WARNing - RIFS and the WARN Act

The Worker Adjustment and Retraining Notification Act (the "WARN Act") generally requires that covered employers give 60 days advance notice of a "plant closing" or "mass layoff" to affected employees, bargaining representatives, and local government officials.   The WARN Act does not apply to employers with 100 or fewer employees, generally measured on the date notice is required to be given. 

Employers must provide WARN Act notice with respect to all affected employees to each affected non-bargaining unit employee or the bargaining representatives of affected bargaining unit employees; the state dislocated worker unit; and, the chief elected official of the unit of local government within which the closing or layoff will occur.  "Affected employees" are those who may reasonably be expected to experience an employment loss as the result of a plant closing or mass lay-off, so employers must be mindful of bumping rights and other factors that may lead to eventual terminations when deciding to whom notice must be provided.

An "employment loss" occurs if employment ends for any reason other than discharge for cause, voluntary departure or retirement; an employee is placed on lay-off for more than 6 months; or, the employee's hours are reduced more than 50% for each month of a 6 month period. 

Complying with the WARN Act in the context of a reduction in force can be challenging.   A "mass lay-off" is any reduction in force, other than a plant closing, which, within any 30 day period, results in an employment loss at a single site of employment of either a third or more of the site's active employees, but at least 50 employees, or at least 500 employees.   Part time employees are not counted (but are entitled to notice); temporary project employees are counted (but are not entitled to notice).  Confusing?

Generally, employment losses are counted over a 30 day period, but if two or more groups suffer losses at the same site during a 90 day period (which is now a frequent occurrence) the groups may be aggregated.  The employer has the burden of proving that the lay-offs resulted from separate and distinct causes and actions and were not separated to evade WARN Act responsibilities.  Accordingly, when analyzing whether a RIF triggers WARN Act obligations, an employer must look back at all terminations that occurred in the past 90 days.   The 30 and 90 day periods are rolling periods depending on if or when the employer hits the requisite number of terminations to require notification.

Does an employer need to look forward as well? An employer may know reductions are coming, but not which jobs or employees will be affected.  Reasonableness is the touchstone of WARN obligations.  The WARN Act does not permit "blanket" or "rolling" notices. If a scheduled termination date changes, a previously given WARN Act notice may be inadequate.  If the date is delayed, the employer can either provide a notice of the postponement, referencing the earlier WARN Act notice (if the delay is less than 60 days) or provide a new WARN Act notice (if the delay is 60 days or longer). 

Instead of lay-offs, some employers are implementing reduced schedules which, as set forth above, can trigger WARN Act obligations as well.

Recalls, bumping and transfers may expunge an employment loss.  In addition, less than 60 days notice may be permissible in the case of a faltering business (for plant closings only); in the event of unforeseeable business circumstances, such as termination of a major contract or an unanticipated economic downturn; and, if the plant closing or mass lay-off is the result of a natural disaster.  Many employers can be expected to assert the unforeseeable business circumstances exception to the WARN Act in today's economic climate.

In the absence of required notice, employees can recover pay and benefits for the period when notice was not given.  If the employer does not want to or is unable to provide the required notice, they can pay employees in lieu of the 60 day notice, in which case damages should not be recoverable.  In addition, upon termination, employees can release WARN Act claims as part of a separation agreement.

Many states have their own versions of the WARN Act which can impose different and sometimes greater notice obligations, and penalties.

Determining whether an employer is covered; whether an event triggers notice obligations; whether an exception applies; and what notice must be given to whom and when can be challenging, particularly when the business is dealing with all of the issues that caused the need for the closing or lay-off in the first place.   Legal analysis of a RIF should include an assessment of WARN Act obligations.

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