LAB-09-10-00005-EP New York State Worker Adjustment and Retraining Notification Act (WARN)

3/3/10 N.Y. St. Reg. LAB-09-10-00005-EP

NEW YORK STATE REGISTER

VOLUME XXXII, ISSUE 9

March 03, 2010

RULE MAKING ACTIVITIES

DEPARTMENT OF LABOR

EMERGENCY/PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. LAB-09-10-00005-EP

Filing No. 155

Filing Date. Feb. 12, 2010

Effective Date. Feb. 12, 2010

New York State Worker Adjustment and Retraining Notification Act (WARN)

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Proposed Action:

Addition of Part 921 to Title 12 NYCRR.

Statutory authority:

Labor Law, section 860-f

Finding of necessity for emergency rule:

Preservation of general welfare.

Specific reasons underlying the finding of necessity:

The effective date of the regulations coincides with the effective date of their authorizing legislation, the New York Worker Adjustment and Retraining Notification (WARN) Act, a new law that becomes effective February 1, 2009. The Act governs the provision of notice to certain employees who will lose employment through plant closings, mass layoffs, or reductions in work hours. The purpose of the authorizing statute is to ensure that the employees are aware of future actions that will affect their employment so that they can take steps to secure new employment, be retrained for more readily available work, and otherwise make arrangements to provide for their needs and those of their families when their employment ends. The law is also intended to ensure the ability of the Department of Labor and its partner, the Workforce Investment Board, to provide Rapid Response services to the affected employees prior to their employment loss. These services include providing employees with information regarding unemployment insurance, job training, and reemployment services. These regulations fill in gaps found in the law in order to more fully inform employees of their obligations and workers of their rights under the law.

The emergency promulgation of these regulations is necessitated by the dramatic job losses currently being suffered within the state and the need to ensure that the notice requirements detailed in the regulation are available to protect workers affected by such job losses and return them quickly to work. After seasonal adjustment, New York State's private sector job count decreased by 3,100, or less than 0.1 percent, to 7,050,700 in December 2009. The statewide total nonfarm job count (private plus public sectors) decreased over the month by 5,900, or 0.1 percent, to 8,544,900 in December 2009. New York State's seasonally adjusted unemployment rate climbed over the month from 8.6 percent in November to 9.0 percent in December 2009, matching a 26-year high. New York City's rate increased from 10.0 percent in November to 10.6 percent in December 2009. The number of unemployed state residents increased from 832,200 in November to 868,600 in December 2009.

The impact of these job losses on workers, their families, and their communities can be staggering, more so if workers are unaware that plant closings and layoffs are coming. The state WARN Act is designed to give workers time to avoid long periods of unemployment by affording them time to search for new work, retrain for more secure long-term employment, and take advantage of reemployment services which will ensure a quick return to work after their former employment ends. The proposed rules will ensure timely notice to the Department and early intervention of Rapid Response teams in situations involving employment losses so that workers can quickly transition into new employment or retraining following the loss of their jobs. Such activities also avoid or shorten periods of unemployment, thereby reducing employer charges associated with the receipt of unemployment insurance by their former employees. On the other hand, employees need to know of the availability of unemployment insurance benefits following these employment losses since the program is designed to provide an economic safety net to the workers and their families. All efforts that will quickly transition workers into new employment when their former jobs end, or that ensure some continued income during unemployment, will allow workers to continue to make needed purchases such as housing, food, heat and other utilities and to maintain the payment of school and property taxes that support their local community.

Enacting emergency regulations, which will immediately clarify the scope, timing, and content of the notice requirements, supports the goals set forth above and protects the general welfare of the state.

Subject:

New York State Worker Adjustment and Retraining Notification Act (WARN).

Purpose:

To provide government enforcement and more advance notice to a larger number of workers than under the federal WARN law.

Substance of emergency/proposed rule (Full text is posted at the following State website:www.labor.ny.gov):

The proposed rule creates a new section of regulations designated as 12 NYCRR Part 921 entitled "New York State Worker Adjustment and Retraining Notification Act" created under Chapter 475 of the Laws of 2008. This Act requires employers of fifty (50) or more employees to provide at least ninety (90) days notice to affected employees and representatives of affected employees, the New York State Department of Labor, and local workforce partners before ordering a plant closing, mass layoff, or reduction in work hours that falls within the employment losses covered by the law. At least twenty-five (25) employees must be affected for the notice requirement to be triggered. The rule contains exceptions to the notice requirement for certain employers who are making good faith efforts to avoid employment losses and have reasonable expectation that these efforts will successfully forestall the plant closing, mass layoff, or reduction in work hours.

Many employers in the State are already subject to the federal WARN Act (29 USC §§ 2101 - 2109 and 20 CFR 639.3). The State WARN Act expands the notice requirements to a larger group of employers and, concomitantly, extends its protections to more employees. The State Act also gives the Commissioner of Labor the authority to enforce the law on behalf of affected employees who did not receive appropriate notice of a plant closing, mass layoff, or covered reduction in work hours from their employer in violation of the law. Labor Law § 860-f(1) states that the Commissioner of Labor "shall prescribe such rules as may be necessary to carry out this article."

