On May 7, 2020, the state of Maryland enacted mandatory “WARN Act” obligations that will be effective in the fall.  Amendments were enacted to the Maryland Economic Stabilization Act.  These new amendments take effect on October 1, 2020.  These amendments require that an employer implementing a “Reduction in Operations” (“RIO”) must provide an advance notice of sixty (60) days to employees and others.  They must also provide continuation of health, pension and/or other benefits to any affected employees.  The terms are yet to be determined by the Secretary of Labor for Maryland.  The closure of all or a portion of operations affecting as few as fifteen (15) employees or relocation of operations triggers these new requirements. Governor Hogan’s decision not to veto the legislation that passed in March 2020 enacted this change.

The new requirements are mandatory and apply to any entity or person that employs at least fifty (50) employees and operates an industrial, commercial, or business enterprise in the state of Maryland.  For Maryland an RIO includes a relocation of part of an employer’s operations, and the shutdown of a workplace, or portion of operations, that reduces the number of employees by at least fifteen (15) employees or 25% of the workforce, whichever is greater over a three-month period. Within the amendments currently, a relocation reason does not specify the number or percentage of employees nor does it specify the relocation distance being a distance that is significant.

Sixty (60) days’ written notice is mandatory for RIO’s effective October 1, 2020, and must be provided to the following:

  • All employees at the workplace that are subject to the RIO;
  • Each exclusive representative or bargaining agency that represents employees at the workplace that is subject to the RIO;
  • The Division of Workforce Development’s dislocated worker unit; and
  • All elected officials in the jurisdiction where the workplace that is subject to the RIO is located.

The state Secretary of Labor is authorized to issue fines for violations of the notice requirement and orders to compel compliance.  The new law requires the Secretary to issue an order to compel compliance if a violation is found.  The new law also gives the Secretary authority to assess a civil penalty up to $10,000 per day (up to $600,000 possible) at the Secretary’s discretion.  Penalties are determined by the gravity of the violation, the employer’s business size, good faith of the employer, and the history of the employer’s violations of the law.  Maryland has the potential to fine employers up to $600,000.  Most states and the federal WARN Act have a potential maximum penalty of $30,000.  Maryland’s law does not address expressly whether it authorizes private rights of action or instead requires that claims be presented to the Secretary of Labor of the state of Maryland.

Regulations on the continuation of benefits, such as health, pension and/or other benefits that an employer facing a reduction in operations should provide to employees whose employment will be terminated will be developed by the state Secretary of Labor in the future and are not available at this time.