Governor Larry Hogan allowed Senate Bill 780 to become law without his signature on May 7, 2020. The law will become effective on October 1, 2020. This new law significantly revised the existing Economic Stabilization Act (MD Code, Labor and Employment §11-301 – §11-304)(“Act”) and will drastically change Maryland employers’ notification and reporting obligations regarding workforce layoffs.

Previously, the Act provided voluntary guidelines for employers who intended to lay off employees regarding the provision of notice to those employees. Under the revised Act, Maryland employers with 50 or more employees are required to provide written notice at least 60 days prior to the start of any “reduction in operations” to:

• all impacted employees; 
• any union that represents those employees; 
• the Maryland Department of Labor’s Dislocated Worker Unit; and 
• all elected officials representing the impacted jurisdiction.

“Reduction in operations” is defined by the Act as:

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

For the purposes of determining the number of employees impacted, employers need not count employees who work less than an average of 20 hours per week or have worked for the employer for less than six months in the preceding 12 months.

The notice must include:

• the name and address of the workplace;
• the name, phone number and email address of a supervisory employee who will serve as the employer’s point of contact;
• 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 of the reduction in operations.

Although certain part-time and new employees are not counted for determining the number of impacted employees, the notice must be provided to all impacted employees.

The Maryland Secretary of Labor has the authority to enforce the Act including the power to:

• issue an order compelling compliance; and
• assess a civil penalty of up to $10,000 per day for each day of non-compliance.

The Act further requires the Maryland Secretary of Labor and the Workforce Development Board to develop mandatory guidelines for use by employers who are “faced with a reduction in operations.”

Employers contemplating a reduction in operations are encouraged to review the revised Act with their counsel to ensure compliance. The revisions significantly change an employer’s previous notice obligations and the penalties for noncompliance are steep.

This alert was written by Marc Sloane, a lawyer in the Labor, Employment, Benefits & Immigration practice group at Miles & Stockbridge.

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