SB 801
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 801 (Senator Griffith)
Finance Economic Matters
Labor and Employment – Economic Stabilization Act – Alterations
This bill alters definitions, thresholds, and notification requirements for employers under
the Economic Stabilization Act. Specifically, the bill establishes that an employee may not
be counted in the determination of a reduction in operations under specified circumstances.
It further clarifies that (1) permanent closures occur when the employer has not agreed in
a written contract to restore operations within three months after the time of the reduction
in employment and (2) a reduction in operations includes a relocation from an initial
workplace that may reduce the total number of employees at the initial workplace by at
least 25% or 15 employees, whichever is greater. Additionally, contact information for a
company official must be included in the notification, and the bill requires notification only
for the chief elected official of the political subdivision instead of all elected officials in
the jurisdiction. Finally, the bill creates exceptions to the required notification deadline in
specified instances.
Fiscal Summary
State Effect: The Maryland Department of Labor (MDL) can absorb the bill’s
requirements with existing resources. No direct effect on revenues.
Local Effect: Revenues and expenditures are not affected. Other than the chief elected
official in a political subdivision, all other elected officials no longer must receive
notification of a reduction in operations.
Small Business Effect: Minimal.
 Analysis
Bill Summary:
Reductions in Operations
An employee may not be counted in the determination of a reduction in operations if the
employee accepts an offer to transfer to any other site of employment within 30 days after
being offered the transfer.
Elected Official Notification
The bill limits the scope of elected official notification from all elected officials in the
jurisdiction to only the chief elected official of the political subdivision where the
workplace is located. Additionally, the bill clarifies that, if a workplace is located in more
than one political subdivision, only the chief elected official of the subdivision to which
the employer paid the most taxes for the prior fiscal year must receive notification.
Exceptions to Notification
The bill establishes two exceptions to the requirement that an employer provide written
notice of a reduction in operations at least 60 days before initiating the reduction. First,
notice is not required if the employer was actively seeking capital or additional business to
prevent the layoffs and believed that providing notice would preclude the employer from
obtaining necessary capital or business. Second, notice is not required if the reduction in
operations occurs due to any form of natural disaster.
If one of the above situations precludes written notice on normal deadlines, the employer
must provide notice as soon as practicable with a brief statement of the basis for not
providing written notice at least 60 days before initiating a reduction in operation.
In the Case of Sale/Purchase of a Business
The bill clarifies that in an instance when purchase or sale causes a reduction in operations,
notice must be provided both by the seller on or before the effective date of sale and by the
purchaser after the effective date of sale.
Current Law: The Economic Stabilization Act established a quick response program to
provide both employers and employees with services to assist in mitigating the effects of a
reduction in operations on employees. The Act, as altered by Chapters 406 and 407 of
2020, defines “employer” as any person, corporation, or other entity that employs at least
50 employees and operates an industrial, commercial, or business enterprise in the State,
SB 801/ Page 2
but it does not include the State or its political subdivisions or any employer who has been
in business in the State for less than one year. A “reduction in operations” includes (1) the
relocation of a part of an employer’s operation from one workplace to another or (2) the
shutting down of a workplace that reduces the number of employees by the greater of at
least 25% or 15 employees over any three-month period. The Act also defines “employee”
as an individual who works for an employer for an hourly or salaried wage or in a
managerial or supervisory capacity. “Employee” does not include an individual who works
less than an average of 20 hours per week or has worked for an employer for less than
6 months in the immediately preceding 12 months.
Under the Act, an employer must provide written notice at least 60 days before initiating a
reduction in operations to (1) all employees subject to the reduction; (2) each exclusive
representative or bargaining agency that represents the employees; (3) individuals who
work less than 20 hours on average each week or have worked for the employer for less
than 6 months in the preceding 12 months; (4) the Division of Workforce Development
and Adult Learning’s (DWDAL) dislocated workers unit; and (5) all elected officials in the
jurisdiction.
The quick response program does not apply to a reduction in operations resulting solely
from labor disputes, seasonal factors customary in the industry, or an employer filing for
bankruptcy. Nor does it apply to a reduction in operations occurring at construction sites
or temporary workplaces or in a commercial, industrial, or agricultural enterprise operated
by the State or its political subdivisions.
The Secretary of Labor, in cooperation with the Workforce Development Board, must
develop voluntary guidelines for employers faced with a reduction in operations, which
must include the appropriate length of time for advance notification to employees of
termination (whenever possible and appropriate, at least 90 days’ notice), the appropriate
continuation of benefits, or specific mechanisms that employers can utilize to ask for
assistance from the program. The mandatory guidelines must include the continuation of
benefits that an employer should provide and a written notice that an employer expects to
terminate employees due to a reduction in operations. MDL must distribute the guidelines
to all employers in the State every two years. MDL must maintain the capacity to provide
employment and training services through the quick response program.
Employers must give notice to their local Office of Unemployment Insurance when laying
off 25 or more employees for a common reason for periods in excess of seven days. The
notice provided by employers must include specified information about the location and
timing of the reduction in operations.
When the Secretary of Labor, or the Secretary’s designee, determines that the Economic
Stabilization Act has been violated, the Secretary or designee must issue an order
SB 801/ Page 3
compelling compliance and may assess a civil penalty of up to $10,000 per day for each
day that an employer violated the requirement for written notice. In determining the amount
of any assessed penalty, the Secretary or designee must consider specified items, and the
assessment of the penalty is subject to specified notice and hearing requirements.
The federal Worker Adjustment and Retraining Notification Act (WARN) requires
employers with 100 or more employees (generally not counting those who have worked
less than 6 months in the last 12 months and those who work an average of fewer than
20 hours a week) to provide at least 60 calendar days advance written notice of a plant
closing and mass layoff affecting 50 or more employees at a single site of employment.
WARN makes certain exceptions to the requirements when layoffs occur due to
unforeseeable business circumstances, faltering companies, and natural disasters.
Employees entitled to notice under WARN include managers and supervisors, as well as
hourly and salaried workers. WARN requires that notice also be given to employees’
representatives, the local chief elected official, and the state dislocated worker unit.
DWDAL’s Dislocated Services Unit (DSU) is a federally funded unit that manages
notifications of employment dislocations in Maryland. DSU provides oversight of
Rapid Response, the State’s system to respond to layoffs, and to prevent or minimize their
impacts on workers, businesses, and communities. As part of its regular operations, DSU
oversees the issuance and sharing of information related to the federal WARN program.
Additional Comments: MDL notes that WARN notifications require similar information
to items required by the Economic Stabilization Act, and the modifications proposed by
this bill better align State activities to existing federal requirements in terms of permissible
exemptions and local official notifications. However, to the extent that future activities fall
out of alignment with federal WARN requirements, State expenditures may be needed to
maintain those activities.
Additional Information
Prior Introductions: None.
Designated Cross File: HB 1154 (Delegate C. Jackson) - Economic Matters.
Information Source(s): Maryland Department of Labor; Department of Legislative
Services
SB 801/ Page 4
Fiscal Note History: First Reader - March 3, 2021
rh/mcr Third Reader - March 26, 2021
Revised - Amendment(s) - March 26, 2021
Analysis by: Michael E. Sousane Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 801/ Page 5


Statutes affected:
Text - First - Labor and Employment – Economic Stabilization Act – Alterations: 11-301 Labor and Employment, 11-302 Labor and Employment, 11-303 Labor and Employment, 11-305 Labor and Employment
Text - Third - Labor and Employment – Economic Stabilization Act – Alterations: 11-301 Labor and Employment, 11-302 Labor and Employment, 11-303 Labor and Employment, 11-305 Labor and Employment