Subpart 921-1, entitled "Purpose and Definitions" sets forth the purpose and defines the terms used in the part. Section 921-1.1(d) defines "employer" as "any business enterprise, whether for-profit or not-for-profit, that employs fifty (50) or more employees within New York State, excluding part-time employees, or fifty (50) or more employees within the state that work in aggregate at least 2,000 hours per week." Section 92 1-1.1(a) defines "affected employee" as "an employee who may reasonably be expected to experience an employment loss as the result of a proposed plant closing, mass layoff, relocation, or covered reduction in hours by the employer."

Subpart 921-2, entitled "Notice," requires covered employers to provide notice to affected employees at least 90 calendar days prior to an event that triggers the notice requirement. This section enumerates the factors that trigger the notice requirement. It further spells out the contents of the notice, how notice is to be served and who must receive notice.

Subpart 921-3, entitled "Extension or Postponement of Mass Layoff Period" requires an employer to give additional notice if the triggering event is extended or postponed. Section 921-3.1 states that an "employer that previously announced and carried out a short-term layoff of six (6) months or less which is being extended beyond six (6) months due to business circumstances (e.g., unforeseeable changes in price or cost) not reasonably foreseeable at the time of the initial layoff must give notice required under the Act and this Part as soon as it becomes reasonably foreseeable that an extension is required." Section 921-3.2 states that "if, after notice has been given, an employer decides to postpone a plant closing, mass layoff, or covered reduction in work hours for less than ninety (90) days, additional notice shall be given as soon as possible after the decision to postpone." This subpart also prohibits "rolling notice".

Subpart 921-4, entitled "Transfers," states that "notice is not required when an employer offers to transfer an employee to a different site of employment within a reasonable commuting distance with no more than a six (6)-month break in employment, regardless of whether the employee accepts such employment, or when an employer offers to transfer the employee to any other site of employment regardless of distance with no more than a six (6)-month break in employment and the employee accepts within thirty (30) days of the offer or of the closing or layoff, whichever is later."

Subpart 921-5, entitled "Temporary Employment," states that "notice is not required if the closing is of a temporary facility, or if the closing or layoff results from the completion of a particular project or undertaking, and the affected employees were hired with the understanding that their employment was limited to the duration of the facility, project, or undertaking." This subpart also makes clear that the employer must demonstrate that the employee understood the job was temporary either from having received notice or industry practice.

Subpart 921-6, entitled "Exceptions," provides exceptions to the 90-day notice period for which the employer bears the burden of proof. This subpart includes exceptions for faltering companies, unforeseeable business circumstances, natural disasters, strikes or lockouts, and economic strikers.

Subpart 921-7, entitled "Enforcement by the Commissioner of Labor," describes the administrative procedure followed by the Department when a WARN violation is suspected or alleged. Section 921-7.2 states that an employer who fails to give notice, as required, is subject to a civil penalty of $500 for each day of the employer's violation. Section 921-7.3 states that an employer who fails to give notice is liable to each employee for back pay and the value of any benefits to which the employee would have been entitled. Further this subpart provides for an administrative appeal to the Commissioner and then an appeal under Article 79 of the CPLR.

Subpart 921-8, entitled "Confidentiality of Information Obtained by the Commissioner of Labor," requires that information obtained by the Commissioner through the administration of this Act be maintained as confidential and not be published or open to public inspection.

This notice is intended:

to serve as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule will expire May 12, 2010.

Text of rule and any required statements and analyses may be obtained from:

Maria Colavito, Esq., New York State Department of Labor, State Office Campus, Building 12, Room 508, Albany, New York 12240, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Kevin E. Jones, Esq., New York State Department of Labor, State Office Campus, Building 12, Room 509, Albany, New York 12240, [phone], email: [e-mail]

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory authority:

Labor Law § 860 as added by Chapter 475 of the Laws of 2008 sets forth the requirements of the State Worker Adjustment and Retraining Notification Act. Section 860-f states that the Commissioner of Labor shall prescribe rules necessary to carry out Article 25-A of the Labor Law.

The Department previously published a Notice of Proposed Rulemaking on February 18, 2009 and extended several times, which added a new Part 921 to 12 NYCRR entitled the New York State Worker Adjustment and Retraining Notification Requirements. The previously published proposed rulemaking prescribed rules to carry out Article 25-A of the Labor Law. The current proposed rulemaking incorporates much of the prior proposed rulemaking with revisions made based upon comments received from various interested parties.

