CAN WE SHUT DOWN AN ENTIRE FACILITY WITHOUT VIOLATING EMPLOYMENT LAWS?
Likely yes, but it’s worth checking some boxes. First, consider whether your state has predictive scheduling laws, which require advanced notice before changing an employee’s schedule. Many of these laws provide exceptions that may apply here, but making specific reference to them may be important.
From a wage-and-hour standpoint, consider the salary impact on your exempt staff. An isolated reduction in salary due to a slowdown, or even treating the time off as an unpaid furlough, generally does not run afoul of federal wage laws, but the Department of Labor is suspicious of multiple salary changes as workload fluctuates. For your non-exempt staff, employers must only pay for hours worked, so there is no federal wage law risk with suspending compensation during a shutdown.
Turning to the WARN Act, the 60-day notice requirement generally won’t be triggered unless a furlough lasts six months. But be sure to consider state mini-WARN laws. For example, a 2017 California decision ruled that a four-week furlough triggered the state WARN law. Again though, exceptions may apply in the context of a legitimate public health concern.
Update March 19: via emergency order, California modified notification requirements under the state’s mini-WARN Act retroactive to March 4, 2020, and extending through the duration of the emergency. Employers must:
(1) Give as much notice as “practicable” and a brief statement about why they are reducing the notification period.
(2 ) Provide the following statement in notifications: “If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019.”
Finally, note that employees who do not receive pay may be able to seek unemployment benefits due to a reduced schedule, even if temporary and without a termination of employment. For example, in Minnesota, reducing a full-time employee below 32 hours/week will support an unemployment claim.
