(Published July 20, 2009)
The Wall Street Journal informed us recently that there are weaknesses in the Worker Adjustment and Retraining Notification (WARN) Act, which have been exposed by the serious job cuts that have been taking place all over the country ("Companies, Workers Tangle Over Law To Curb Layoffs," July 6).
I wonder where the WSJ has been? I always thought the weaknesses in the WARN Act were pretty self-evident. If the goal is to ensure that all workers get either 60 days' notice, or pay in lieu of notice, before a layoff, there are a few too many exceptions to be sure of that happening. There are three of them: 1) faltering company (the company is involved in financial negotiations in an attempt to stave off the closing, and the notice would jeopardize these negotiations); 2) unforeseeable business circumstances (the closing is due to completely unexpected circumstances that could not have been foreseen); and 3) natural disaster (the layoff or closing is due to a natural disaster).
I have to admit that I have mixed feelings about advance notification. A few years ago, the day before I started work, upper management fired an employee. If they'd waited for me, I wouldn't have allowed them to do it the way they did, but they didn't wait for me. After breaking the news to her, they allowed her 15 minutes to go back and get her personal belongings. In those 15 minutes, she did $2,000 worth of damage to a computer, deleted several key files, and cancelled all the travel arrangements for upper management for the balance of the calendar year (it was October). If one disgruntled employee could do all that in 15 minutes, can you imagine what several could do in 60 days?
I've also been in the position where a company fell under exception #2 — completely unexpected financial issues that could not have been foreseen. There was one time when one of our financial backers called out of the blue and told us, in effect, "We've decided to pull our financing as of the end of the week." That meant immediate layoffs. We were too small to fall under WARN, but even if we did, we would not have been able to hold together financially for 60 days without that backing. The company made every effort, but it went out of business a few months later.
As I said, I'm really of two minds when it comes to notification. Working under contracts, I know that it's good to know when the job is coming to an end so you can plan financially and start looking for new work. On the other hand, I've already given you one reason why advance notification can be a problem.
Thinking about it objectively, I can see the reasoning behind all of the exceptions. But it seems to me that, aside from the third one, the "Act of God" exception, the exceptions don't really have very tight parameters; it might be a bit too easy to make the claim that the need for a shutdown was unexpected or that the notice would jeopardize financial negotiations. I can't help but wonder if maybe the exceptions need to be tightened up slightly.
From an HR standpoint, I guess all I can say is we need to find the line that's fair to the employees, without hurting the company. That's going to be a different line for each layoff and each company. But when the legal lines are blurry, we need to stay within the spirit, not just the letter, of the law. I have some problems with the law as a whole, but that doesn't let me off the hook from following it!
Catherine Bannon is an HR consultant in Marshfield, MA (catherine.bannon@gmail.com). Bannon worked for 10 years in HR management before starting her consulting practice.
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