2. Legislative objectives:

Article 25-A establishes the New York State Worker Adjustment and Retraining Notification (WARN) Act intended to provide more advance notice to a larger number of workers who are laid off from their jobs than under the federal WARN law. Under the State WARN, companies with at least 50 employees must provide at least 90 days' notice to affected employees and their representatives, the New York Department of Labor, and the local Workforce Investment Board(s) where 25 or more employees where such number makes up at least 33% of the workforce, or 250 employees regardless of what percentage of the workforce is involved, will suffer an employment loss. This notice allows the Department to provide workers reemployment and retraining services in advance of their employment loss. This early intervention will reduce or avoid periods of unemployment, ensure that workers are aware of job placement and retraining services, and, if attempts to transition workers into new employment are unsuccessful, make them aware of the availability of unemployment insurance benefits as an economic safety net for them and their families. Under the Act, the Commissioner of Labor is required to enforce the law by recovering back wages and the value of the cost of any benefits to which the employee would have been entitled and by imposing penalties against such employers.

3. Needs and benefits:

Workers whose employment is affected as a result of plant closings, mass layoffs, or significant reduction of hours require early and adequate notice to find new employment and prepare for their future. As the downturn in the economy increasingly impacts companies large and small, larger numbers of workers are impacted by such events. At the time of this writing, New York State's seasonally adjusted unemployment rate climbed over the month from 8.6 percent in November to 9.0 percent in December 2009, matching a 26-year high. The number of unemployed state residents increased from 832,200 to 868,600 over the same period.

Certain job sectors in the state, such as manufacturing, continue to decline, signaling a growing need to retrain workers exiting jobs in this sector. All in all, the current economic climate makes it essential to provide the Department with early access to workers who will be losing employment so that they can receive information and assistance that will return them to work as soon as possible following their job loss. During 2009, the Department received 400 WARN notices involving approximately 41,000 employees. Many of these workers would not have received notice under the federal WARN Act which only applies to businesses with 100 or more employees.

Early intervention to assist workers with obtaining new jobs is also essential to avoiding the economic impact of large-scale employment losses on workers, their families, and their communities. Large-scale job losses addressed by the state law impact employee spending and lead to the general decline of the local economy. This affects businesses that serve the workforce, adversely impacts local sales and property taxes, housing values, and the like. Early intervention leading to reemployment also reduces dependence upon unemployment insurance benefits for laid-off workers. Although such benefits are a critical economic safety net for workers and their families, reemployment is always preferable and provides greater income to workers. Reemployment reduces UI charges to individual employers and also UI benefit costs. Reduction of UI benefit costs is particularly beneficial to the State at this point in time since the State's UI Trust Fund has a deficit balance which is expected to last for several years.

Finally, the state Act and regulations also meet a significant need by providing workers with an effective mechanism to seek redress for employer violations of the notice requirements. Currently, the federal WARN law requires aggrieved employees to bring private lawsuits to sue for redress, a remedy that has been infrequently used over the years. The State WARN Act and these regulations give the Commissioner of Labor the authority to recover back wages and benefits on behalf of such workers and to impose civil penalties against employers who fail to provide the required WARN notice.

Since the WARN Act took effect February 1, 2009, the Department has issued four (4) Notices of Violation and collected $7,500 in penalties. A number of employers also extended their notice period or voluntarily paid back wages and benefits to employees upon being notified of a potential violation by the Commissioner. There are approximately twenty (20) WARN investigations currently underway.

4. Costs:

It is impossible to predict the potential cost of the rule on regulated parties with any certainty. As noted elsewhere in this document, employers with 100 or more employees are already required to provide WARN notice for covered employment losses. The rule extends notification requirements to covered employment losses involving employers with 50 or more employees. There are 9,388 employers in the state who have between 50 and 100 employees. However, these employers will not be impacted by the rule unless they engage in an employment loss that meets the triggers set forth in the Act and the rule. Moreover, the number of employers set forth above is inflated because it includes employers with part-time employees who are not included in the numerical trigger computations referenced in the rule.

For those employers who are subject to the rule, costs of providing notice include preparation of the notice and mailing or delivery of the notice to affected workers, their representatives, the Department, and the local Workforce Investment Boards. The rule minimizes costs by permitting delivery of the notice with employee paychecks or direct deposit statements or by employer-sponsored electronic mail. First class mail delivery costs would still be minimal as the notice is a one or two page document. Moreover, for those employers already required to provide notice under the federal WARN Act, additional costs will be limited to those associated with providing notice to more employees. The rule would not preclude an employer from utilizing the same notice to meet both state and federal notice requirements so long as all information required under the rule is included.

Apart from employee notice, only three other notices (Department of Labor, employee representatives, and local Workforce Investment Boards) are required. Where an employer has given notice of a mass layoff and extends the duration of that layoff, or where an employer has given notice of an employment loss and postpones that action, that employer must give notice of the extension or postponement as soon as possible. Finally, an employer who elects to pay affected employees sixty days of pay and benefits to avoid liability and penalties for failure to provide the required notice, must still provide notice to affected employees notifying them of the potential availability of unemployment insurance and reemployment services with the final paycheck or through a separate notice provided at the time of termination. The rule specifically provides the content of the notice for the convenience of regulated parties.

Employers who wish to assert an exception to the notice requirement must provide the Commissioner evidence establishing entitlement to such exception. Such evidence should already exist in many circumstances, e.g. copies of loan or grant applications soliciting capital to continue business operations. or be readily available, e.g. documentation of the effects of a unexpected, serious downturn in the economy on the employer's business operation.

