Seyfarth synopsis: Companies contemplating a mass layoff must comply with the federal Worker Adjustment and Retraining Notification Act. In California, alas, companies must also consider the even more stringent requirements of California’s own WARN act. That is the harsh lesson recently imparted by the California Court of Appeal in Boilermakers v. NASSCO Holdings Inc.  

As just reported in our management alert, a California shipyard sustained liability when it failed to notify 90 employees of a four- to five-week furlough occasioned by a lull in their production work. Under the federal WARN act, no notice was required, because fed-WARN requires notice only for a “plant closing” or a “mass layoff,” and the latter refers only to an “employment loss,” which is either a termination, a layoff exceeding six months, or a 50% reduction in work hours during six consecutive months.

Because the short furlough here did not trigger any of those conditions, fed-WARN did not apply.

But California is different. As NASSCO Holdings explains, California, as is its wont, has decided that federal worker protections are inadequate, and that California knows better: “the entire thrust of the legislative effort in enacting the California WARN Act was to provide greater protection to California workers than was afforded under the federal law.” Cal-WARN, like fed-WARN, applies to “mass layoffs,” but defines the term more broadly than fed-WARN does. Under Cal-WARN, a “mass layoff” includes a layoff of at least 50 employees during a 30-day period, with a “layoff” being any “separation” from a position for lack of funds or work, and with there being no requirement of a minimum duration (such as the six-month minimum duration stated in fed-WARN). So Cal-WARN can cover a short-term layoff that fed-WARN would not cover.

The employer in NASSCO Holdings pointed to absurdities resulting from a broad reading of Cal-WARN, such as Cal-WARN applying to long holiday weekends and totally unforeseen events. NASSCO Holdings responds that, under Cal-WARN, “California employers, not California employees, should bear the risk of surprise resulting from an unexpected layoff,” and that employers who do not like that result can always take their concerns to the California Legislature. (Good luck with that.)

NASSCO Holdings also sounds a warning that Cal-WARN’s extension to short-term layoffs is not its only Cal-peculiarity. Cal-WARN exceeds the reach of fed-WARN in other respects as well. For example, Cal-WARN, unlike fed-WARN,

  • provides employers no exemption for layoffs resulting from “unforeseeable events,”
  • permits an award of attorney fees only for prevailing plaintiffs (not prevailing defendants),
  • includes part-time employees as well as full-time employees in calculating whether enough employees have been affected to constitute a mass layoff,
  • requires direct notice to employees (not just to employee representatives), and
  • requires notice to more local officials and agencies.

This Cal-WARN saga is thus an apt exemplar of the more general peril that unsuspecting national employers—duly following national labor law—can encounter when they do business in the Golden State. Be WARNed: California is peculiar.

California Workplace Solution:  Laying off at least 50 employees can trigger a Cal-WARN concern even if the layoff, or furlough, will be short-term. So you may have to give employees at least 60 days’ notice of that event. Some administrative authority suggests that very short furloughs—lasting two weeks, or some shorter period—do not trigger Labor Code termination obligations, which arguably could mean that they escape the grasp of Cal-WARN. That authority is consistent with Cal-WARN language that creates liability only to employees who have “lost … employment,” and with the fact that a very short-term furlough is not a meaningful loss of employment. But the facts of each particular situation will matter. Our specialists at Seyfarth are here to WARN you of the risks and advise you on how best to handle your own situation.

Edited by David Kadue.

Seyfarth Synopsis: Sustained cuts to California’s court system have strained access to justice across the state, and not enough is being done to fix the situation.  But, you can help!

Since the “Great Recession” of 2008, California’s court system has seen unprecedented reductions in funding, further straining the resources of an already overburdened court system.  A 2013 report from the California Judicial Council (“CJC”) estimated that the budget crisis had resulted in the closing of 50 courthouses, 175 courtrooms, and more than 25 branch courts. Accompanying these closings were 4,000 staff layoffs, imposition of furlough days and reduced hours of service, and significant other service reductions, affecting self-help services and the availability of  court reporting services (in civil cases), and court interpreters.

As a result, those seeking access to justice during the last eight years have found themselves waiting longer to get all kinds of cases heard and filings processed. The matters affected have included motions for summary judgment to resolve cases without trial, restraining orders, family court mediations, and even criminal trials. The CJC estimates that more than two million Californians have lost access to justice in their communities. Attorneys report waiting several months for hearings that could be heard in 16 court days under the Code of Civil Procedure, and sometimes find that their first available hearing date is a date after the date set for trial. Some attorneys have been in trial for weeks in matters that called for only a number of days, because of shortened court hours and increased judicial caseloads. One retired judge predicted that, without additional funding, cases filed in 2014 could take 5 years to get to trial.

Other courts have decaying infrastructure and facilities that can create unsafe environments, including infestations of rats, mold, ADA access issues, and shootouts due to inadequate security.

Counties that have decided to improve facilities despite the Great Recession have found themselves scrambling to pay for construction after court revenues declined and state funding was withdrawn. And even where courts can find the money, it has not been that simple…The Santa Clara County Superior Court recently saw its 400 employees strike for 8 days because they had gone eight years without a raise. The strike effectively paralyzed the court. Employees criticized the County for going forward with a $208-million-dollar Family Justice Center courthouse instead of increasing their pay.

Some modest improvements in court operations have occurred since the CJC’s report, but most courts still operate under a significant budget shortage. Details for each county are available in County Budget Snapshots.

What’s being done to fix this situation? The CJC has instituted measures to manage the impact of underfunding on the courts, but the major “fix” involves taking from “donor” counties who already have scarce resources. The “Workload Allocation and Funding Methodology,” instituted by the CJC in April 2013, allocates practically unchanged amounts of funding to counties pursuant to a formula based on case quantity, type, staffing needs, operating expenses, special expenditures, and “unique factors.” A recent budget proposal to similarly reallocate vacant but needed judgeships in Alameda and Santa Clara County to San Bernardino and Riverside counties was rejected, as was a bill that would have funded 12 new judgeships throughout the state.

In the recently passed 2016-2017 California Budget, the courts obtained $146.3 million in new funding, some of which was allocated to boost the number of court interpreters and replace case management systems in Orange, Sacramento, San Diego, and Ventura counties.

Regardless of how creative judges and legislators might get, the bottom line is that the funding of the state’s courts need to be substantially increased. The Judicial Branch budget makes up just over 1% of the funds allocated from the state’s General Fund— as Chief Justice Tani Cantil-Sakauye stated, “a penny on the dollar is insufficient to provide justice.”

So, what can I do? If you believe the courts should have more funding so that individuals, businesses, and employers have more access to have their cases timely heard and decided, you can contact Governor Jerry Brown here, and find the contact information for your  local legislators in the State Assembly and Senate.  The Bar Association of San Francisco also has templates and talking points for advocating for improved and adequate funding for California’s courts.

Further information regarding the 2016-17, and prior years’, California Budget can be found here.

Edited by Coby M. Turner.