California Labor &
Employment Law Blog
Jan 5, 2010

California Labor Commissioner Issues Opinion on Faltering Company Exception to WARN Act

Topics: Legal Information

California's Department of Labor Standards Enforcement issued a new opinion letter this week analyzing the requirements of the faltering business exception under the WARNAct. As most employers know, in certain circumstances employers are required to give employees 60 days notice of a mass layoff or shutdown. There is a notable exception to the 60-day notice requirement, known as the faltering company exception. In California, the faltering company exception is codified at Labor Code section 1402.5. Companies may apply to the DLSE for a determination that the company meets the faltering company exception and thereby are excused from the requirement of giving their employees 60 days advance notice of a layoff. The DLSE's new opinion letter is fairly detailed and provides useful guidance on factors the DLSE will look at to determine whether the exception actually applies. Employers who believe they may qualify should review the new opinion letter for guidance. The letter (which concludes that the exception does not apply on the facts presented) is available here. Interestingly, the DLSE has also re-posted an older opinion letter wherein the DLSE found the faltering business exception applicable. That letter is available here.

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