California companies reported a surge of layoffs as they grappled with economic effects of the coronavirus, but the reports reflect just a fraction of the job losses in the fast-moving meltdown.
From March 1 to March 25, 139 companies reported laying off 18,998 employees. Many businesses have yet to report their losses, but the sharp jump in notices is another indication of the state’s rapid economic downturn. In February, just 64 companies reported 7,164 employee layoffs. For the full month of March 2019, 77 employers reported 5,657 layoffs.
Businesses are required, under California’s Worker Adjustment and Retraining Notification Act, or WARN, to give workers and government officials 60 days’ notice of plant closings or mass layoffs. However, that 60-day requirement applies only to businesses with more than 75 employees, and it was suspended by Gov. Gavin Newsom in a March 17 executive order. That order allowed companies laying off workers after March 4 to instead give “as much notice as is practicable.”
Newsom said Wednesday that more than 1 million Californians applied for unemployment benefits from March 13 to March 25. And the state’s Economic Development Department reported Thursday that it had processed 186,809 claims for unemployment benefits in the week that ended March 21, up from 57,606 the week before.
The governor’s delay order cited COVID-19, the disease that stems from the coronavirus, as causing “business needs and circumstances to change in ways that were not foreseeable as recently as just weeks and days ago, necessitating rapid changes in workforce needs.”
“Because of the need to prevent or mitigate the spread of COVID-19, employers have had to close rapidly without providing their employees the advance notice required under California law,” it said.“Because of the need to prevent or mitigate the spread of COVID-19, employers have had to close rapidly without providing their employees the advance notice required under California law,” it said.
In early March, companies reporting layoffs represented a wide variety of industries, including 20th Century Fox, which terminated 120 in Los Angeles; the aerospace multinational Thales Avionics, which laid off 128 in Irvine; and Redline Courier Service, which laid off 114 in Chatsworth, Chino and Hawthorne.
In the last week, large layoffs included 341 at Pacific Park in Santa Monica, 429 at the Hyatt Regency in Long Beach, 426 at Levy Premium Food Service in Los Angeles and 200 at Citrus in Los Angeles.
WARN notices give only a partial snapshot of job losses. Not only are employers of fewer than 75 workers not required to report, but also layoffs must only be reported for workers who have been employed for at least six of the 12 months before the layoffs. So newly hired workers are not reported.
Nor do businesses who use independent contractors fall under the law, although many use thousands of contract workers, particularly technology companies such as Google and Uber.
“I am not aware of any statistic available right now that will paint the true picture of how many layoffs there have been,” said Leonard Sansanowicz, a Los Angeles employment attorney. “There are too many factors — people working multiple jobs, employees misclassified as independent contractors, undocumented workers who may go unreported, to name a few — to have a truly accurate picture.
“I don’t think we will realize the full economic impact of this virus for quite some time.”
Sansanowicz suggested the Supreme Court’s Dynamex decision in 2018 and AB 5, the new California law that tightened the test for hiring contractors, could affect the future reporting of WARN notices. “Employers can avoid liability for WARN Act notices just like they avoid liability for paying employer portions of payroll taxes, workers’ comp insurance, health insurance and other benefits, by intentionally misclassifying employees as independent contractors,” he said.
Workers who are furloughed — implying a short-term job loss — must be reported under the WARN Act and counted as layoffs.
“‘Furlough’ and ‘layoff’ have no specific legal meaning,” Irvine employment attorney James McDonald said. “A California appellate court has held that a WARN notice must be given when employees are put off work, regardless of whether it is called a layoff or furlough.”
A $2-trillion U.S. relief bill, passed by the Senate late Wednesday and expected to be approved Friday by the House and signed by President Trump, would add as much as $600 a week for four months to state unemployment benefits. California currently provides up to $450 a week in unemployment insurance.
California and its cities will get $10 billion from a block grant portion of the proposed relief bill in the Senate, not including the benefits to workers and individuals, Newsom said.
The U.S. Labor Department said Thursday that nearly 3.3 million people filed for first-time unemployment claims nationwide in the week that ended March 21.
That number was five times greater than in any single weekly period of new filings since record-keeping began in 1967 — and it points to what many expect will be a dramatic increase in the jobless rate, possibly even into double digits later this spring.
The Economic Policy Institute, a research nonprofit in Washington, estimated that the U.S. and California could lose about 11% of private-sector jobs by June. That would mean 14 million jobs nationwide and 1.6 million in California.