Permanent Layoffs in California: What Are Your Employer’s Obligations?

June 17, 2020

You’ve been laid off. What happens now? It depends on when the layoff happened. You could be protected through California’s WARN laws, but timing is everything.

When COVID-19 stay-home orders went into effect and businesses had to shut down until further notice. That led to layoffs. Some of those lay-offs were temporary, but others proved to be permanent as business owners opted to close doors for good. Restaurants like Souplantation and Sweet Tomatoes announced permanent closures. The same is true of retailers like Pier 1 Imports.

This pandemic is not the only time businesses have shut their doors and lead to massive layoffs. They occur each year for varying reasons. In 2019, California’s largest recycling center, RePlanet, shut all of its locations leaving more than 700 without jobs. No one wants it to happen to them, but what if it does? If you’re laid off, what are your employer’s obligations? If your employer fails to meet those obligations, what can you do?

Paycheck Laws

You may wonder what happens if you’re laid off. How do you get your final paycheck? When should you expect it to arrive?

California’s Labor Code Section 204 states that most employers need to pay employees at least twice per month. There are a few exceptions where administrative, executive, and professional employees can be paid once a month on or before the 26th. The once-a-month rule is also used for auto dealers who earn commissions and farmworkers who receive room and board. Farmworkers hired by a labor contractor must be paid each week. You have to be paid on time, even if you forget to submit your hours or time card.

If you are laid off, your wages and any accrued vacation and personal time have to be paid on the day you’re terminated. Again, there are a few exceptions. Oil drillers must be paid within 24 business hours of the layoff. If you are a seasonal worker in an agricultural/food industry, your employer has to pay you within 72 hours of the layoff. You may find your final check is mailed to you. You might have to come to the office to pick it up. If you’ve been getting your payment through a direct deposit, make sure permissions are in place for your final payment to be deposited the same way. The law states that direct deposits of wages are immediately terminated when you are laid off. You must authorize your employer to make that final pay via direct deposit.

What happens if you’ve been laid off and haven’t received your final pay and payment for accrued vacation and personal time within the expected time frame? If your employer fails to follow the laws, the employer faces penalties of up to 30 days times your daily wages. If your employee pays 10 days after he/she should have, it’s 10 times your daily wages. You cannot refuse or fail to pick up your final paycheck in order to get this penalty payment. If there is a “good faith” dispute over whether your employer really owes you the money, the penalty is also not charged. Your employer does have to pay you the wages that are not being disputed, however.

Make sure your employer has your current address. If there are wages due to you and the check is returned due to an incorrect address, it will go to the state. The state will attempt to find your current address. Otherwise, it goes into the Unclaimed Wages Fund.

Federal and California WARN Laws

Generally, the Labor Code requires certain California employers to let employees know 60 days in advance of a mass layoff. The law applies to companies that have had 75 or more employees within the past 12 months and that are laying off 50 or more workers. If you work for a small company, these laws won’t apply. For example, if your employer has 20 workers, you can be laid off without notice. The number of workers is based on each location. If you work for an employer with five locations and each location has 20 workers, that’s 100 workers in all, so the WARN law does apply.

This is meant to give California representatives and affected employees time to plan accordingly. Employees need time to search for new jobs, get set up in a job training or retraining program to find a new career, or to adjust to the switch to unemployment pay while finding a new job. It gives the state notice to help those who are now laid off and looking for new jobs. To qualify for protection under the WARN laws, you must have been an employee for at least six months of the past year.

During the Pandemic, N-31-20 put the 60-day WARN requirement on hiatus. This was because the pandemic and stay-home orders happened suddenly. If the layoff took place during the pandemic, employers were allowed to bypass this rule. WARN laws also are null and void during a natural disaster, war, or “physical calamity” like a bankruptcy.

What happens if your employer lays off workers and disregards the WARN laws? You could be eligible for back pay and benefits. The pay is based on the income you’ve received in the past three years or the wage you were receiving at the time you were laid off, whichever rate is higher. You’re paid for 60 days or half of the number of days you worked for that employer, whichever is lower. You’re also covered financially for the loss of benefits, such as health insurance. Employers who violate these laws also pay a fine to the state of no more than $500 per day. If the employer pays employees the correct amounts within three weeks of the mass layoff, the fines are waived.

How do you make sure you get the money you’re owed? You should talk to an attorney who specializes in employment laws. If you’re due severance pay or have a severance agreement, the attorney can go over what you should be receiving. At that time, the attorney can also make sure that the employee met the terms of the WARN laws. It always helps to have an expert in employment law to make sure you’re being treated fairly.

Shegerian Conniff specializes in employment law. Give our office a call to schedule a free consultation to determine if your employer met the requirements when laying you off. If you’re due compensation that you didn’t receive, we can help. Reach us at 310-322-7500.