Last month, the New York Department of Labor promulgated amendments to its New York Worker Adjustment and Retraining Notification Act (NY WARN) regulations. These amendments are now in effect, and they add significant burdens on employers who engage in “mass layoffs” or “plant closings” as those terms are defined under NY WARN.

The amendments to the NY WARN regulations address four main topics: (1) the definition of a “covered employer”; (2) the contents of the notice that must be provided under NY WARN; (3) issues concerning the sale of a business; and (4) the creation of a new process that employers must undertake if they want to take advantage of the exceptions to NY WARN.

Covered Employers

NY WARN only applies to “covered employers.” A “covered employer” is any business enterprise that employs 50 or more employees in New York. In determining whether a business enterprise is a “covered employer,” the amendments to the NY WARN regulations clarify that the count includes not only those employees at a single site of employment within the state, but also includes those employees who work remotely but are “based at the employment site.” It is unclear what it means to work remotely and be “based at the employment site.” It could mean that if an employer has 48 individuals located at an office in New York City and two employees who work remotely in New Jersey, but who “report into” the New York City office, the employer is a “covered employer” for NY WARN purposes even though only 48 individuals physically work in New York. Alternatively, it could be limited to those employees who generally work remotely but who on occasion come to the employment site for meetings or other work events and thus are deemed to be “based at the employment site.” This uncertainty will need to be resolved by the courts.

NY WARN Notice Content

Currently, under NY WARN, if a covered employer conducts a “plant closing” or mass layoff,” such employer must provide 90-days’ written notice to:

• Affected employees
• The employees’ representatives, if any (i.e., any unions that represent the affected employees)
• The New York Commissioner of Labor
• The Local Workforce Investment Board established by the New York Workforce Investment Act
• The chief elected official of the unit or units of local government where the affected employees work
• The school district(s) where the affected employees work
• The locality (or localities) that provide firefighting, emergency medical or ambulatory services, or other emergency services where the affected employees work

For purposes of NY WARN a “plant closing” is the permanent or temporary shutdown of an employment site, if the shutdown is expected to last more than six months and results in an employment loss of 25 or more full-time employees during any 30-day period. A “mass layoff” is a workforce reduction at any employment site that: (1) is not a plant closing; (2) results in an employment loss during any 30-day period for either (a) at least 25 full-time employees constituting at least 33% of the employees at the site; or (b) at least full-time 250 employees regardless of whether they comprise 33% of the employees at the site.

The amendments to the NY WARN regulations significantly alter the contents of the notice that must be provided to the Commissioner of Labor. Previously, the notice to the Commissioner of Labor could be mailed or faxed; now it must be electronically submitted. Further, the notice to the Commissioner of Labor now must include:

• The complete legal business name and any d/b/a name of the employer
• The business and email address of the employer’s representative who the state could contact should the state have questions or need additional information
• The business and email address of the employees’ representatives
• The personal telephone number and email address of the affected employees as well as their work locations, part-time/full-time status, method of payment (e.g., hourly, salary or commission basis) and union affiliation (if any)
• The total number of full-time employees at the employment site and the number of affected full-time employees at the site
• The total number of part-time employees at the employment site and the number of affected part-time employees at the site

Moreover, the amendments require that the notices to the affected employees include “any additional information known at the time of the notice and relevant to the separation, including but not limited to information on severance packages or financial incentives if the employee remains and works until the effective date of the layoff, available worker assistance, and, if the planned action is temporary, the estimated duration of the action.” Presumably, this means that if an employer offers a stay-on or incentive bonus, where employees will receive additional compensation if they work through the 90-day notice period until the plant closing or mass layoff date, the employer will need to notify employees about such bonus in the NY WARN notice to the affected employees.The amendments, however, do not appear to require an employer to provide any information about severance or other post-employment benefits stemming from the plant closing or mass layoff.

Sale of Business

The amendments to the regulations clarify that, as a general matter, when there is a sale of the business and the employees will be laid off as a result of such sale, the obligation to issue NY WARN notice is on the seller, not the buyer. However, if, as part of the sale transaction, the buyer agrees to employ the seller’s employees after the sale, the seller may reasonably rely on the agreement and does not have to provide NY WARN notices. If the buyer breaches the agreement and lays off the employees, the obligation to provide any required NY WARN notices, and thus any potential NY WARN liability, falls on the buyer rather than the seller.

