Worker Adjustment and Retraining Notification Act (WARN)
The WARN Act plays a vital role in safeguarding the rights of workers. It ensures that employers cannot carry out significant workforce reductions without providing at least 60 days’ advance notice and appropriate compensation. But far too frequently, companies fail to provide the required notice before plant closures and mass layoffs, leaving workers not only unemployed but feeling betrayed and exploited.
However, in the face of an unforeseen plant closure or mass layoff, affected employees have recourse to protect their rights. They have the option to pursue legal action, such as filing a lawsuit, in order to recover the rightful back pay they are owed. This avenue empowers employees to defend themselves against the negative consequences of such sudden and disruptive employment events.
What is the WARN Act?
In the event of an impending closure or mass layoff, the WARN Act provides employees the opportunity to search for alternative employment while still receiving compensation.
The WARN Act, passed in 1988, safeguards workers and their families by mandating that companies with 100 or more employees give 60 days’ notice before any closures or mass layoffs.
Additionally, WARN stipulates that employers must notify the state-dislocated worker unit, the chief elected official in the area, as well as the employee’s representatives (e.g., a labor union) of any closures or mass layoffs. In addition, employers who fail to send notice of layoffs or plant closures to a division of local government can incur a $500 civil fine per day of noncompliance.
What types of layoffs fall under the jurisdiction of the WARN Act?
- Plant closures
- Mass layoffs (e.g., a large-scale RIF or layoff)
What’s considered a plant closure under the WARN Act?
The WARN Act defines a plant closure as an employer closing a location or operations unit at a certain employment site, resulting in at least 50 full-time employees being laid off or terminated.
What’s considered a mass layoff under the WARN Act?
Under the WARN Act, a mass layoff occurs when an employer terminates 50-500 full-time employees within a 30-day period of time. The number of laid-off employees must reflect at least one-third of the total number of full-time employees at a particular employment site.
A mass layoff also arises automatically when a business lays off 500 or more full-time workers at a given location within 30 days, regardless of workforce size.
What are the exceptions to the WARN Act?
The WARN Act contains three major exceptions. The 60-day notice requirement may be waived for employers who can establish that layoffs or plant closures are the results of a “faltering company, unforeseen business circumstances, or natural disasters.”
Faltering company. This applies to plant closures and covers situations where a company aims to find new capital and/or business in an effort to stay open but believes giving advance notice of closure would undermine that effort.
Unforeseeable business circumstances. This applies to closures and mass layoffs caused by unforeseeable business problems that occurred at the time notice would otherwise have been due.
Natural disaster. This applies in circumstances where a business closure or mass layoff takes place as an immediate result of a natural disaster, such as a hurricane, earthquake, drought, etc.
In such cases, the WARN Act mandates companies to offer their employees as much warning as feasible. The notices must provide a brief justification for the reduced notice period when they are issued, and the notice must be in writing.
Who is protected under the WARN Act?
Those protected under the WARN Act include:
- Full-time employees who work 20 or more hours a week and have been with said company for a minimum of 6 months,
- Hourly and salaried employees, and
- Managerial and supervisory employees.
WARN applies to private, for-profit, and nonprofit workplaces, as well as quasi-public organizations. However, federal, state, or local governmental organizations that provide public services do not have protection under WARN.
Are remote workers covered under WARN?
Remote workers are eligible to WARN Act protections as long as they fulfill the requirements of those protected under the Act (see section above).
Are temporary workers covered under WARN?
Employees contracted with the awareness that their position would be temporary are not covered under the WARN Act. Therefore, temporary employees are often unprotected.
What states are protected under the WARN Act?
All 50 states are protected under the federal WARN Act.
Many states, however, have their own state-specific WARN Act laws that oftentimes offer employees more protections than the federal WARN Act.
These states include:
- New Jersey
- New York
While the states listed above have their own versions of the WARN Act, Texas does not offer its own state-specific statutes.
What type of notice is an acceptable form of notice?
WARN stipulates that “any reasonable method of delivery… designed to ensure receipt of notice” is an appropriate form of notice.
Examples of the appropriate forms of notice include:
- First-class mail
- Hand delivery or in-person delivery
What type of notice is not an acceptable form of notice?
- Through workplace gossip
- Private work chats (slack, messenger, etc.)
What if I was on vacation during the official notice?
If you were out sick, on vacation, or not on-site during the official notice of layoffs, you are owed the same warning as every other employee.
What about my benefits?
Companies who violate WARN may be held accountable for back pay and benefits, such as the cost of health insurance, to each affected employee for up to 60 days.
Should I sign a severance agreement?
In situations that involve plant closures or mass layoffs, companies may provide their employees with alternative severance agreements. Since these severance agreements are not required by law, employers can and do trick employees into waiving their WARN rights for payments of less than the 60 days they are owed.
We recommend that all employees stay actively aware of what they are signing and consult with legal experts, such as those here at Kaplan Law, prior to signing a severance agreement.
Who is responsible for notice in the event of a sale of business?
When a business is being sold in whole or in part, the following conditions must be satisfied under WARN.
- If the sale of business results in plant closures or mass layoffs those protected under the WARN Act (see section above titled “Who is protected under the WARN Act?”) must be given a minimum of 60 days’ notice by the seller.
- If the sale does not lead to a covered plant closing or a mass layoff, no notice is necessary.
- Any plant closures or mass layoffs that take place after the date/time of the sale must be disclosed by the buyer.