Under Maryland SB780 and effective October 1, 2020, the state's Economic Stabilization Act (ESA) is modified to make employer compliance with its requirements mandatory, rather than voluntary, and shortens the time that certain employers must provide notice to employees of a reduction in operations from 90 to 60 days.

The Maryland ESA is an expansion on the federal requirements under the Worker Adjustment and Retraining Notification Act (WARN Act).

Employee written notice requirement

Employees must be given a written notice at least 60 days in advance of a reduction in operations, which is defined as either:

• The relocation of a part of the employer's operation from one workplace to another existing or proposed site
• The closing of a workplace or a portion of the operations of a workplace when such action reduces the number of employees by at least 25% or 15 employees, whichever is greater, over any three-month period

The mandatory employee notice requirement does not apply to the certain types of operational reductions, such as those that:

• Are the sole result of a labor dispute
• Occur at construction sites or other temporary workplaces
• Are the result of seasonal factors that are customary in the industry (qualifying seasonal factors will be identified in upcoming guidance from the Maryland Department of Labor)
• Are the result of an employer filing for bankruptcy under the federal bankruptcy laws

The employee written notice must include:

• The name and address of the workplace where the reduction in operations is expected to occur
• The name, telephone number, and e-mail address of the employer's supervisory contact whom employees can contact for information
• A statement that explains whether the reduction in operations is expected to be permanent or temporary and if the workplace is expected to close
• The expected date when the reduction in operations will begin

The 60-day written notice required under the amended law must be given to:

• All employees at the workplace who are subject to the reduction in operations
• Each exclusive representative or bargaining agency that represents employees at the workplace subject to the reduction in operations
• Individuals who work less than 20 hours on average each week or have worked for the employer for less than six months in the immediately preceding 12 months at the workplace subject to the reduction in operations
• The Maryland Division of Workforce Development and Adult Learning's Dislocated Worker Unit
• All elected officials in the jurisdiction where the workplace that is subject to the reduction in operations is located

Covered employers

The requirement to provide employee written notices applies to employers with at least 50 employees that operate an industrial, commercial, or business enterprise within Maryland and have been doing business in the state for at least one year. In determining if the 50-employee threshold is met, employers may exclude employees who work less than 20 hours per week on average or who have worked less than six months out of the immediately preceding 12 months.

Penalties

Employers that do not comply with the law could face a fine of up to $10,000 per day for each day in violation.

Ernst & Young LLP insights

A number of states are taking action to provide protections to employees facing layoff due to a reduction in operations or workplace shutdown by adopting or enhancing state laws that go beyond the requirements of the federal WARN Act.

New Jersey, for instance, recently passed legislation (S 3170) that mandates severance payments to employees who are part of a mass layoff and requires a 90-day notice to employees of an upcoming mass layoff. Under the New Jersey law, a "mass layoff" is defined as a reduction in force that is not the result of a transfer or termination of operations and that results in the termination of employment at an establishment during any 30-day period for 50 or more full or part-time employees working at or reporting to the establishment.

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