Quick Hits

• On June 14, 2025, the Maryland Department of Labor reissued proposed regulations for the Maryland Economic Stabilization Act, requiring employers to provide notice of mass layoffs or reductions in force.
• Maryland’s Economic Stabilization Act mandates sixty days’ written notice for mass reductions in operations, applying to employers with at least fifty employees and triggered by significant workforce reductions.
• The public has until July 14, 2025, to comment on the proposed regulations, which include new definitions for remote and telework employees and mechanisms for the Maryland Department of Labor to assist employers facing permanent reductions.

Background

Similar to the federal Worker Adjustment and Retraining Notification (WARN) Act, Maryland’s act (commonly referred to as “the Maryland Mini-WARN Act”) requires sixty days’ written notice to employees in the case of a mass reduction in operations. Previously, compliance with the act and its regulations was voluntary, but compliance was made mandatory in 2020. Paul D. Burgin, a shareholder in Ogletree Deakins’ Baltimore office and a coauthor of this article, was instrumental in encouraging the General Assembly to further amend the act in 2021 to better conform it to the federal law.

The MDOL announced in 2020 that it would not enforce the act until the existing regulations were revised to reflect the newly mandatory notice requirements. In December 2023, the MDOL issued proposed regulations for public comment. Normally, following the comment period, the agency will consider any submissions and may revise the regulations before issuing them in final form. In this case, however, no final regulations followed; rather, the MDOL has now issued another version of the proposed regulations for comment.

What the Act Requires

Maryland’s act applies to employers with at least fifty employees operating an industrial, commercial, or business enterprise in the state for more than one year. It is triggered by an employer’s reduction in operations, meaning either:

• the relocation of part of its operation from one workplace to another, that may result in the reduction of the total number of employees by the greater of at least 25 percent or fifteen employees; or
• the shutting down of a workplace or a portion of its operations that reduces the number of employees by the greater of at least 25 percent or fifteen employees over a three-month period.

For example, if an employer has one hundred employees and lays off fifteen, the law would not apply because less than 25 percent of the one-hundred-person workforce was impacted.

The count of impacted employees does not include those working less than an average of twenty hours a week, or who have worked less than six of the preceding twelve months, or who have accepted within thirty days an offer of transfer to another employment site. A “workplace” is defined as a factory, plant, office, or other facility where employees produce goods or provide services, but does not include construction sites and temporary workplaces.

The act also exempts the following types of reductions in operations by private employers: those resulting solely from labor disputes; those occurring at construction sites or other temporary workplaces (redundantly); those resulting from seasonal factors customary in the industry (as determined by the MDOL); or those resulting from an employer’s bankruptcy.

Under the act, an employer must give a sixty-day written notice prior to a reduction in operations to:

• all employees at the workplace that is subject to the reduction in operations, including those working on average less than twenty hours a week and those who have worked less than six months during the prior twelve-month period;
• any representative or bargaining agency representing those employees (i.e., a union);
• the state Dislocated Worker Unit; and
• the chief elected official (instead of all elected officials) in the jurisdiction where the affected workplace is located. If the workplace is in more than one jurisdiction, then notice is given to the chief elected official in the jurisdiction where the employer paid the most taxes in the preceding fiscal year.

The required notice must include:

• the name and address of the affected workplace;
• a company official’s name, telephone number, and email address to contact for further information;
• a statement explaining whether the reduction in operations is expected to be temporary or permanent (meaning that the employer has not entered into a written agreement to resume operations within three months of the reduction), and if the workplace is expected to shut down; and
• the expected date the reduction in operations will begin.

Significantly, the act adopts some—but not all—of the federal exceptions to the notice requirement. Thus, an employer need not provide sixty days’ notice if:

• it was actively seeking capital or business that would have enabled the employer to avoid or postpone the reduction, and it believed that providing such notice would have precluded it from obtaining the capital or business; or
• the reduction in operations was due to a natural disaster (e.g., flood, earthquake, or drought).

Under those circumstances, notice must still be given as soon as practicable, along with a brief explanation of why it was not provided sixty days before the reduction. Unfortunately, the General Assembly declined to adopt the federal exemption for business circumstances that were not reasonably foreseeable sixty days before the reduction.

The act also addresses notice in the context of a reduction in connection with the sale of a business, specifying that it must be given both by the seller on or before the effective date of the sale and the purchaser after the date of the sale. In addition, it asserts that an employee of the seller becomes an employee of the purchaser upon the sale, meaning that there has been no employment loss for that employee.