Employers who fail to comply with the regulation would be subject to penalties, back pay, and other damages, as well as costs associated with their defense. During the first year of its enforcement of the rule, the Department has assessed penalties in only a handful of cases; in most situations, employers who failed to provide notice have either extended the notice period voluntarily to come into compliance or have paid back wages and benefits due under the rule to employees.

5. Paperwork:

The Department's enforcement will require paperwork associated with investigations and, where necessary, hearings to determine violations and to impose appropriate penalties.

Employers charged with violating the law will have to document their entitlement to exemptions from the notice provisions. In the event of appeals, there will be additional paperwork for the Department and employers to reproduce the hearing record and prepare necessary court filings.

6. Local government mandates:

The state WARN Act and the proposed rule do not apply to state, local, or tribal governmental entities except under circumstances where such otherwise exempt entities are engaging in commercial operations, as already provided in federal WARN regulations.

7. Duplication:

There is no duplication of existing state rules or regulations. There is some overlap of the proposed rule with federal WARN regulations. The Department has drafted the state regulations to be consistent with federal rules to the extent possible, while still meeting the spirit and intent of the more stringent state law.

The Department's procedural rules for other Departmental hearings under 12 NYCRR Part 701 will be used for any administrative hearings conducted under the WARN Act, thereby avoiding duplication in this regard.

8. Alternatives:

The Department has considered a number of alternatives to various provisions of the proposed rule and, where possible, has selected those that will minimize the adverse impact of the rule. Wherever state and federal WARN laws contain identical requirements, these regulations track federal regulations. For example, rather than requiring a separate state and federal notice for employers subject to both notice requirements, the Department allows a single notice to be used so long as it contains all the information required under state regulation. The Department also chose optional methods of delivery of the notice including enclosing notice with employee paychecks or direct deposit slips to avoid costs associated with separate delivery. Notice may also be provided by electronic mail (e-mail), if certain requirements are met.

The Department also considered alternatives regarding the scope of employee notice under the proposed rule. The Department believes it is critical that the notice contain information which employees can use to hasten their return to work following termination of employment. While the Federal WARN rules encourage, but do not require the inclusion of useful information on dislocated worker assistance programs, the Department chose to require the notices to contain information on the potential availability of unemployment insurance and reemployment services. By providing the actual language which employers can use to satisfy this requirement, the Department minimized the impact of the requirement on the regulated community.

The Department recognized that, in computing the average regular rate of compensation, salary and commission employees may not work on a regular schedule. Instead of using the number of days worked to calculate the average regular rate of compensation, the number of days the salary or commission employee was in active employment status will be used. Otherwise, the average regular rate of compensation may be unrepresentative of the actual rate of compensation.

The Department also considered creating a separate enforcement procedure for the state WARN Act, but instead decided to utilize the administrative procedure currently in place for other administrative hearings conducted by the Department.

9. Federal standards:

Federal standards implementing the federal WARN law exist and are found at 29 USC §§ 2101 - 2109 and 20 CFR 639. However, consistent with a less stringent federal law, such regulations provide a shorter period of notice, cover fewer employers, and do not permit administrative enforcement of the law. Since the Commissioner of Labor is required to enforce the Act, additional provisions not contained in the federal WARN regulations were included to ensure that information regarding notice requirements, investigations, and determinations in the state regulations sufficiently inform all affected parties of their rights and obligations and ensure a fair and thorough determination of violations based on the requirements of the Act.

10. Compliance schedule:

The Act took effect February 1, 2009.

Regulatory Flexibility Analysis

1. Effect of rule:

The New York State Worker Adjustment and Retraining Notification (WARN) Act (Chapter of the Laws of 2008, effective February 1, 2009) requires businesses in New York with 50 or more employees to provide notice at least 90 days prior to a plant closing, mass layoff, relocation, or covered reduction in work hours where at least 25 of the employees will experience an employment loss from such event. Prior to the Act, only larger firms with at least 100 workers covered by the federal WARN law were required to provide 60 days notice of such events. The state WARN notice must be given to the affected employees and their representatives, the New York Department of Labor, and the local Workforce Investment Board(s) where the employment losses occur. During 2009, the Department received 400 WARN notices involving approximately 41,000 employees. These notices allowed the Department to deploy Rapid Response staff to assist workers with information regarding unemployment insurance benefits, and retraining or other reemployment services.

State, local, and tribal governmental entities are not subject to the requirements of the rule.

