WARN - Worker Adjustment and Retraining Notification Act

WARN requires covered employers to give employees 60 days’ advance notice of a planned layoff or shutdown that affects at least 50 employees and results in a loss of work for more than six months, termination, or a certain reduction in work hours.

Coverage

Employers covered under WARN employ:

• 100 or more employees, excluding part-time workers; or
  
  
• 100 or more employees, including part-time workers, who work more than a total of 4,000 hours per week (not including overtime).

Covered employers also include nonprofit organizations of the specified size, independent contractors, and public and quasi-public agencies which engage in business activities and are organized separately from regular government and have their own governing bodies.  Examples: regional transportation authorities and independent municipal utilities.

For purposes of determining coverage as an employer, the following categories of workers are counted as members of the work force.

• Workers on temporary layoff or on leave who have a “reasonable expectation of recall.”
  
  
• U.S. workers at foreign sites of employment, although the sites themselves are not covered under WARN.
  
  
• Full-time workers who are exempt from notice under WARN.

Not covered under WARN: federal, state, and local governments.

 

Key Definitions

An employment loss includes termination other than for cause, voluntary departure, or retirement; layoffs exceeding six months; a reduction of more than 50% of an individual employee’s work hours during each month of any six-month period.

A plant closing is the shutting down, either temporarily or permanently, of a single employment site, facility, or operating unit, which results in loss of employment for 50 or more employees (excluding part-time employees) during any 30-day period.

A temporary shutdown must meet the required number of terminations, span more than six months, or reduce work hours to match the definition of employment loss.

A mass layoff is a work force reduction (not the result of a plant closing) resulting in job loss for at least 33% of the active work force (excluding part-time employees) and at least 50 employees (excluding part-time workers) during any 30-day period at a single site of employment.

Where 500 or more employees (excluding part-time workers) are affected, the 33% requirement does not apply, but if all other criteria are met, notice is required.

Notice is also required if the number of employment losses which occur during a 30-day period fails to meet the threshold requirements for a plant closing or mass layoff, but the number of employment losses for two 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.  Job losses within any 90-day period count together toward 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.

Part-time employees are employees who work less than 20 hours per week, or who have been employed fewer than six of the 12 months preceding the required notification date.

Conditions For Notification

Employers are only responsible for giving notice to employees who will or “reasonably may be expected to” experience a covered employment loss.  Notice targets may include the following.

• Each employee affected by a planned closing or mass layoff, or, if workers are unionized, to the designated employee representative.  Part-time workers are also entitled to notice.
  
  
• The state’s dislocated worker unit, which provides training or other assistance to workers who have lost their jobs.
  
  
• The chief elected official of local government.  The identity of this person will vary, depending on the local government structure.  For example, where there is an elected board, the employer must provide notification to the board’s chairperson.

Exceptions To WARN

Sixty-day advance notices are not required for the following.

1. Mass layoffs due to the closings of temporary facilities or the completion of projects for which employees were hired with the clear understanding that employment was temporary and would last only for as long as the facilities remained open or for the duration of the project.
   
   
2. Agricultural or construction work in which employees are doing seasonal but recurring work, e.g., harvesting, processing, work on a particular building.  Employees must be hired with the understanding that their work will be temporary only.
   
   
3. Contract-related work that is temporary.  Determining if jobs that are related to a specific contract or order are temporary or not depends on whether the contract or order is part of a long-term relationship. 
   
   
4. A closing or mass layoff due to a strike or a lockout.  Hiring permanent replacements for economic strikers, according to the National Labor Relations Act, also does not trigger WARN coverage.
   
   There are exceptions to this rule.  Notice must be given to the following employees affected by a strike or lockout.
   
   
   1. Non-strikers at the same work site who experience an employment loss because of the strike.
      
      
   2. Members of any non-striking bargaining unit, where a striking union represents more than one bargaining unit at a single site.
      
      
   3. Workers who are not part of a bargaining unit involved in labor negotiations that led to a lockout.
      
      
   4. Employees at other non-striking plants where covered closings or mass layoffs occur as a direct or indirect result of a strike or lockout.
      
      
5. Employees who are reassigned or transferred to certain employer-sponsored programs, such as retraining or job-search activities.  The termination cannot be involuntary, e.g., a constructive discharge.
   
   
6. Employees who do not experience a covered employment loss when a closing or layoff is due to the relocation or consolidation of all or part of an employer’s business, provided that the employer fulfills one of these two conditions:
   
   
   1. offers to transfer affected employees to a different employment site “within a reasonable commuting distance” with no more than a six-month break in employment; or
      
      
   2. offers to transfer employees to any other employment site, regardless of commuting distance, with no more than a six-month break in employment, and employees accept within 30 days of the offer, or closing, or layoff, whichever is later.

Reduction Of Notice Period

Notification periods of less than 60 days may be given in three circumstances.

1. Faltering company.  This exception applies only to plant closings.  To use it, the employer must prove that at the time the 60-day notice would have been required, it had been actively seeking capital or business through a “commercially reasonable” method to avoid or postpone the shutdown.  It must also be able to show that the required notice would have resulted in lost new business or financing if employees, customers, or the public knew that the company was in trouble.
   
