but at least 50) of the employees, or (b) at least 500 employees, but the New York statute lowers these thresholds to (a) 33% (but at least 25) of the employees, and (b) at least 250 employees, respectively.

The Firm is available to assist employers both in planning reductions in force that comply with the new law, and in defending lawsuits alleging violations of this new law.  Please do not hesitate to contact us with any questions.