Employment Contracts – Are They Still Valid After Temporary Layoffs?

September 8, 2020

To make it through this long-running pandemic, many employers had to lay off workers until the economy picks up. While the layoffs are often temporary and employers plan to hire those workers when cities and states reopen, it does make workers wonder if their employment contracts are still valid or not. You may not be back to work full-time yet. You may not be sure you ever will be. Where does your employment contract stand in all of this?

Protections Offered With the Worker Adjustment and Retraining Notification Act (WARN) and Cal WARN

Usually, you’re protected from layoffs by two acts. During shutdowns or layoffs, the Federal WARN Act offers protections to those whose employer has 100 or more workers. It requires the company to give 60 day’s notice or the employer may have to pay employees who are laid off. California has its own version of this act known as Cal WARN.

With Cal WARN, employees of businesses with 75 or more workers need to have 60-day’s notice if there’s a layoff in certain industries. This allows them time to find a new job or seek job training. If an employer fails to provide the full 60 day’s notice to qualified employees, they can be charged a fine of $500 per day. Employees receive back pay for half the employee’s time with that come or three years of compensation, whichever is worth the most. The employer also has to cover medical expenses that would have normally been covered under the employee’s health insurance plan.

Cal WARN doesn’t apply to jobs that normally end when a project is completed. It includes workers in the film industry, construction, mining, logging, etc. It also isn’t in effect due to acts of war, natural disasters, strikes, and a few other situations.

What’s important to know is that the 60-day notice policy was suspended during the COVID-19 pandemic. People did not expect the virus to last so long. Executive Order N-31-20 doesn’t completely withdraw the act, but the 60-day notice requirement before layoffs is not valid during the pandemic. If you were counting on that helping you keep your job, you really cannot for now.

How Do Temporary Layoffs Affect Your Employee Contract?

If you have a contract in place, there should be terms regarding what happens during temporary furloughs. The problem is that the pandemic is lasting longer than most terms. Will you return and pick up where the contract left off or is a new contract going to be drawn up when you return? Most employees and employers have never experienced this situation before. You’re bound to have questions and your employer may not know the answers. You may need the expertise of an attorney who specializes in employment contracts.

Here are some of the questions people are asking. It’s often hard to know for sure without reading the fine print. That’s why it pays to talk to a lawyer.

#1 – How Long Can Temporary Layoffs Last?

If your employment contract states temporary layoffs can only be used for X number of weeks before layoffs become permanent. It’s been longer than that and you may still not be able to get back to work. Does that void the contract? Are you out of a job? You need to ask your employer. It’s very likely that your employer is simply stuck in a pandemic that’s lasting longer than anyone would have predicted. Your job is still safe, but it’s important to ask.

#2 – What Happens to Your Wages if It’s Based on the Sales You Make?

Some terms may be voided due to the pandemic. If you’re in sales and your contract says you must sell X amount of product each month, the pandemic will make that though. You shouldn’t be held to sales goals when you can’t go to businesses or trade shows. Your employer will discuss these exceptions with you. If you’re both in agreement, you may be able to modify the contract on a temporary or permanent basis. Some of the terms you may want to change in a renegotiation are work schedules, sales targets for raises or bonuses, or educational requirements if your job is dependent on getting in a certain number of credit hours each year.

#3 – What Happens if the Year Contract is Up Before the Pandemic Ends?

Your contract states you’re employed with them for 12 months. You signed it on October 1st and it’s now August. You’d worked for 6 of those 12 months already when the layoff started in April. Does the year contract include the months that you haven’t been able to work, or is it only good for the months you’ve actually worked? Do you now have 2 months left on your contract or the other 6? If you can’t tell, you should ask an attorney for guidance.

#4 – Do Probationary Period Terms Reset With Temporary Layoffs?

Probationary periods are another aspect to consider. If you started a job in March and had a probationary period of 3 months, what happens next? If you were laid off temporarily when the pandemic picked up in April, you haven’t met the probationary period. You should ask a lawyer what this means when it comes to benefits. If you are laid off for now, will you have to start the 3 months probation all over when you can go back to work or will it count the month you’d worked before the temporary furlough?

#5 – Can You Take Another Job?

What happens if you’re not getting enough money through unemployment to cover your bills? You want to take some contract work to make up the difference, but you don’t know if you can given the terms in your employee contract. If it’s due to a non-compete clause, they are not allowed in California, so you’d be okay. What if something else has you concerned there’s a conflict of interest? What do you do? This is one reason you should ask an attorney who specializes in employment law to look things over. If the contract is voided by the temporary layoff, you’re set. If the contract is still in effect, you need to be careful.

#6 – How Does Unemployment Pay Work in a Temporary Layoff?

When it comes to income, you will qualify for Pandemic Emergency Unemployment Compensation (up to 13 weeks) or unemployment insurance (up to 26 weeks). Until July 25th, this payment included an extra $600 to help people with rent/mortgage and other important bills. That $600 ended and other amounts are being debated. At this point, the only payments for missed work will be the amount of unemployment pay that you qualify to receive. Your employer may allow you to cash in vacation pay if it’s needed to cover bills, but you’d need to see what it says in your employment contract.

If you’ve been laid off, what are your rights? Who should you turn to when you’re not certain if employment laws are on your side or not? Shegerian Conniff has the experience you need. Reach out for a free consultation at all hours of the day or night by calling 310-322-7500. It doesn’t cost you anything to find out if a temporary layoff voided your employment contract or if you’re still covered.