New Law Requires Some Maryland Employers to Give Advance Notice of Relocations and Layoffs

Hard on the heels of a disastrous spring that saw employers of all sizes laying off or furloughing employees in record numbers, a new law quietly passed in Maryland, which will impose heavy penalties on employers with 50 or more employees who fail to give sixty days’ advance notice of covered relocations and layoffs to affected employees. 

These new requirements amend the existing Economic Stabilization Act and will take effect on October 1, 2020.  As detailed below, however, the amendments leave open many questions that hopefully will be resolved by future regulations.

When is Notice Required?  Sixty days’ advance written notice is required before any reduction in operations occurring on or after October 1, 2020, which is defined as: (1) any relocation of any part of the employer’s operations from one workplace to another, or (2) shutting down, in whole or part, operations at a workplace that affects 15 or more employees (see definition of “employee” below), or at least 25% of the workforce, whichever is greater, within a 3-month period.  This means that notice must be given prior to the effective date of the law for covered reductions in operations occurring between October 1, 2020 and November 30, 2020.  Employers who are planning reductions in operations affecting fewer than 15 employees or 25% of the workforce at one time must look at prior reductions in operations to see if, when aggregated, they would trigger the notice requirement.

Who is Counted as an Employee?  The law specifies that the term “employee” includes hourly and salaried employees and managerial/supervisory employees.  The term “employee” expressly does not include employees who work, on average, less than 20 hours per week or who have worked less than six of the “immediately preceding 12 months.”  This definition of employee applies to both the number of employees affected by the reduction in operations, and the number of employees required for an employer to be subject to the notice requirements.

Which Employers are Covered?  All Maryland employers with 50 or more employees (using the above definition), who have operated an industrial, commercial, or business enterprise in Maryland for at least one year prior to the reduction in operations are covered.  The law does not specify whether these 50 employees all have to work in Maryland, so all employers with 50 or more employees “working an average of 20 hours per week or more and who have worked at least six of the immediately preceding 12 months” should pay close attention to this law.  The law does not explain whether the “immediately preceding 12 months” are those which precede the date notice must be given or the date the reduction in operations will take effect.

Who is Entitled to Receive Notice?  A covered employer is required to give 60 days’ advance written notice of any covered reduction in operations occurring October 1, 2020 or later to:  (1) all employees at the affected workplace, including those working, on average, less than 20 hours per week and those who have worked for less than six of the immediately preceding 12 months; (2) the bargaining representative of the employees (if any); (3) the state dislocated worker unit; and (4) all of the elected officials in the jurisdiction where the workplace is located.  The law does not define “jurisdiction,” so this requirement could include elected officials for the applicable city, county, and state. 

Are There any Exceptions?  Notice is not required in the event of covered reduction in operations due to: (1) a labor dispute; (2) bankruptcy filed under federal law; (3) seasonal factors recognized by the state; or (4) changes in work location from construction sites or temporary work locations.   This law does not excuse compliance with notice requirements under any of the exceptions or special circumstances applicable under the federal Worker Adjustment Retraining Notification Act (“WARN Act”), including circumstances involving employee transfers, short term layoffs, unforeseen business circumstances, faltering business, or natural disasters.   

What Must the Notice Say?  Based on the amendments, the notice must contain the following information:  (1) the name and address of the worksite affected by the reduction in operations; (2) name, telephone number, and email address of a supervisory employee at the worksite who can provide further information; (3) statements as to whether the reduction is expected to be permanent or temporary and whether the worksite is expected to shut down; and (4) the date when the reduction in operations is expected to occur.

What if an Employer Does Not Comply?  In the event of non-compliance, the Secretary of Labor may issue a compliance order as well as a penalty of up to $10,000 per day of noncompliance.  In determining the amount of the penalty, the Secretary will take into consideration the following factors:  (1) the gravity of the violation; (2) the size of the business; (3) the employer’s good faith; and (4) the employer’s history of violation of the Economic Stabilization Act.

What Happens Next?  As noted, the law takes effect October 1, 2020.  The Secretary of Labor has been charged with issuing regulations providing guidelines for compliance with these new requirements, including, the content of the notice, benefits required during the notice period, and other matters.  One hopes that these regulations fill the gaps left by the legislation itself on the several issues mentioned above.

What Employers Should Do Now?  With heavy penalties looming in the future, covered employers should carefully plan for any future layoffs and ensure that they provide the required advance notice triggered by changes in business plans.

Melissa Calhoon Jones, chair of the labor and employment group, counsels companies on employment, labor, and immigration issues.  For more information about this regulation and other employment concerns, please contact her.

This information has been prepared by Tydings for informational purposes only and does not constitute legal advice.