2. Compliance requirements:

Employers of 50 or more employees, other than part-time employees, will be required to provide a WARN notice to the required parties under the WARN Act containing information set forth in the rule. Such employers must also maintain records to support any exception they may claim from the notice requirement so that they may share this information with the Department should it commence an investigation into the employer's failure to provide timely notice. Employers in New York are already required to maintain accurate and complete payroll records in order to comply with state laws relating to wages and unemployment taxes. These records help employers calculate the size of their workforce and the hours worked by employees in order to determine whether a WARN notice is required. Information regarding employees who will be affected by a plant closing, mass layoff, relocation, or covered reduction in work hours would have been developed and documented during the planning phase for such actions; therefore necessary information should be readily available to employers to assure compliance with the WARN notice requirements. To the extent that bumping rights might exist in the place of employment, these rights would be established in the employer's collective bargaining agreement with the union representing its workers. The rule acknowledges that information identifying specific individuals affected by bumping rights may not be available at the time notice is required. Consequently, the rule simply requires that the notice contain a statement whether bumping rights exist. Finally, the records required to support a WARN exception claim are records that should already be in the employer's possession as, for example, under the faltering company exception where the employer applied for loans or was seeking clients or capital to keep its business open. Where an employer asserts a right to an exemption, they must include the basis for such exemption in the notice provided to all parties.

3. Professional services:

Employers covered by this rule are not expected to require professional services to comply with the rule. As noted above, information that must be included in the notice to the Department, the Workforce Investment Board, employees, and their representatives is simple, straightforward, and already available to the employer. It includes information regarding the planned action, the individuals who will be impacted, and employer contact information. The Department has included a requirement that the notice contain a statement for employees and their representatives regarding potential eligibility for unemployment insurance benefits and various reemployment services available from the Department. In order to minimize the impact of this requirement on the employer, the Department has included the content of this notice in the rule.

Employers who are cited for a violation of the notice requirement and who are subject to imposition of penalties may elect to hire legal counsel to defend such action.

The rule recognizes agreements for services entered into between employers and Professional Employer Organizations under Article 31 of the Labor Law and allows provisions in those agreements to address issues of WARN compliance and liability. Such agreements are entirely voluntary.

4. Compliance costs:

The adoption of the regulations is expected to result in minimal costs to employers. They will be required to file a WARN notice with the required parties; costs associated with providing the notice will depend upon the number of employees affected and the means of delivery selected by the employer. The rule minimizes costs associated with providing notice by permitting delivery of the notice with employee pay or direct deposit statements or by employer-sponsored electronic mail. Notice may also be personally delivered to individual employees at the workplace. Should employers choose to send the notice via first class mail, postage costs would still be minimal as the notice should be no more than a one or two page document. Apart from employee notice, which must be provided individually to all affected employees, notices to the Department of Labor, employee representatives, and local Workforce Investment Boards are required. Again, postage costs associated with such delivery should be nominal. In some circumstances, employees suffering an employment loss may be represented by different unions. In those cases, notices would be required to be sent to each of the different unions. In rare circumstances where places of employment are served by multiple Workforce Investment Boards, more than one notice may be required.

In the event an employer has already given notice of a mass layoff and extends the duration of that layoff, or in the event an employer has given notice of a plant closing, mass layoff, relocation, or covered reduction in work hours and postpones that action for which notice was given, that employer must give notice of the extension or postponement as soon as possible.

Employers who wish to assert an exception to the notice requirement will have to provide the Commissioner with documentary and other evidence establishing that they qualify for a WARN exception under one or more of the various exception categories. While such evidence should already exist in many circumstances, e.g. copies of loan or grant applications soliciting capital to continue business operations, other evidence may have to be compiled by the employer in response to an investigation of the employer's failure to provide timely notice, e.g. documentation of the effects of a unexpected, serious downturn in the economy on the employer's business operation.

Employers who fail to comply with the regulation would be subject to penalties, back pay and other damages, as well as costs associated with their defense. The rule allows the Commissioner to forego damages and penalties where the employer timely makes payment equivalent to sixty days of pay and benefits to employees within three weeks of termination. During the first year of its enforcement of the rule, the Department has assessed penalties in only a handful of cases; in most situations, employers who have failed to initially provide the requisite notice have either extended the notice period voluntarily to come into compliance or have paid back wages and benefits due under the rule to employees who did not receive the requisite notice.

Minimal costs may be incurred by labor unions representing employees affected by plant closings, layoffs, relocations, and covered reductions in work hours but these costs would typically involve normal representational and information activities. Similarly, costs associated with WIB and Departmental responses to employment losses would be part of regularly funded workforce services and unemployment insurance activities.

5. Economic and technological feasibility:

The adoption of these emergency regulations is not expected to create an undue burden on employers. Larger employers (i.e. those who employ 100 or more employees) will typically be required to file a notice with the Commissioner under the federal WARN Act in any case. Where this requirement overlaps with the state WARN requirements, the employer may file a single notice so long as it meets the notice requirements set forth in the regulations. Consistent with current federal WARN regulations, notice must be provided using a method that ensures the timely receipt of notice by the required parties. Delivery methods approved under the rule include personal delivery or first class mail. The rule also permits notice to be provided to affected employees along with paychecks or direct deposit receipts and by electronic mail (e-mail). The burden of proof is on the employer to show that each employee received the e- mail. The employee e-mail addresses must be addresses provided to the employees by the employer and used in the conduct of business. The e-mail notice must be identified as "urgent." These alternative methods of delivery should provide sufficient alternatives to covered employers to address issues of both convenience and cost.

