The Economic Stabilization Act (aka Maryland’s “WARN” Act) Coming October 1, 2020

A reduction in operations is described as either the relocation of operations from one workplace to another existing site; or closing a workplace or portion of the operations at a workplace that reduces the number of employees by the greater of 25% or 15 employees – as defined by the Act – over a 3-month period.  The Act defines a “workplace” as a factory, plant, office, or other facility where employees produce goods or provide services but does not include a temporary workplace or construction site.

The Act categorizes an “employee” as an individual who works for an hourly or salary wage or is employed in a managerial or supervisory capacity for at least 20 hours per week for 6 of the last 12 months. People who work fewer than 20 hours per week or have worked fewer than 6 months for the employer do not have to receive a notice. This notice must also be made available to union representatives, elected officials, and the State Dislocated Workers Unit.

The written notice must include the following information:

  1. The address of the workplace where the reduction of operations will occur;
  2. The name, telephone number, and e-mail address of an upper-level employee who can be contacted for additional information;
  3. A statement explaining whether the reduction is expected to be temporary or permanent;
  4. Determine if the workplace anticipates closing; and
  5. The expected date and time when the reduction will begin.

This notice must be provided to the following individuals 60 days before the reduction is scheduled to begin:

  1. All employees subject to the reduction which includes those who work at least 20 hours per week and have been employed for at least 6 months of the last 12 months;
  2. Any representative of a bargaining agency that represents the employees (i.e. a union);
  3. The State Dislocated Worker Unit; and
  4. All elected officials in the jurisdiction where the workplace is located.

If the Secretary of the Department of Labor determines an employer violated the Act, that employer can face a civil penalty of $10,000 for each day they were in violation.

The Secretary of the Department of Labor, Licensing and Regulation is also required to create programs and guidelines to manage the potential difficulties that a reduction of operations will have on employers and employees.

Any additional mandatory guidelines for written notice for an employer expecting to terminate employees due to a reduction in operations will be provided by the Secretary of the Maryland Department of Labor as a result of this Act. The Secretary may also provide mandatory guidelines for employer responsibilities regarding continuation of benefits – such as health, severance, and pension – that an employer should provide to employees in the event of termination as well as instructions on how an employer can seek assistance from the State’s quick response program.

**This Act DOES NOT apply to reductions that:

  1. Result solely from labor disputes;
  2. Occur in enterprises operated by the State or its political subdivisions;
  3. Occur in temporary worksites or construction sites;
  4. Result from customary seasonal disruptions that are customary according to the Department of Labor, Licensing, and Regulation;
  5. Result from an employer filing bankruptcy.