Governor Newsom Vetoes Bill That Would Have Given California Employees Earlier Layoff Warning

On October 8, 2023, Governor Gavin Newsom vetoed Assembly Bill (AB) No. 1356, which would have required employers to provide workers with earlier notice in the event of a mass layoff. Specifically, AB 1356 would have amended the California Worker Adjustment and Retraining Notification (Cal-WARN) Act, California Labor Code Sections 1400-1408, by extending the notice period for a mass layoff, closure, or relocation from 60 days to 75 days.

Quick Hits

• Governor Newsom vetoed legislation that would have amended the Cal-WARN Act to require75 days’ advance notice in the event of a mass layoff, closure, or relocation, up from 60 days’ advance notice.
• The vetoed bill would have also prohibited the waiver of federal WARN Act liability in severance agreements.

AB 1356

Under the current Cal-WARN Act, “[a]n employer may not order a mass layoff, relocation, or termination at a covered establishment unless, 60 days before the order takes effect, the employer gives written notice of the order” to employees and the Employment Development Department, and the employer “include[s] in its notice the elements required by the federal Worker Adjustment and Retraining Notification Act (29 U.S.C. Sec. 2101 et seq.).”

AB 1356 would have amended the Cal-WARN Act by increasing the employer’s mandatory notice period from 60 days to 75 days. The bill would have also expanded the act’s definition of “employer” to include “a client employer of a labor contractor.” AB 1356 would have further amended the act to define “employee” as “a person employed by a labor contractor and performing labor with the client employer for at least 6 of the 12 months and for at least 60 hours preceding the date on which notice is required.” AB 1356 would have also exempted employees of a labor contractor completing a temporary project with a defined end date.

AB 1356 would have also expanded the definition of “covered establishment” to include “a single location or a group of locations, including any facilities located in this state.” The bill’s definition would have potentially expanded the scope of businesses covered by the law.

The bill would have also prohibited “[a]ny general release, waiver of claims, or nondisparagement or nondisclosure agreement that is made a condition of the payment of amounts for which the employer is liable under Section 1402 [of the Labor Code].”

Looking Ahead

Despite the veto of AB 1356, the landscape of legal requirements in California that employers must comply with when dealing with mass layoffs, business closures, and/or relocations continues to strengthen. As a result, employers may want to proceed with caution when contemplating layoffs or relocations. In the future, California lawmakers could very well amend the Cal-WARN Act to require longer notice to employees and to include more affected individuals.

For the latest information on California’s labor and employment law landscape, please join us for our upcoming webinar, “California Legislative Update: A Busy 2023 Brings Big Changes for Employers,” which will take place on Monday, October 30, 2023, from 11 a.m. to 12 noon (PDT). The speakers, Christopher W. Olmsted and Charles L. Thompson, IV, will discuss the key takeaways from this and other new California laws. Register here.

Ogletree Deakins will continue to monitor California legislative developments and will provide updates on the California and Reductions in Force blogs as additional information becomes available.

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