6. Minimizing adverse impact:

The proposed rule is being promulgated in response to numerous requests received from employers, their attorneys, workers, and worker representatives seeking clarification and guidance on the scope and requirements of the state WARN statute. The Department has sought to minimize adverse impact upon the regulated community by including provisions in the rule that address the issues and concerns raised in these inquiries. These provisions allow employers to better understand their obligations under the law, and inform employees of their rights under the law. This proposal is intended to assist employers to avoid violations while ensuring that workers receive the notice that will provide them with an opportunity to plan for their futures and to support their families following employment termination.

At the same time, the Department has taken a number of steps to minimize the adverse impact of the rule. With few exceptions that reflect the legislative intent of the state WARN Act, wherever state and federal WARN laws contain identical requirements, the provisions of this rule track federal regulations for the federal WARN which have been in place for more than a decade. This compatibility of provisions will allow for greater ease of compliance by regulated parties. For those employers who are subject to both state and federal notice requirements, the Department will allow a single form of notice to be used so long as the notice contains all the information elements required under the state regulation. Where the Department included a requirement that the WARN notice apprise affected employees of the availability of unemployment insurance and reemployment services, the rule contains the actual language to be used by employers for this purpose. The rule allows delivery of the notice along with paychecks or direct deposit slips, by personal delivery, or by electronic transmission, in order to avoid costs associated with separate delivery by first class mail. The rule permits employers who already have Professional Employer Organization agreements to address issues related to WARN notice and liability in those agreements in order to facilitate compliance.

The statute and regulation also minimize adverse impact by including exceptions to the length of notice requirement where the employer can demonstrate that providing the notice would adversely impact the business' efforts to obtain financing, customers, or other financial support that would allow it to remain open or avoid employment losses. Employers who assert this defense to a failure to provide timely notice must be able to demonstrate such efforts to the satisfaction of the Department and must notify affected employees of the basis for the claimed notice limitations. While the Department will strictly construe such limitations on notice requirements, numerous employers have successfully demonstrated to the Department over the past year that they met the statutory and regulatory criteria for notice limitations.

As a whole, the proposed rules ensure the early intervention of the Department in situations involving employment losses so that workers can quickly transition into new employment or retraining following the loss of their jobs. Where such activities lead to reemployment, employers will not face benefit charges associated with the receipt of unemployment insurance by their former employees. Under circumstances where early intervention activities do not serve to avoid unemployment, unemployment insurance benefits will provide an economic safety net to the workers and their families. All efforts which will either keep the workers employed, move them quickly into new employment, or ensure some continued income will assist the workers' communities. Income allows workers to continue to make needed purchases including housing, food, utilities, etc. and to maintain the payment of school and property taxes that support their local community. This income is particularly important in rural communities which often have fewer commercial and industrial businesses to support their tax base and depend upon employed residents to financially support local business and governmental services.

The state WARN Act and the proposed rule do not apply to state, local, or tribal governmental entities except under circumstances where such otherwise exempt entities are engaging in commercial operations. This limitation on the exemption from WARN that would otherwise apply to governmental entities also mirrors the language found in federal WARN regulations.

7. Small business and local government participation:

Prior to and during the initial emergency rulemaking for this rule, the Department discussed the WARN Act at a meeting of the Labor and Employment section of the New York State Bar Association and at a meeting of the New York Chapter of the Association of Corporate Counsel. Many individuals attending these meetings represented small businesses impacted by the rule. In addition, the Department published information on its website, issued press releases, and held press conferences regarding the passage of the state WARN Act. All of these activities prompted numerous contacts from businesses, corporate counsel, and worker representatives identifying areas of the statute which they felt required clarification in the regulations. The Department has attempted to address all these requests for clarification in the rule.

The Department intends to publish a copy of this rule on its website and to mail copies to organizations representing business and labor for distribution to their members. These information activities will be in addition to the formal publication of the proposed rule in the State Register. Department staff will also be available, where possible, to organizations that wish to have presentations on the changes to the rule.

Rural Area Flexibility Analysis

1. Types and estimated numbers of rural areas:

Employers of fifty (50) or more employees in the state who engage in plant closings, mass layoffs, relocations, or reductions in work hours covered under the Act and the rule must provide notice of such employment losses under both the statute and the emergency rule. Such employers are located throughout the state and, therefore, all the state's rural areas are affected by the rule.