   
2. Unforeseeable business circumstances.  This exception applies to both plant closings and mass layoffs.  It pertains to business circumstances that are “sudden, dramatic, unexpected, outside the employer’s control, and not reasonably foreseeable” at the time the 60-day notice would have been required.  Examples: losing a major account, a principal supplier going out of business.
   
   The test for determining whether a circumstance is reasonably foreseeable is whether the employer used reasonable business judgment in predicting the demands of its particular market. 
   
   
3. Natural disasters.  This exception applies to both plant closings and mass layoffs that employers can prove directly resulted from a natural disaster.  Examples of natural disasters include floods, earthquakes, droughts, storms, tidal waves, and similar effects of nature.

Timing And Delivery Of Notice

Employers are prohibited from ordering any facility closing or mass layoff until the end of 60 calendar days after written notice has been served.

Employers should use any “reasonable” method to deliver notices so that they are “timely-received.”  Acceptable delivery methods include first-class mail; personal delivery, with optional signed receipt; and, where employees are notified directly by the employer, inclusion in pay envelopes.

Notice Requirements

All WARN notices must be in writing.  Nonunion employee notices must be given to any employee who reasonably expects to be terminated, laid off for more than six months, or experiences at least a 50% reduction in work hours for each month in a six-month period; to managers and supervisors; to employees likely to lose their jobs because of bumping or other rights; and to part-time employees in a nonunion work site.

The language must be clear and specific and state the following.

• Whether the planned closing or mass layoff is expected to be temporary or permanent.
  
  
• If the entire facility is to be closed.
  
  
• When the employer expects to close the facility or begin the mass layoff, and when the employee can expect employment to be terminated.  Use either a specific date or a 14-day period during which separations are expected to occur.  If the 14-day period is used, the 60-day notice must begin before the first day of the 14-day period.
  
  
• Whether or not bumping rights exist.
  
  
• The name and telephone number of a company official who can give more information. 
  
  
• Any other pertinent information.  Example: If a facility will only be closed temporarily, state how long it will be closed.

Union notices must be given to the chief elected officer of employees’ exclusive representative(s) or to the bargaining agent(s) for the employees, and, if they are different, to the local union official(s) representing the employees.

Each notice given in a unionized work site must state:

• whether the closing or mass layoff is expected to be temporary or permanent;
  
  
• if the entire facility is to be closed;
  
  
• the expected date of the first employee separation, and the anticipated schedule for separations;
  
  
• job titles of positions affected by the closing or layoff, and the employees’ names holding those positions;
  
  
• the name and address of the facility that will be closed or where the mass layoff will occur; and
  
  
• the name and telephone number of a company official who can give more information.

State/local government notices must also be sent to the state’s dislocated worker unit and to the chief elected official of local government.  These separate notices must state:

• the name and address of the facility that will be closed or where the mass layoff will occur;
  
  
• whether the planned closing or mass layoff is expected to be temporary or permanent;
  
  
• if the entire facility is to be closed;
  
  
• the expected date of the first employee separation, and the anticipated schedule for separations;
  
  
• the job titles of positions affected by the planned closing or mass layoff, and the employees’ names holding those positions;
  
  
• an indication of whether or not bumping rights exist;
  
  
• the name and address of each union representing affected employees, and the name and address of the chief elected officer of each union; and
  
  
• the name and telephone number of a company official who can give more information (an employer does not have to state how long the closing or layoff will last, even if it knows).

Notice In Case Of Sale

An employer is responsible for providing notice up to and including the date or time of sale, while the buyer is responsible thereafter.  Any full-time employee on the effective date of sale is considered an employee of the purchaser immediately after the sale’s effective date.

Penalties

Employers who violate WARN may be held liable for damages or civil penalties.

1. Back pay.  Employers must pay the higher of either the average regular rate of pay received by each worker during the last three years of employment, or the final regular rate of pay.
   
   
2. Lost benefits.  Covered benefits are those provided under an employee welfare benefit plan, an employee pension plan as described by ERISA (e.g., health, disability, unemployment or vacation benefits), and medical expenses incurred during the period of employment loss that would have been covered under the benefit plan. 

Each employee must receive compensation for each day of violation, up to 60 days.  Employers may also be fined up to $500 per day for each day of violation, up to 60 days.  To avoid this penalty, an employer must pay each affected worker all back pay and lost benefits within three weeks from the day the employer orders the closing or mass layoff.

Allowable Penalty Reductions

An employer may offset or reduce the amount of back pay and lost benefits due to each employee by:

1. Paying employees’ wages for the violation period.
   
   
2. Voluntarily and unconditionally paying employees.
   
   
3. Making payments to a third party or trustee on behalf of employees for the violation period.  Payments include health premiums and pension plan contributions.
   
   
4. Proving that its failure to give appropriate notice was not an attempt to evade the law, or was based on information that subsequently changed, or was due to minor, inadvertent, or factual errors.

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