As you may remember, Maryland made substantial changes to its mini-WARN Act, the Economic Stabilization Act, in 2020. The major changes were outlined in our previous alert which can be found here. The most substantial change in the 2020 Act was that it required covered employers to provide 60-days’ written notice prior to implementing a reduction in force or plant closing. Previously, the notice procedures under the Maryland Economic Stabilization Act were strictly voluntary. While the 2020 changes were to take effect on October 1, 2020, Maryland’s Department of Labor announced that it was delaying enforcement of the Act until April 1, 2021 in order to develop regulations surrounding the changes.
In the 2021 legislative session, and prior to the enforcement date of the previously amended Act, the Maryland Legislature took it upon themselves to further amend the Economic Stabilization Act through House Bill 1154. With Governor Hogan’s signature now on the bill, these new changes will become effective October 1, 2021.
Of particular importance, the amended 2021 Act has removed the in the state requirement regarding the threshold number of employees an employer must have in order to be covered under the Act. Now, employers who employ more than 50 individuals anywhere are covered and must provide notice in the case of a layoff or closure occurring in Maryland.
In summary, the 2021 amended Economic Stimulus Act now requires Maryland employers with 50 or more employees that lay off the greater of 25% of their workforce or 15 employees, whichever is greater, over any three-month period to issue a mandatory notice, not less than 60-days prior to the layoff or closure. Alternatively, if an employer shifts business operations from one workplace to another, the notice requirement is also triggered.
Employees are not counted towards the threshold reduction in force number (i.e. 25% or 15 total), if:
- The employee works less than 20 hours per week or had worked for the employer for less than six-months.
- An employee accepts an offer to transfer to any other site of employment within 30 days of being offered the option to transfer.
The notice must be sent to:
- The chief elected official of the political subdivision where the workplace is located. If an employer has locations in multiple subdivisions, notice must be sent to the official in the subdivision for which the employer paid the most taxes during the fiscal year immediately preceding the layoff/closure.
- The Division of Workforce Development’s dislocated worker unit.
- All employees who are subject to the reduction in force or plant closure.
- The exclusive representative or bargaining agency that represents the employees at the workplace.
- Any individual who works less than 20 hours per week or has worked for the employer for less than six-months.
The notice must state:
- The name and address of the workplace where the reduction of operations is expected to occur.
- The name, telephone number, and email address of a company official as a contact for seeking further information.
- A statement that explains whether the reduction in operations is expected to be permanent or temporary and whether the workplace is expected to shut down.
- The expected date when the reduction in operations will begin.
The Act does not apply to reductions in operations that:
- Result solely from labor disputes.
- Occur in a Maryland commercial, industrial, or agricultural enterprise.
- Occur at construction sites or other temporary workplaces.
- Are from seasonal factors that are customary in the industry.
- Result from an employer’s bankruptcy filing under federal bankruptcy laws.
Further, employers that fall under either of the following categories are excused from the 60-day notice requirement. While the 60-day prior notice requirement is relaxed in these cases, employers must issue notice as soon as practicable, along with a brief statement regarding the basis for the employer’s inability to provide the 60-day notice.
- In circumstances where an employer was actively seeking capital or business that, if sourced, would have allowed the employer to avoid or postpone the reduction. This excuse requires the employer to believe that providing notice would have inhibited its ability to secure the capital or business.
- The reduction is due to any form of natural disaster, including the specific examples of flood, earthquake, or a drought.
Penalties remain unchanged from the 2020 Act. An employer who violates the Maryland Economic Stabilization Act will be subject to an order to comply and may be liable for civil penalties up to $10,000 per day for each day the employer failed to comply with the law.
Employers who are considering layoffs are recommended to pay close attention to and track the total number of employees subject to a lay-off or reduction. With the Act’s three-month lookback period, employers who conduct rolling lay-offs could inadvertently hit the threshold number, and thus subject themselves to penalties. Further, employers who have locations in multiple states are encouraged to review the applicable mini-WARN acts that may exist in any other jurisdictions that they operate in; the provisions of each act can vary greatly from state-to-state.