2. Reporting, recordkeeping and other compliance requirements; other professional services:

Rural area employers of 50 or more employees, other than part-time employees, who have a plant closing, mass layoff, relocation, or reduction in work hours covered by the Act will be required to provide a WARN notice to the required parties under the WARN Act containing information set forth in the rule. Such employers must also maintain records to support any exception they may claim from the notice requirement so that they may share this information with the Department should it commence an investigation into the employer's failure to provide timely notice. Employers in New York are already required to maintain accurate and complete payroll records in order to comply with state laws relating to wages and unemployment taxes. These records help employers calculate the size of their workforce and the hours worked by employees in order to determine whether a WARN notice is required. Information regarding employees who will be affected by a plant closing, mass layoff, relocation, or covered reduction in work hours would have been developed and documented during the planning phase for such actions; therefore necessary information would be readily available to employers to assure compliance with the WARN notice requirements. To the extent that bumping rights might exist in the place of employment, these rights would be established in the employer's collective bargaining agreement with the union representing its workers. The rule acknowledges that information specifically identifying individuals affected by bumping rights may not be available at the time notice is required and simply requires that the notice contain a statement whether bumping rights exist. Finally, the records required to support a WARN exception claim are records that should already be in the employer's possession as, for example, under the faltering company exception where the employer applied for loans or was seeking clients or capital to keep its business open.

Rural area employers covered by this rule are not expected to require professional services to comply with the rule. As noted above, information that must be included in the notice to the Department, the Workforce Investment Board, affected employees, and their representatives is simple, straightforward, and already available to the employer. It includes information regarding the planned action, the individuals who will be impacted, and employer contact information. The Department has included a requirement that the notice contain a statement for employees and their representatives regarding potential eligibility for unemployment insurance benefits and various reemployment services available from the Department. The Department has included the content of this notice in the rule to minimize the impact of the requirement on the employers. Where a rural area employer wishes to assert an exception to the WARN notice requirement, the records required to support such a WARN exception claim are records that should already be in the employer's possession. For example, under the faltering company exception where the employer applied for loans or was seeking clients or capital to keep its business open. Where an employer asserts a right to an exemption, it must include the basis for such exemption in the notice provided to all parties.

3. Costs:

It is impossible to predict the potential cost of the rule on regulated parties with any certainty. As noted elsewhere in this rulemaking, employers with 100 or more employees are already required to provide WARN notice for covered employment losses under the federal WARN Act. The rule extends notification requirements to covered employment losses involving employers with 50 or more employees. There are 9,388 employers in the state who have between 50 and 100 employees. Some of these employers will undoubtedly be located in rural areas. However, these employers will not necessarily be impacted by the rule unless they engage in a plant closing, mass layoff, relocation, or reduction in work hours that meets the numerical notice triggers set forth in the Act and the rule. Moreover, the number of employers set forth above is inflated because it includes employers with part-time employees who are not included in the numerical trigger computations referenced in the rule.

For those rural employers who are subject to the rule, costs of providing notice include preparation of the notice and mailing or delivery of the notice to affected workers, their representatives, the Department, and the local Workforce Investment Boards. The Department has attempted to keep such costs to a minimum by allowing employers to include notices with paychecks or direct deposit statements already provided to affected employees and allowing notification to affected employees by electronic mail. Moreover, for those employers in New York already required to provide notice under the federal WARN Act, additional costs will be associated with providing notice to more employees, i.e. nominal postage costs or somewhat higher costs associated with other delivery methods which the employer may elect to use. However, since the notice will be a one page sheet of information, such postage charges should be minimal. The rule would not preclude an employer from utilizing the same notice to meet both state and federal notice requirements so long as the notice includes all information required under the proposed rule.

Apart from employee notice, which must be provided individually to all affected employees, only three other notices (Department of Labor, employee representatives, and local Workforce Investment Boards) are typically required. The only exceptions to this would involve circumstances in which employees may be represented by different unions, or where covered employment sites are served by multiple Workforce Investment Boards. Under these circumstances, more than one notice may be required. In the event an employer has already given notice of a mass layoff and extends the duration of that layoff, or in the event an employer has given notice of a plant closing, mass layoff, relocation, or covered reduction in work hours and postpones that action for which notice was given, that employer must also give notice of the extension or postponement as soon as possible. Finally, the rule also requires that an employer, who elects to pay affected employees sixty days of pay and benefits to avoid liability and penalties for failure to provide the required 90-day notice, must provide notice to affected employees notifying them of the potential availability of unemployment insurance and reemployment services. This notice must be provided with the final paycheck or through a separate paper or electronic mail notice provided at the time of termination. As elsewhere, the rule specifically provides the content of the notice for the convenience of regulated parties.

Employers who wish to assert an exception to the notice requirement will have to provide the Commissioner with documentary and other evidence showing that they fit one or more of the various exception categories. While such evidence should already exist in many circumstances, e.g. copies of loan or grant applications soliciting capital to continue business operations, other evidence may have to be compiled by the employer in response to an investigation of the employer's failure to provide timely notice, e.g. documentation of the effects of a unexpected, serious downturn in the economy on the employer's business operation.

Employers who fail to comply with the regulation would be subject to penalties, back pay and other damages, as well as costs associated with their defense. The rule allows the Commissioner to forego damages and penalties where the employer timely makes payment equivalent to sixty days of pay and benefits to employees within three weeks of termination. During the first year of its enforcement of the rule, the Department has assessed penalties in only a handful of cases; in most situations, employers who have failed to initially provide the requisite notice have either extended the notice period voluntarily to come into compliance or have paid back wages and benefits due under the rule to employees who did not receive the requisite notice.