NY WARN Exceptions

Since its enactment, there have been five exceptions to the NY WARN that can excuse a covered employer from having to provide 90-days’ written notice prior to a mass layoff or plant closing. Those four exceptions are: (1) the employment losses resulted from a natural disaster or an act of terrorism or war; (2) the employer is a “faltering business”; (3) there are unforeseen business circumstances; (4) the employment losses are due to the completion of a particular project and the affected employees were hired with the understanding that their employment would be limited to the duration of the project; or (5) the employment losses are the result of a lockout or strike.

The Faltering Business Exception

The faltering business exception applies when:

• The employer was actively seeking business or capital that would allow the employer to avoid the employment losses
• There was realistic possibility of obtaining the necessary business or capital and
• The employer had a reasonable, good faith belief that giving the required notice would preclude it from successfully obtaining the sought-after business or capital.

An employer relying on this exception must still give as much notice as is practicable and must provide a brief statement in its notice to all required parties explaining the reason(s) for the short notice. Further, when relying on this exception, the employer’s actions must be viewed in a company-wide context. Thus, under the faltering business exception, the entire company or enterprise’s financial position as a whole is reviewed. Therefore, if only one company location is affected, it is extremely unlikely that this exception will be applicable.

The amendments to the NY WARN regulations clarify that the faltering business exception only applies to a plant closing, it does not apply to a mass layoff. Therefore, a covered employer cannot rely on the faltering business exception to excuse it from providing 90-days advances written notice when it engages in a mass layoff that does not result in the closure of the employment site

Unforeseen Business Circumstance Exception

The unforeseen business circumstance exception applies when the employment losses are caused by business circumstances that were not reasonably foreseeable. An important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by some sudden, dramatic and unexpected action or condition outside the employer’s control that directly prevents the employer from providing the required 90 days’ notice.

The amended regulations state that acts of terrorism as well as public health emergencies, such as a pandemic, that result in a sudden and unexpected closure of a business are unforeseen business circumstances that will excuse an employer from providing 90-days written notice under NY WARN. Employers who take advantage of this exception must still provide as much notice as practicable under the particular circumstances at issue.

New Requirements in Order to Use NY WARN Exception

Finally, and perhaps most importantly, the amended regulations now require employers to submit a request to the Commissioner of Labor for the Commissioner’s consideration if an employer intends on invoking any of the NY WARN exceptions. The NY WARN exceptions do not excuse an employer from providing required notices. Rather, if an exception is applicable, the employer does not need to provide 90-days advanced notice, instead, they only need to issue the required notices as soon as practicable after the employer becomes aware of the event that will trigger a plant closing or mass layoff.

Under the amendments, whenever the employer intends on invoking one of the NY WARN exception to issue notice less than 90 days’ in advance of the NY WARN event, the employer must submit a request to invoke the exception within 10 business days of issuing the required NY WARN notice to the Commissioner of Labor. With its request, the employer must provide documentation to the Commissioner of Labor supporting its invocation of one (or more) of the NY WARN exceptions, including a statement of the reason for the layoff, reducing the notice period, and an affidavit signed under penalty of perjury confirming that the information provided to the Commissioner in the employer’s request is true and accurate.

Upon receiving the request, the Commissioner will conduct an investigation and determine whether the employer qualifies for the requested NY WARN exception. If the Commissioner determines that the employer failed to satisfy the requirements for one of the NY WARN exceptions, the Commissioner will commence an enforcement action to determine the employer’s liability for failing to fully comply with NY WARN. If the employer fails to submit a request for one of the NY WARN exceptions and it did not provide 90 days’ written notice as required by NY WARN, the employer cannot rely on any NY WARN exception to avoid liability for failing to provide 90 days’ written notice prior to a plant closing or mass layoff.

The amendments add to the already complex and burdensome administrative and paperwork requirements for employers who are experiencing business difficulties that will require the enterprise to undertake a mass layoff or plant closing. If an employer is considering closing an employment site or laying off employees in New York, the employer should consult with counsel as soon as possible and well before any decision is made about when to close a site and/or lay off employees.

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