If there is a violation, Maryland’s secretary of labor can issue an order compelling compliance and may assess a discretionary civil penalty of up to $10,000 per day. The following factors will be considered in determining the amount of the penalty: the gravity of the violation, the size of the business, the employer’s good faith, and the employer’s history of prior violations. The penalties shall be subject to notice and hearing requirements.

The MDOL’s First Attempt at Regulations

The MDOL first issued proposed regulations to implement the act on December 15, 2023. The proposed regulations were limited in the guidance they provided, and in many instances simply cited back to definitions provided in the statute without further explanation of how that language would be interpreted. Paul Burgin submitted written comments on January 15, 2024. The proposed regulations were withdrawn, and the new proposed regulations fail to address many areas of uncertainty set forth in Paul’s January 2024 written comments.

What the Newly Proposed Regulations Contain

Like the prior version of the proposed regulations, this new version is somewhat limited in the guidance that it provides, with a number of instances where it simply cites back to the statutory definitions without further explanation of how that language will be interpreted. But there are some areas of concern. We summarize the most significant portions of the proposed regulations as follows.

Definitions

The proposed regulations include several new and key definitions that would vastly expand the scope of this law to address the virtual workplace.

First, the proposed regulations add a definition of “remote worker” to mean “an employee, or multiple employees operating under the same Employer Identification Number, with a permanent work arrangement under which they are scheduled to perform duties, responsibilities, and other authorized activities of such employee’s position at an approved worksite other than the assigned workplace.”

The next addition is “telework,” meaning “a worksite flexibility agreement for the purpose of allowing an employee or employees to perform their duties, responsibilities, and other authorized activities of such employee’s position from an approved alternative worksite other than the employee’s official duty station.” The MDOL’s distinction between “remote” and “teleworking” employees is hard to parse—in both cases, it seems the employee is working from somewhere other than the employer’s physical facility to which they report.

Finally, with regard to the definition of “workplace,” in addition to referencing the statutory definition, the MDOL has further proposed that “Workplace” shall include “the official duty station or agency worksite for telework employees within the State of Maryland,” as well as “the entire State of Maryland, which is considered a single workplace for any remote worker or collection of remote workers.” As such, the department proposes that the act would extend to an employer’s teleworking or remote workforce and would not be limited to a physical workplace such as a plant, office, factory, or facility. This raises significant questions, including how this aligns with the fact that the act is triggered only when the greater of at least 25 percent or fifteen employees are impacted at “a workplace.”

Mechanisms to Start Assistance Programs From the Maryland Department of Labor

In this section, Maryland’s secretary of labor is directed to take certain actions, including contacting employers that are faced with or planning a permanent reduction in operations. The proposed regulations eliminate the requirement that the contact be made by phone—a sensible change in a world of electronic communication. Another proposed change, however, is rather more confusing. The current regulations require the contact to be confidential, while the proposed regulations would change that to “Consider confidential, commercial, and financial information.” These are very different requirements, with the latter potentially imposing a content-based consideration in lieu of the confidentiality of the contact itself.

Order Compelling Compliance

The proposed regulations state that, following an investigation, if the secretary of labor believes there to be a violation, “the Secretary shall, with reasonable promptness, issue an order compelling compliance.” Moreover, the order would be required to: “(a) Be in writing; (b) Describe with specificity the nature of the alleged violation; (c) State the penalty, if any, that the Secretary proposes to assess…; and (d) Inform a party of the requirements of [the Enforcement section] of this regulation.”

The “Enforcement” section then sets forth notice and hearing provisions, permitting an employer to contest the penalty in writing within fifteen business days of the order. A proposed penalty would become final if a party does not timely contest the penalty. If a party files a notice of contest, the matter would be delegated to the Office of Administrative Hearings for a contested hearing in accordance with standard procedures.

Other Provisions

• A new “Notice” provision would require employers to provide sixty days’ written notice of a reduction in operations.
• The currently existing “Voluntary Guidelines for Employers Anticipating a Permanent Reduction in Work Force” would be made mandatory with little other change.
• Existing regulations regarding the MDOL’s Rapid Response Program and assistance from the MDOL’s Division of Workforce Development and Adult Learning would be substantively unchanged. These resources provide employers and employees with information and support in the context of a mass layoff or reduction in force.

What Happens Now?

Interested members of the public have until July 14, 2025, to comment on the proposed regulations. Comments may be sent to Dylan McDonough, Policy Analyst, Maryland Department of Labor Division of Workforce Development and Adult Learning, 100 South Charles St. (Tower I, Suite 2000), Baltimore, MD 21201, or made by telephone to 410-767-1890, or email to dylan.mcdonough@maryland.gov. The MDOL will review any comments before issuing final regulations. Once regulations are adopted as final, MDOL will begin enforcement of the act.