Economic Stabilization Act (ESA) Frequently Asked Questions (For Employers) - Division of Workforce Development & Adult Learning

You are encouraged to review the ESA statute (Md. Code Ann., Lab. & Empl. § 11-301, et seq.), the Maryland Economic Stabilization Act regulations, and the Frequently Asked Questions below. If you have further questions, please reach out to the MD Labor Dislocation Services Unit at sheila.bouloubassis@maryland.gov. Moreover, there is no penalty for filing ESA notices even if you are unsure whether the statute applies to you. Providing notice helps MD Labor provide free services to help those who are affected by reductions in operations.

The ESA notice requirements apply to any person, corporation, or other entity that operates an industrial, commercial, or business enterprise; employs at least fifty (50) employees in Maryland; has been operating for at least one (1) year; and is operating in the State of Maryland. The State of Maryland and its political subdivisions are not “employers” under the Economic Stabilization Act.

An individual counts as an “employee” under the ESA if they:

• Work for an employer for an hourly or salaried wage or in a managerial and supervisory capacity;
• Work an average of twenty (20) hours or more per week; and
• Have worked for an employer for at least six (6) months in the immediately preceding 12 months.

Employers with fifty (50) or more employees in Maryland must provide written notice before initiating a reduction in operations, subject to certain exemptions. The term “reduction in operations” includes:

• The relocation of a part of an employer's operation from an initial workplace to another existing or proposed site that may reduce the total number of employees at the initial workplace by at least 25% or 15 employees, whichever is greater; or
• Shutting down 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 3-month period. If an employer takes multiple employment actions over the course of a 3-month period that together meet this threshold, the ESA notice requirements apply.

A notice may be submitted online to the Dislocation Services Unit by emailing dlwdalwarn-labor@maryland.gov. The notice must include:

1. the name and address of the workplace where the reduction of operations is expected to occur;
2. the name, telephone number, and e-mail address of a company official to contact for further information;
3. a statement that explains whether the reduction in operations is expected to be permanent or temporary and if the workplace is expected to shut down; and
4. the expected date when the reduction in operations will begin.

Alternatively, a letter containing the required information can be sent to:
Maryland Department of Labor
Dislocation Services Unit
100 S. Charles Street
Tower 1, Suite 2000
Baltimore, MD 21201


*Remember to also notify all employees at the workplace that are subject to the reduction in operations; each exclusive representative or bargaining agency that represents the employees at the workplace that are subject to the reduction in operations; individuals who work less than 20 hours on average each week or have worked for the employer for less than 6 months in the immediately preceding 12 months at the workplace that is subject to the reduction in operations; and the relevant chief elected official.

Anytime an employer initiates a reduction in operations, as defined under the ESA, the employer must provide written notice at least 60 days before the reduction in operations, subject to certain exemptions. The ESA specifies what information must be in the notice, including a statement that explains whether the reduction in operations is expected to be permanent or temporary. There are various exemptions to the notice requirements, including for reductions in operations that occur at construction sites or other temporary workplaces, and reductions in operations that result from seasonal factors that are determined by the Department of Labor to be customary in the industry.

An employer must provide at least 60 days’ notice before initiating a reduction in operations. As discussed below, there are exceptions to these requirements, but those only apply when certain conditions are met. In addition, an employer is not required to provide 60 days’ notice if the employer was actively seeking capital or business that would have enabled the employer to avoid or postpone the reduction in operations, and believed that providing the written notice required would have precluded the employer from obtaining the necessary capital or business. Similarly, an employer is not required to provide 60 days’ notice if the reduction in operations occurs due to any form of natural disaster such as a flood, an earthquake, or a drought. In these circumstances, the employer must provide notice as soon as practicable and include a brief statement of the basis for not providing notice at least 60 days before initiating a reduction in operations.

The ESA does not apply to reductions in operations when they:

1. Result solely from labor disputes
2. Occur in a commercial, industrial, or agricultural enterprise operated by the State or its political subdivisions
3. Occur at construction sites or other temporary work places
4. Result from seasonal factors that are determined by the Department of Labor to be customary in the industry, or
5. Result when an employer files for bankruptcy under federal bankruptcy laws

In addition, an employee is not 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.

“Remote worker” refers to 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. “Teleworker” refers to an individual who operates under a worksite flexibility agreement that has the purpose of allowing the employee to perform their duties, responsibilities, and other authorized activities of their position from an approved alternative worksite other than the employee’s official duty station. If you aren’t sure whether your workers are considered remote workers or teleworkers, please feel free to contact the MD Labor Dislocation Services Unit at sheila.bouloubassis@maryland.gov.

As discussed above, the requirements of the ESA are triggered when an employer initiates a reduction in operation to a workplace. Under the ESA regulations, “workplace” includes the official duty station or agency worksite for telework employees within Maryland. For remote workers, “workplace” includes the entire State of Maryland, which is considered a single workplace for any remote worker or collection of remote workers.

Yes, Maryland can provide free Rapid Response services for any dislocation event, regardless of the size of the workforce or the number of workers impacted. You may complete the Notification of Dislocation Event Form to alert us of the layoff or closing.

If the affected workplace is located in more than one political subdivision, notice should be provided to the chief elected official of the political subdivision to which the employer paid the most taxes for the fiscal year immediately preceding the year in which the reduction in operations occurs.