Main Menu
WARN: The Reality of Notifying Workers

The Worker Adjustment and Retraining Notification Act, more commonly known as WARN, requires certain employers to provide notification to affected employees in advance of a mass layoff or plant closing. Regardless of whether WARN applies to your business or whether you will ever need to comply with it, trends in this area of law during the current economic crisis are illustrative of the problems and realities of providing notice to employees.

Under WARN, companies with more than 100 employees are required to provide 60 days advance notice to affected employees, a local government representative, and the state displaced worker unit before a plant closing or mass layoff. A mass layoff occurs under the Act when 50 full-time workers comprising at least one-third of the workers at a single location or any layoff of more than 500 people lose their jobs permanently or are out of work for more than six months. A company that fails to provide the requisite notice is liable to the affected workers for back-pay representing the days that notice should have been provided but was not. Failure to make these payments within three weeks can subject the employer to a civil liability of up to $500 per day for each day of violation.

The WARN Act does contain several exceptions under which employers can terminate or lay-off workers with little or no notice. For example, a company that is struggling financially and trying to obtain financing may be able to argue that it could not provide advance notice because to do so would inhibit its ability to obtain the financing it needed to stay afloat. Companies affected by natural disaster or unforeseen business circumstances can also argue that they are exempt from the notice requirements.

WARN attorneys note that in the past year, their caseloads for WARN cases have as much as tripled. Dozens of employee groups have challenged abrupt terminations in federal courts, arguing that had they received the notice they were entitled under WARN, they would have had a better opportunity to find a new job sooner. Others have argued that had they received the proper notice, they would have made different life choices, such as not making home improvements or not taking a family vacation. The rising number of WARN claims and the arguments made by affected workers lead us to wonder: what is the real purpose of WARN and is it realistic for employers to always comply?

Employers argue that WARN is not realistic – that it is often difficult, if not impossible, to predict 60 days in advance that a mass layoff or plant closing will be required. Employers also argue that even when they cannot meet the burdens necessary to qualify for the statutory exemptions, providing notice can be detrimental to efforts to sell the business or remain profitable. Also, it can be difficult for an employer to know at the onset of a temporary layoff whether the layoff will become “permanent” or exceed six months.

Those in support of WARN and its objectives argue that the Act is not powerful enough to obtain its goals of providing real notice to workers and the community. In June, federal representatives of both parties and Senator Brown (D) of Ohio introduced a bill that would enhance DOL enforcement of WARN, double the penalties, apply the law to smaller groups of workers, and raise the notice period from 60 days to 90 days. In addition, several states have recently enacted their own, stricter, versions of WARN. In the first legislative session of 2009, Indiana House Representative Dennis Tyler (D) introduced HB 1166 which would have required Indiana employers with more than 50 workers and less than 100 workers to provide notice 60 days in advance of a mass layoff or plant closing. The bill would essentially apply WARN provisions to smaller employers without effecting the way WARN operates otherwise. The Bill passed in the House but only reached a first reading in the Senate.

While there are clearly important human and economic reasons for employers to provide notice to employees, there can also be real challenges to doing so. If you have any questions about the WARN Act or how it may apply to your business, please contact the labor and employment attorneys at Bingham McHale for more information.

RSS RSS Feed

Subscribe

Recent Posts

Categories

Contributors

Archives

Back to Page