WARNING -- Do Your Layoff Plans Comply with the WARN Act?
Unfortunately, the current economic climate has employers looking at the reality of layoffs and downsizing to weather this financial storm. When companies consider trimming their workforce to a significant degree, or plant closings to deal with tough economic realities, they often-times must also forewarn employees of these decisions. Aptly named the WARN Act, the federal Worker Adjustment Retraining and Notification Act, in effect since 1989, requires certain employers to provide sixty-days’ advance notice of such a “mass layoff” or “plant closing.” The purpose of the WARN Act is to give affected employees sufficient advance notice to adjust to and hopefully emerge from the impending job loss.
A. Scope of the Federal WARN Act: 100 and 50
The WARN Act applies to companies of 100 or more employees, excluding part-time employees working less than 20 hours per week (or short term employees of less than 6 months). It also applies to employers of 100 or more employees (including part-time workers) who in the aggregate work at least 4,000 hours per week.
What kinds of events or transactions are triggered under the WARN Act? Plant closings -- a permanent or temporary shut down (6 months or more) of a single site or facility or operating unit where the shut down results in an employment loss of 50 or more full-time employees during any 30-day period. Mass layoffs -- either (1) a reduction in force of at least one-third of the full-time employees, provided the number of full-time affected employees is at least 50, at a single facility during any 30-day period; or (2) employment loss of at least 500 full-time employees at a single facility during any 30-day period, regardless of the percentage affected. Where the layoffs or plant closings occur in two or more phases and the aggregate number of affected employees exceeds these thresholds within any 90-day period, the employer must provide notice under the Act unless it is able to prove that the employment losses were truly the result of separate causes and not an attempt to avoid the requirements of the Act.
B. The WARN Act’s Notice Requirements
Under these triggering circumstances, the WARN Act requires employers to provide all affected employees -- full time and part time -- or the employees’ representative written notice at least 60 days in advance. The company must also notify the state’s dislocated workers unit and the highest elected official of the locality in which the closing or layoff is to occur. The notice must be in writing and must provide the predicted date of separation.
Generally, affected employees are entitled to notice, or to 60 days’ pay and benefits in lieu of notice, 60 days in advance of the plant closing or layoff. If the employer fails to provide such notice, then the employee can file a civil lawsuit under the WARN Act for money damages and seek attorneys fees. The employer that fails to notify the local taxing authority and fails to pay employees money due under the WARN Act within three weeks of the shutdown or layoff may also be subject to a civil penalty of up to $500 per day.
C. Be Aware That Some States and Localities Have “Baby” WARN Acts
Recently, New Jersey joined the ranks of states that have adopted their own form of plant closing and mass layoff statutes to supplement the federal WARN Act provisions. These states include California, Connecticut, Hawaii, Illinois, Kansas, Maine, Massachusetts, Michigan, Minnesota, New Hampshire, Oregon, Rhode Island, South Carolina, Tennessee, and Wisconsin. Although Pennsylvania is not among them, Philadelphia does have local regulations that address plant closures and layoffs.
