Don’t Forget WARN Warnings When Reducing Head Count
We have not talked much about the Worker Adjustment and
Retraining Notification Act (“WARN”) in recent years both because unemployment
has been low and we have not seen many plant closings or mass layoffs that
would trigger WARN. But much like solar eclipses and cicadas, the frequency of
WARN events is cyclical, and, during the last couple of months, several of my
colleagues and I have found ourselves having more conversations about WARN than
we have had in the last few years. So this might be a good time to review the
basics of the federal plant closing law that went into effect some 30 years
employer is generally covered by WARN if it has more than 100 employees.
Second, the WARN obligation to provide 60 days’ notice of an upcoming layoff is
triggered in two situations: (1) a “plant closing” that results in an
employment loss for more than 50 employees at a particular site during any
30-day period or (2) a “mass layoff” that results in either 500 employees or
33% of the employer’s active workforce suffering an employment loss at a
particular site during a 30-day period. Third, the WARN notice must be provided
to affected employees or their union, to the state dislocated worker unit, and
to the chief elected official of the unit of local government containing the
affected site. Failure to comply with the WARN Act could make an employer
liable for up to 60 days of back pay for each employee, including the value of
that try to get around WARN by having multiple layoffs in a row, all under the
triggering threshold, may still be liable, because WARN can be triggered by
cumulative layoffs in a 90-day period.
WARN does provide certain
exceptions to the notice requirement, including an exception for the “faltering
company” who has sought new capital in order to stay open and for whom giving
notice would ruin that opportunity. There are also exceptions for layoffs
caused by unforeseeable business circumstances or natural disasters. Typically,
these exceptions have been narrowly construed by the courts, and employers
would be well-advised to seek legal counsel before relying on them.
employers should not forget that many states have their own WARN-like statutes.
While these are often referred to as “mini-WARNs,” some of them have stricter
requirements than the federal law. Failure to comply either with WARN or these
state statutes can be expensive, so it is important to consider these laws
before conducting any reduction-in-force.
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