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You may be referring to the Worker Adjustment and Retraining Notification 
(WARN) Act, which you can read at 
<http://www.dol.gov/dol/allcfr/ETA/Title_20/Part_639/toc.htm>. BTW, it's 
federal, not state, law.

  ... Chuck

>In most states of the USA, when a company plans to shut down their
>operations, they are required by law to inform all their employees 60-90 days
>in advance (how many days varies with the state) and also to notify the state
>that they will be doing this, because the state is going to suffer a big ding
>on their unemployment compensation, and a reduction in their payroll taxes,
>and states like to budget in advance so there will be no surprises.
>
>If the company's total work force is sufficiently small, the state government
>may be oblivious to the fact that the company is in violation of what laws.
>After all, US laws are so complicated that it takes a lawyer specialist to
>figure them out, which are too expensive to be populated in many government
>beaurocracies.

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