What Advance Notice Do I Need to Provide for a Reduction in Force or Layoff?Client Alert
The Worker Adjustment and Retraining Notification Act (“WARN Act”), 29 U.S.C. 210l, et seq., offers protection to workers, their families and communities by requiring covered employers to provide notice 60 days in advance of reductions in force resulting from covered plant closings and mass layoffs. This notice must be provided to either affected workers or their representatives (e.g., a labor union); to the State dislocated worker unit; and to the appropriate unit of local government.
IMPORTANT - The COVID-19 pandemic may provide an exception to the 60-day notice requirement, allowing for less than 60-days’ notice, due to unforeseeable business circumstances. However, the pandemic does not currently permit a covered employer do completely disregard the WARN Act. Notice of a reduction in force involving a covered plant closing or mass layoff should still be provided as soon as practicable in compliance with the Act.
In general, employers are covered by WARN if they have 100 or more employees, not counting part-time employees who work an average of less than 20 hours a week and not counting occasional employees who have worked less than 6 months in the last 12 months.
However, employers are also covered if they have 100 or more employees, including part‑time employees, who collectively work at least 4,000 hours each week, excluding overtime.
What Triggers Notice
Plant Closing: A covered employer must give notice if an employment site (or one or more facilities or operating units within an employment site) will be permanently or temporarily shut down, and the shutdown will result in an Employment Loss (as defined below) for 50 or more employees during any 30-day period. This does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. These latter groups, however, are entitled to notice.
Mass Layoff: A covered employer must give notice if there is to be a mass layoff which does not result from a plant closing, but which will result in an Employment Loss at the employment site during any 30-day period for 500 or more employees, or for 50-499 employees if they make up at least 33% of the employer’s active workforce. Again, this does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. These latter groups, however, are entitled to notice.
Aggregation of Multiple Plant Closings or Mass Layoffs: An employer also must give notice if the number of Employment Losses which occur during a 30-day period fails to meet the threshold requirements of a plant closing or mass layoff, but the number of Employment Losses for 2 or more groups of workers, each of which is less than the minimum number needed to trigger notice, reaches the threshold level, during any 90-day period, of either a plant closing or mass layoff. Employment Losses within any 90-day period will count together toward the WARN threshold levels, unless the employer demonstrates that the Employment Losses during the 90-day period are the result of separate and distinct actions and causes.
With certain exceptions, the term “Employment Loss” means:
- An employment termination, other than a discharge for cause, voluntary departure, or retirement;
- a layoff exceeding 6 months; or
- a reduction in an employee’s hours of work of more than 50% in each month of any 6-month period.
With three exceptions, notice must be timed to reach the required parties at least 60 days before a closing or layoff. When the individual employment separations for a closing or layoff occur on more than one day, the notices are due to the representative(s), State dislocated worker unit and local government at least 60 days before each separation. If the workers are not represented by a union, each worker’s notice is due at least 60 days before that worker’s separation.
Exceptions to the 60-Day Notice Period
- Unforeseeable business circumstances. This exception applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required (e., an unanticipated and dramatic economic downturn or a government-ordered closing of an employment site that occurs without prior notice);
- Faltering company. This exception, to be narrowly construed, covers situations where a company has sought new capital or business in order to stay open and where giving notice would ruin the opportunity to get the new capital or business, and applies only to plant closings; and
- Natural disaster. This applies where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought or storm.
IMPORTANT - If an employer provides less than 60 days advance notice of a closing or layoff and relies on one of these three exceptions, the employer bears the burden of proof that the conditions for the exception have been met. The employer must still give as much notice as is practicable. When the notices are given, they must include a brief statement of the reason for reducing the notice period in addition to the items required in notices. If the employer fails to give any notice, it cannot rely on the exception as a defense to a WARN Act claim.
Form and Content of Notice
No particular form of notice is required. However, all notices must be in writing and contain specific information. Consult with your BMD attorney regarding the form and content of your notices.
Enforcement and Penalties
Enforcement of WARN Act requirements is through the Federal Courts. Workers, representatives of employees and units of local government may bring individual or class action suits. In any suit, the court, in its discretion, may allow the prevailing party a reasonable attorney’s fee as part of the costs.
An employer who violates the WARN Act provisions by ordering a plant closing or mass layoff without providing appropriate notice is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days. The employer’s liability may be reduced by such items as wages paid by the employer to the employee during the period of the violation and voluntary and unconditional payments made by the employer to the employee.
An employer who fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. This penalty may be avoided in certain circumstances.
State WARN Laws
Seven states have enacted layoff notice laws similar to the WARN Act. If you employ workers in California, Illinois, Maryland, New Jersey, New York, Tennessee or Wisconsin, you may be subject to more restrictive coverage, trigger or notice requirements.