New York has joined a number of other states that have enacted plant-closing laws. The New York statute is far more expansive than the federal Worker Adjustment and Retraining Notification Act (Federal Act), and will require many New York employers to provide substantially longer notice to employees who will be affected by workforce restructurings and reductions.
The New York State Worker Adjustment and Retraining Notification Act (N.Y. Act), which will become effective on February 1, 2009, applies to employers with 50 or more full-time employees and mandates that these employers must provide 90 days’ written notice of a mass layoff, plant closing or relocation. By contrast, the Federal Act requires employers of 100 or more full-time employees to give their employees only 60 days’ notice of a mass layoff or plant closing.
A mass layoff under the N.Y. Act is similar to a mass layoff under the Federal Act, except that it is triggered when far fewer employees are affected. Under the N.Y. Act, a “mass layoff” means an employment loss for either (i) 33% of the full-time workforce, which amounts to at least 25 employees (as opposed to at least 50 under the Federal Act) or (ii) at least 250 full-time employees (as opposed to 500 under the Federal Act). A “part-time” employee under both the federal and state statutes means an employee who is employed for an average of fewer than 20 hours per week or who has been employed for fewer than 6 of the 12 months preceding the date on which notice is required.
A plant closing under the N.Y. Act is analogous to a plant closing under the Federal Act, but is also triggered when significantly fewer employees are affected. Under the N.Y. Act, a “plant closing” means the shutdown of a single site of employment, or one or more facilities or operating units with a single site of employment, if the shutdown results in an employment loss at the single site of employment of 25 or more employees (excluding part-time employees) – as opposed to 50 or more under the Federal Act.
Notably, the N.Y. Act additionally requires a covered employer to provide notice of a relocation, which is not required under the Federal Act. The N.Y. Act defines “relocation” as the removal of all or substantially all of the industrial or commercial operations of an employer to a different location 50 miles or more away.
Once the N.Y. Act is triggered, a covered employer is required to provide at least 90 days’ written notice to, among others, (i) affected employees (i.e., employees who may reasonably be expected to experience an employment loss as a consequence of the event); (ii) the affected employees’ collective bargaining representatives, if applicable;
(iii) the New York State Department of Labor; and (iv) certain local workforce investment boards. Any notice required by state law must include the same elements as those required by the Federal Act.
The N.Y. Act provides several exceptions to the notice requirement, including that (i) the employer was actively seeking capital or business at the time the notice was required, which if obtained would have enabled the employer to avoid or postpone the relocation or termination, and believed in good faith that providing notice would have precluded it from obtaining the needed capital or business; (ii) the need for notice was not reasonably foreseeable at the time the notice would have been required; (iii) the plant closing is of a temporary facility or the plant closing or mass layoff is the result of the completion of a particular project, and the affected employees were hired with the understanding that their employment was limited to the duration of the facility or project; (iv) the plant closing or mass layoff is due to any form of natural disaster, such as a flood, or an act of terrorism or war; or (v) the plant closing or mass layoff is the result of a labor strike or lockout not intended to evade the requirements of the statute.
These exceptions parallel those provided under the Federal Act. An employer unable to provide otherwise required notice in a timely fashion as a result of any of the foregoing circumstances shall provide as much notice as is practicable, as well as a brief statement of the basis for reducing the notification period.
The N.Y. Act provides affected employees with the right to sue their employers in court for violations and also gives administrative enforcement authority to the New York State Department of Labor, whereas the Federal Act provides only for a private right of action. Failure to comply with the N.Y. Act will result in similar penalties to those under the Federal Act, even though the applicable notice period under state law is longer. As under the Federal Act, in the event of a violation, employers may be held liable to each affected employee for back pay and the value of the cost of any lost benefits (including the cost of any medical expenses incurred by the employee that would have been covered by an employee benefit plan) for the duration of the violation, up to a maximum of 60 days or one-half of the days the employee was employed by the employer, whichever is smaller.
This liability may be reduced by any wages the employer pays over the notice period or by any voluntary and unconditional payment (e.g., severance pay) not required by a legal obligation. The N.Y. Act, like the Federal Act, also provides for a civil penalty of $500 per day of violation, but the total amount of the penalty may not exceed the maximum penalty for which the employer may be liable under the Federal Act for the same violation. This penalty may be avoided if the employer satisfies its liability to each affected employee within three weeks from the date of the WARN triggering event. In addition, the N.Y. Act, like the Federal Act, allows a court to award attorney’s fees to a prevailing plaintiff.
The N.Y. Act specifically states that neither the N.Y. Department of Labor nor any court has the authority to prohibit a plant closing, mass layoff or relocation.
Employers should also be aware that efforts are underway to increase the protections under the Federal Act. Proposed legislation to strengthen the law, titled the Federal Oversight Reform and Enforcement of the WARN Act, was introduced in Congress last year. If passed, the new law would reduce the threshold for coverage of firms under the Federal Act to 50 employees, from 100; reduce the mass layoff figure to 25 employees, from 50; increase the notice period to 90 days, from 60; and double the back pay for violations of the WARN Act