Maryland Toughens Mini-WARN Act for Employers

Author: David B. Weisenfeld, XpertHR Legal Editor

May 27, 2020

Maryland employers will soon face new obligations as the state has significantly expanded its mini-Worker Adjustment and Retraining Notification (WARN) Act without including any exception for a health pandemic.

Effective October 1, 2020, the amended Maryland Economic Stabilization Act mandates that employers with 50 or more employees operating commercial, industrial or business enterprises in Maryland for at least one year must provide 60 days' advance written notice to affected employees before implementing a reduction in operations. That goes well beyond the federal WARN Act's 100-employee coverage threshold.

Under Maryland's amended mini-WARN law, a reduction in operations is:

  • The relocation of a part of an employer's operation from one workplace to another existing or proposed site; or
  • The shutdown of a workplace or portion of a worksite that reduces the number of employees by at least 25% or by at least 15 employees, whichever is greater, over any three-month period.

The penalties for noncompliance are steep as the law includes a penalty of up to $10,000 per day, to be assessed by the Maryland Secretary of Labor, for failing to provide the required notices to all parties.

"What is particularly notable about the law is that it does not contain exceptions for reductions in operations that are a result of a natural disaster or other unforeseeable business circumstances," said employment attorney Guy Brenner, who heads Proskauer's Washington, DC, labor and employment practice.

Elsewhere, California suspended its mini-WARN Act for covered employers affected by a COVID-19-related plant closing, mass layoff or shutdown while New Jersey delayed a scheduled expansion of its law as a result of the coronavirus pandemic. But Maryland took no such step.

"Given employers' current experience with the [COVID-19] pandemic, the absence of such common exceptions is curious," said Brenner. With the potentially high fines associated with a failure to comply, he noted that Maryland employers need to be very aware of the law's nuances before initiating any reduction in force after the amended law goes into effect October 1.

Under the Maryland mini-WARN Act, notice must be given to:

  • All employees subject to the reduction in operations;
  • Any exclusive bargaining representative, such as a union;
  • State agencies including the Maryland Workforce Development's Dislocated Worker Unit; and
  • All elected local officials in the area of the affected workplace.

However, the requirements do not apply to reductions resulting solely from labor disputes, from seasonal factors the state Department of Labor determines are customary in the industry, and when an employer files for bankruptcy.