Minimal costs may be incurred by labor unions representing employees affected by plant closings, layoffs, relocations, and covered reductions in work hours but these costs would typically involve normal representational and information activities. Similarly, costs associated with WIB and Departmental responses to employment losses would be part of regularly funded workforce services and unemployment insurance activities.

To the extent that early intervention and reemployment services offered by the Department through its Rapid Response activities reduce the number of workers who will ultimately claim unemployment insurance benefits as a result of the adverse employment action, rural employers will see UI charges decrease as a result of the rule.

4. Minimizing adverse impact:

The Department has sought to minimize adverse impact upon rural employers by including provisions in the rule that address the issues and concerns raised in inquiries received from regulated and interested parties throughout the first year of implementation of the WARN Act. While it is not possible to know whether individuals contacting the Department are rural employers or represent rural employers, we believe that the changes made to the rule clarifying certain provisions or adding alternatives for compliance would benefit rural employers. These changes will allow rural employers to better understand their obligations under the law and inform employees of their rights under the law. This proposal is intended to assist employers to avoid violations while ensuring that workers receive the notice that will provide them with an opportunity to plan for their futures and to support their families following employment termination.

At the same time, the Department has taken a number of steps to minimize the adverse impact of the rule upon employers. With few exceptions that reflect the legislative intent of the state WARN Act, wherever state and federal WARN laws contain identical requirements, the provisions of this rule track federal regulations for the federal WARN which have been in place for more than a decade. This compatibility of provisions will allow for greater ease of compliance by regulated parties. For those employers who are subject to both state and federal notice requirements, the Department will allow a single form of notice to be used so long as the notice contains all the information elements required under the state regulation. Where the Department included a requirement that the WARN notice apprise affected employees of the availability of unemployment insurance and reemployment services, the rule contains the actual language to be used by employers for this purpose. The rule allows delivery of the notice along with paychecks or direct deposit slips, by personal delivery, or by electronic transmission, in order to avoid costs associated with separate delivery by first class mail. The rule also permits employers who already have Professional Employer Organization agreements to address issues related to WARN notice and liability in those agreements in order to facilitate compliance.

The statute and regulation also minimize adverse impact by including exceptions to the length of notice requirement where the employer can demonstrate that providing the notice would adversely impact the business' efforts to obtain financing, customers, or other financial support that would allow it to remain open or avoid employment losses. Rural employers who assert this defense to a failure to provide timely notice must be able to demonstrate such efforts to the satisfaction of the Department and must notify affected employees of the basis for the claimed notice limitations. While the Department will strictly construe such limitations on notice requirements, numerous employers have successfully demonstrated to the Department over the past year that they met the statutory and regulatory criteria for notice limitations.

As a whole, the proposed rules ensure the early intervention of the Department in situations involving employment losses so that workers can quickly transition into new employment or retraining following the loss of their jobs. Where such activities lead to reemployment, employers will not face benefit charges associated with the receipt of unemployment insurance by their former employees. Under circumstances where early intervention activities do not serve to avoid unemployment, unemployment insurance benefits will provide an economic safety net to the workers and their families. All efforts which will either keep the workers employed, move them quickly into new employment, or ensure some continued income will assist the workers' communities. Income allows workers to continue to make needed purchases including housing, food, utilities, etc. and to maintain the payment of school and property taxes that support their local community. This income is particularly important in rural communities which often have fewer commercial and industrial businesses to support their tax base and depend upon employed residents to financially support local business and governmental services.

The state WARN Act and the proposed rule do not apply to state, local, or tribal governmental entities - including those located in rural areas - except under circumstances where such otherwise exempt entities are engaging in commercial operations. This limitation on the exemption from WARN that would otherwise apply to governmental entities also mirrors the language found in federal WARN regulations.

5. Rural area participation:

Prior to and during the initial emergency rulemaking for this rule, the Department discussed the WARN Act at a meeting of the Labor and Employment section of the New York State Bar Association and at a meeting of the New York Chapter of the Association of Corporate Counsel. Many individuals attending these meetings represented small businesses impacted by the rule. In addition, the Department published information on its website, issued press releases, and held press conferences regarding the passage of the state WARN Act. All of these activities prompted numerous contacts from businesses, corporate counsel, and worker representatives identifying areas of the statute which they felt required clarification in the regulations. The Department has attempted to address all these requests for clarification in the rule.

The Department intends to publish a copy of this rule on its website and to mail copies to organizations representing business and labor for distribution to their members. These information activities will be in addition to the formal publication of the proposed rule in the State Register. Department staff will also be available, where possible, to organizations that wish to have presentations on the changes to the rule.

Job Impact Statement

This rule requires notice to be provided to employees and other parties 90 days prior to covered plant closings, mass layoffs, relocations, and reductions in work hours at sites of employment subject to the rule. It is apparent from the nature and purpose of the rule that it will not have a substantial adverse impact on jobs and employment.