Maryland employers wrestling with the onerous challenges posed by the COVID-19 crisis, will soon have a new legal obligation to meet when reducing their workforces. Effective October 1, 2020, the Economic Stabilization Act will require employers to provide employees 60 days written notice of a reduction in operations that will result in lay-offs or terminations. The new law requires the Secretary of the Department of Labor, Licensing and Regulation to create guidelines as wells as programs to mitigate the impact a reduction in operation has on employers and employees.
The Act applies to employers with 50 or more employees that have operated an industrial, commercial, or business enterprise in Maryland for at least 1 year. An “employee” means an individual who works for an employer for an hourly or salary wage or in a managerial or supervisory capacity at least 20 hours per week. It does not include persons who work an average of less than 20 hours per week or have worked for the employer for less than six months in the past 12 months.
The Act mandates written notice to employees, as well as union representatives, elected officials, and the State Dislocated Workers Unit, in the case of a reduction in operations. The reduction in operations can be either the relocation of part of its operation from one workplace to another existing or proposed site; or the shutting down of a workplace or a portion of its operations that reduces the number of employees by the greater of at least 25% or 15 employees (only counting those included in the definition of employee) over any 3-month period. A “workplace” includes a factory, plant, office, or other facility where employees produce goods or provide services but does not include a construction site or other temporary workplace.
The Act does not apply to reductions in operations that:
- Result solely from labor disputes;
- Occur in a commercial, industrial, or agricultural enterprise operated by the State or its political subdivisions;
- Occur at construction sites or other temporary workplaces;
- Result from seasonal factors that are determined by the Department to be customary in the industry; or
- Result when an employer files for bankruptcy.
Prior to initiating a reduction in operations, an employer must give 60 days written notice to the following individuals:
- All employees at the workplace that are subject to the reduction in operations, including those working on average less than 20 hours a week and those who have worked less than 6 months during the prior 12-month period;
- Any representative or bargaining agency representing those employees (i.e. a union);
- The State Dislocated Worker Unit; and
- All elected officials in the jurisdiction where the affected workplace is located.
The written notice shall include the following information:
- The name and address of the workplace where the reduction of operations is expected to occur;
- The name, telephone number, and e-mail address of a workplace supervisory employee 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; and
- The expected date and time when the reduction in operations will begin.
The Act directs the Secretary of the Maryland Department of Labor to provide mandatory guidelines for the written notice for an employer that expects to terminate employees due to a reduction in operations; the continuation of benefits, such as health, severance, and pension, that an employer should provide to employees who will be terminated due to a reduction in operations; or the specific mechanisms that employers can use to ask for the assistance of the State’s quick response program.
If an employer is determined by the Secretary of the Department of Labor to be in violation of the Act, the employer could face a civil penalty of up to $10,000 per day for each day the employer was in violation.
The bill will become law without the Governor’s signature and takes effect October 1, 2020.