The Amount of Notification Required When Reducing Employee Work Hours & Benefits in California
Most employers keep their workers in the loop concerning changes to their employment status, such as whether they are full-time or part-time employees, or changes to employee benefit plans. However, just in case some employers don't communicate frequently and openly with their employees, the federal government and California state government impose rules for employee notification.
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Federal Law
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WARN stands for the federal Worker Adjustment and Retraining Notification Act, which is the set of regulations that governs layoffs and substantive changes to the employer's continuation of business. The WARN Act also provides guidance for an employer contemplating cutting hours for a significant portion of the workforce. In addition to the federal WARN notification rules, many of the states have laws that apply to employers regarding business closure, layoff and employee notification.
California Law
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When federal WARN laws differ from state WARN laws, employers should follow the law that favors employees. California laws concerning notification are more stringent than the federal law. For instance, California employers with as few as 75 employees, including part-time workers, are subject to notification rules when cutting employees' hours. According to the federal WARN law, only employers with 100 or more full-time employees are subject to the notification rules. Notification laws apply whenever more than one-third of the workforce is affected, or when 50 employees are affected, depending on the size of the workforce.
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Employment Loss
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Federal law and California state law considers cutting hours an employment loss; therefore, according to California law — and federal law — employers must give at least 60 days of notice to employees about an employment loss. Federal law states that employers who cut hours by 50 percent are initiating an employment loss. This is the point at which California employers need to be familiar with, and comply with, both federal and state law. When a California employer with more than 75 total employees — part-time and full-time — plans to cut hours by 50 percent, the company must give 60 days notice. For example, if a company that employs 75 workers plans to make 50 of its full-time employees part-time and cut the hours of its part-time workers down to half of what they're already working, that requires at least a 60-day advance notice to employees.
Benefits Loss
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Similarly, California employers must give their employees 60 days of advance notice that their benefits are being cut. However, if employee benefits are part of a contract to which the employee is entitled, the employer could be liable for benefits, according to California law. The difference between federal and state law is that California employees are entitled to all of their benefits, not just those covered under the Employee Retirement and Income Security Act (ERISA). California employers must provide notification 60 days in advance concerning loss of all benefits.
Additional Notification
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Employers have an obligation to tell employees when their hours are being cut; however, California employers also have an obligation to provide notification to other parties. California firms must provide notice to the highest city and county official, as well as the Workforce Investment Board and the California Workforce Services Division. The Workforce Investment Board oversees offices that receive Workforce Investment Act federal funding for assisting displaced workers.
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