Bills seek to eliminate closure notification exceptions
The unexpected closure of a downstate hotel is prompting potential changes to the state’s business closure notification requirements for employees and the surrounding community.
State Sen. Shelley B. Mayer, D-Port Chester, has introduced S.7345 and S.7344 in the state Senate. S.7345 would amend the state Labor Law to eliminate two exceptions to notice requirements under the WARN Act — when an employer is actively seeking capital or when an employer cites a lack of foreseeability. S. 7344 requires a written notification of closure to all localities in which an employer paid taxes in the current or previous year and each locality that provides police, firefighting, emergency medical or ambulance services to property where the employer has a place of business.
Both bills have been referred to the Senate’s Labor Committee. Neither bill has been proposed in the past.
Mayer proposed the legislation after the Doral Arrowwood hotel complex in her Senate district informed its 275 employees on Dec. 24, 2019, that it was closing on Jan. 12, 2020.
The state WARN Act requires 90 days’ notice when more than 50 employees will be affected by a company’s closure, with companies liable for up to 60 days of back pay and benefits when a closure takes place sooner than the WARN Act notice stipulates. Under current law, the employer’s duty to pay for a WARN Act violation can be waived if the employer proves that it was seeking capital that, if obtained, would have pushed the closing date further out or if giving notice to employees would have jeopardized efforts to receive the needed working capital. Companies can also be exempted from back pay and benefits payment if the company can prove that the closure was not reasonably foreseeable at the date when a WARN notice was required to have been posted.
“The fact that an employer was actively seeking funding or that the employment loss requiring WARN Act notice was unforeseeable should not, in either case, allow them to escape compliance with the WARN Act,” Mayer wrote. “This bill preserves other existing exceptions for temporary projects, natural disasters, and lockouts, but ensures that employers cannot hide behind vague business arguments to avoid paying their employees or to relieve them from providing sufficient notice to their employees, the Department of Labor, and other required notice recipients.”
S.7344 was written to address what Mayer views as a shortcoming of the WARN Act, which does not require notification of affected communities of a plant closure. Closure of the Doral Arrowood resort cost the Blind Brook School District about $2 million in tax revenue, Mayer wrote in her legislative justification, while there was also a health and safety concern posed by lack of maintenance of an on-site cogeneration facility, swimming pool, maintenance materials that include fuel and compressed gas and the kitchen.
“This bill requires employers with WARN Act notice obligations to notify affected communities and school districts (in addition to the existing requirement to notify employees, the Department of Labor, and local workforce investment boards) to ensure that these communities are aware of mass layoffs, plant closings, and major relocations,” Mayer wrote in her legislative justification. “Receiving notice of these situations at the same time as other WARN Act notice recipients will enable these communities to react sooner and more effectively to manage situations such as the closing of the Doral Arrowwood that have a significant impact on the well-being of their residents, essential service obligations, and revenue.”