Amid a steady stream of technology sector layoffs, the California Legislature is considering a bill that would expand employers’ obligations under the state’s WARN Act.
Most significantly, the legislation would extend to contract workers the protections afforded to other laid-off employees under California’s version of the federal Worker Adjustment and Retraining Notification Act.
The California Labor Federation, a co-sponsor of the bill authored by Assemblymember Matt Haney, has estimated the Golden State’s contract workforce comprises nearly two million people. A significant percentage of these contractors work in the tech industry, reports indicate.
Haney, a San Francisco Democrat, has said his bill “closes the gaping loopholes in critical layoff protection laws and gives contract workers the basic protections that all workers at these large companies deserve.”
Assembly Bill 1356 would also increase from 60 to 90 days the advance notice employers must provide to employees prior to ordering terminations, relocations or mass layoffs.
“Providing a 90-day notice period is a critical change that recognizes the reality of the high cost of living in California and helps increase the economic safety net for some of our most vulnerable communities,” Haney said, according to an analysis of the legislation by the Assembly Labor and Employment Committee.
Severance provisions
The bill also takes aim at the practice of employers reportedly requiring employees to waive their legal rights in exchange for receiving payments that would be due to them under the WARN Act.
The legislation says that a general release, waiver of claims, or non-disparagement or non-disclosure agreement that is made a condition of the payments an employer owes a laid-off worker is “void as a matter of law and against public policy.”
An employer who makes payments they owe under the WARN Act contingent on such severance-style agreements would be subject to a civil penalty of up to $500 for each violation.
The TechEquity Collaborative, a supporter of AB 1356, has said decoupling WARN notice pay from separation agreements will ensure laid-off workers “are guaranteed their rights without strings attached.”
The topic of severance agreements and the clauses they contain has recently been spotlighted by the National Labor Relations Board.
The NLRB ruled in February that the severance agreements offered by a Michigan hospital to furloughed employees were unlawful because of the confidentiality and non-disparagement provisions they included.
Opponents
Meanwhile, a coalition of employer organizations, including the California Chamber of Commerce, has expressed opposition to certain components of AB 1356.
An analysis of the legislation said the employer coalition believes the legislation “is overly broad in its application to employees of a labor contractor, including failing to take into account the terms of a contract or agreement between the labor contractor and client.”
The legislation would expand the definition of an “employee” under California’s WARN Act to include a person employed by a labor contractor and performing labor with the client employer for at least six months of the 12 months preceding the date on which the WARN Act notice is required.
Additionally, the opponents criticized the expansion of the notice time from 60 to 90 days, saying it would result in businesses over-noticing pending layoffs.
“Out of fear of violating the statute, the employer has no choice but to be overinclusive in who is receiving notices, leading to layoffs that may not actually be necessary or having to tell workers they are being laid off and then walking that back later, which is poor for worker morale and may lead workers to finding other jobs unnecessarily,” the coalition of opponents said.
Context and hearing
The backdrop for the legislation is the thousands of layoffs in the tech sector, a huge industry in California, that have taken place early this year following similar announcements in the latter part of 2022.
The companies who have laid off workers in recent months include Amazon, Meta, Microsoft and Twitter.
Tech layoffs announced in the first few months of 2023 already exceed the total number of tech layoffs last year, according to information from layoffs.fyi that was cited by TechCrunch.
This year’s figure includes nearly 85,000 employees laid off in January and nearly 75,000 combined laid off across February and March.
While AB 1356 would affect the tech sector, the Assembly Judiciary Committee’s analysis of the bill highlighted that it would impact “contract workers and their employers across the state, regardless of the industry.”
The Assembly Judiciary Committee is scheduled to discuss the bill during a hearing Tuesday, April 25.
