BILL NUMBER: S8692

SPONSOR: MAYER
 
TITLE OF BILL:

An act to amend the labor law, in relation to increasing the maximum
time period for determining back pay and other liabilities for certain
employees who experience employment loss

 
PURPOSE OR GENERAL IDEA OF BILL:

Increases the maximum amount of back pay receivable by employees when
there is a WARN Act violation from 60 days to 90 days to match the
90-day notice requirement.

 
SUMMARY OF PROVISIONS:

Section 1 removes the sixty-day cap on the number of days of back pay
for which an employer is liable when there is a WARN Act violation.

Section 2 sets the effective date.
              

 
JUSTIFICATION:

The WARN Act requires certain employers to provide at least 90 days'
advance notice to employees when there is a plant closing, relocation,
or mass layoff. When a covered employer fails to provide timely notice,
it is liable to its employees for back pay for the number of days for
which there was a violation. However, this liability is capped at 60
days of back pay. As a result, workers receive the same back pay whether
the notice is 60 days late or 90 days late. This causes a perverse situ-
ation in which an employer has no incentive to give additional notice if
it plans a plant closing, relocation, or mass layoff within thirty days.
This means that workers can suffer up to 30 days of additional lost pay.

Of more practical importance in many situations is the fact that employ-
ees are suddenly without a paycheck, and therefore without a means to
make rent, buy food, and pay their medical bills. In this context, while
an additional 30 days of violation means nothing financially to the
employer under current law, those 30 days are critical to a worker who
needs to immediately find a new job, especially because this issue only
occurs in circumstances in which notice is given less than 30 days from
the date on which the employee will be laid off. With such limited time
to find new employment, every day counts.

This is not a theoretical situation. Employees of the Doral Arrowwood
Resort in Rye Brook were told on Christmas Eve of 2019 that the hotel
would close on January 12, 2020, a notice period of just 19 days. Not
only were they very suddenly out of a job, because of the current 60-day
limitation on back pay, those 268 employees will not be compensated for
the eleven additional days for which notice was deficient under the WARN
Act.

This bill extends the number of days of back pay for which an employer
is liable to the full 90-day notice period. This change will eliminate
the current mismatch of incentives by linking the employer's financial
liability to the full period of violation, thereby encouraging employers
to give as much notice as possible in a time when it is arguably most
crucial to their workers.
 
PRIOR LEGISLATIVE HISTORY:

None.

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect immediately.