As New York employers continue to restructure their workforces in response to the ongoing economic crisis, the New York Department of Labor continues to adjust its regulations regarding the New York State Worker Adjustment and Retraining Notification Act (NY WARN), which, in general, requires covered employers to give at least 90 days advance notice where at least 25 employees will suffer an employment loss. On February 12, 2010, the Department of Labor issued revised, emergency NY WARN regulations, which became effective immediately, subject to public comment through mid-April 2010. The new regulations replace the NY WARN's original implementing regulations and make several key changes, including:
Clarification Of Triggering Events: As discussed in previous advisories dated February 4, 2009, and December 23, 2008, NY WARN requires employers with 50 or more employees to provide at least 90 days notice to affected employees, their representatives, the Department of Labor, and the local Workforce Investment Board prior to a plant closing, mass layoff, relocation, or other covered reduction in work hours. The new regulations clarify that a covered reduction in work hours, like a mass layoff, triggers the Act's notice requirements if it affects at least 25 full-time employees and 33 percent of the full-time workforce at the affected job site. Similarly, the regulations state that a covered relocation, like a plant closing, will trigger the notice requirements if it causes an employment loss for at least 25 full-time employees.
While certain temporary workers have been exempt from NY WARN's notice requirements, the new regulations further specify that notice is not required for a closing or layoff that results from the completion of a particular seasonal project or undertaking, but only if the employer can show that the affected employees were hired with the understanding that their employment was so limited.
Identifying Who Is Responsible For Notice: The new regulations clarify which entity is responsible for providing notice when a bankruptcy, merger, consolidation or sale triggers the Act's notice requirements. In bankruptcy situations, the regulations appear to follow the prevailing federal trend by placing WARN responsibility on the entity that continues to operate the business.
In the context of mergers and consolidations, the original business entity is initially responsible for providing notice; however, if notice would be due after the date of the merger or consolidation, the merged or consolidated entity is responsible for providing the notice to affected employees who have worked there for at least one day at the time notice would be due.
In the context of business sales of assets, the seller remains responsible for providing the notice up to and including the effective date of the sale. Any employees of the seller who are included in the sale will automatically become employees of the buyer and the buyer will be responsible for providing any notices due after the effective date of the sale. Significantly, however, a buyer's promise of employment to a seller's employees does not relieve the seller of its obligation to provide notice to those employees who will be terminated before the effective date of the sale.
Liability and Offsets: Under the new regulations, an employee's "date of layoff" is the last day an employee is permitted to work. Since an employer's liability period runs from this date, an employer cannot avoid NY WARN liability simply by keeping employees on payroll through the notice period, but not paying them all amounts due under the Act.
An employer can avoid liability by paying employees all amounts due under the Act within three weeks of their date of layoff. Additionally, wages paid after notice has been given, along with any voluntary, unconditional payments, will offset the amount of any NY WARN liability; however, vacation pay, "severance packages" and other payments required pursuant to contracts, collective bargaining agreements or other legal obligations will have no offset effect.
Enhanced Notice Requirements: The new regulations also include new procedural requirements. For example, notices to employees must be postmarked 90 days prior to separation or marked "urgent" if permitted to be sent by e-mail, and must inform employees that they may be eligible for unemployment insurance benefits after their last day of employment. Notices to union representatives, the Workforce Investment Board and the Commissioner of Labor must explain the method used to send employee notices. Additionally, notices to the Commissioner of Labor must include the "name and addresses of the employees to be laid-off."
The new NY WARN regulations again emphasize the need for employers to carefully analyze their obligations under both WARN and any applicable state laws before instituting a workforce reduction or restructuring.