In our ever-changing economy, many companies are reorganizing their operations to keep competitive. While such actions can help a company become more efficient, it may lead to the elimination of existing jobs and facilities. The ability of workers to readjust and find new employment after they have lost their jobs is a major concern of the U.S. Department of Labor (DOL).
For many workers who have been dislocated due to a layoff or plant closure, early intervention can play an important role in their successful reemployment and can help workers and communities adjust to the effects of layoffs and plant closings. As a result, Congress passed the Worker Adjustment and Retraining Notification (WARN) Act that went into effective on February 4, 1989. The WARN Act provide workers with sufficient time to seek other employment or retraining opportunities before losing their jobs.
Employees are protected by WARN if their employer fits the following profile:
It is a business with 100 or more full-time workers (not counting workers who have less than 6 months on the job and workers who work less than 20 hours per week), or employs 100 or more workers who work at least a combined 4,000 hours a week, and is a private for-profit business, private non-profit organization, or quasi-public entity separately organized from the regular government.
Workers protected by WARN may be hourly or salaried workers, including managerial and supervisory employees.
Employees may be protected by WARN if their job loss occurs as part of:
A plant closing—where the employer shuts down a facility or operating unit within a single site of employment and lays off at least 50 full-time workers;
A mass layoff—where the employer lays off either between 50 and 499 full-time workers at a single site of employment and that number is 33% of the number of full-time workers at the single site of employment; or
A situation where the employer lays off 500 or more full-time workers at a single site of employment.
Employees are entitled to WARN notice if the above conditions apply to their situation and they:
Are terminated from their employment, but not if they voluntarily quit, retire, or are discharged for cause;
Are laid off for more than 6 months; or
Have their regular hours of work reduced by more than half during each month of a 6-month period.
Employees are not protected by the WARN Act if they are considered any of the following:
Strikers, or workers who have been locked out in a labor dispute;
Workers working on temporary projects or facilities of the business who clearly understand the temporary nature of the work when hired;
Business partners, consultants, or contract employees assigned to the business but who have a separate employment relationship with another employer and are paid by that other employer, or who are self-employed; and
Regular federal, state, or local government employees.
Notice is not required in certain cases involving transfers because the transfer is not considered an employment loss. If the employer offers an employee a transfer to a job within a reasonable commuting distance, the employee is not considered to have suffered an employment loss, whether or not they take the job. If the employer offers the employee a job outside a reasonable commuting distance, the employee must accept the job within 30 days, or they are considered to have suffered an employment loss.
There are two other conditions to this transfer rule. One is that the offer of a transfer must be the result of a consolidation or transfer of the employer’s business. The other is that the offer must be made before the plant closing or mass layoff occurs. An offer of reassignment to a different site of employment would not be deemed to be a "transfer" if the new job constitutes a constructive discharge.
With some exceptions, the employees must receive a written notice 60 calendar days before the layoff or plant closing. Employees are entitled to receive this notice even if they are a part-time worker or they work at another site and will lose their job due to this layoff or plant closing.
The notice the employees receive from the employer must include the following information:
An explanation of whether the layoff or closing is permanent or temporary of 6 months or less;
The date of layoff or closing and the date of their separation (The employer has some leeway in predicting the dates on which workers will be separated. The employer may give the employees notice that they will be separated within a two-week, or 14-day, period after a certain date. If the employer chooses to use a 14-day period, it must give employees notice 60 days before the first day of the 14-day period.);
An explanation of bumping rights, if they exist; and
Name and contact information for a person in the company who can provide additional information.
There are two situations in which the employees may not receive an individual 60-day written notice from the employer even though WARN applies. The first situation is when a union represents the employees. In that case, the employer must give 60 days’ written notice to the union. It is the union’s decision how and when to give employees notice.
The second situation is when there is a complex system of bumping rights. This situation will not arise often since most complex seniority systems are created under collective bargaining agreements and the union is the party required to be notified. If there is a complex seniority/bumping system and no union is involved, the employer must make a good faith effort to determine who will actually lose their job as the result of the seniority system. However, the employer is not required to predict exactly who will lose a job as a result of a complex bumping system. If the employer cannot exactly predict who will lose their job as a result of a complex bumping system, the employer must give notice to the person whose job is being eliminated even though that person may later bump another worker.
The employer can extend the notice when the date or schedule of dates of a planned plant closing or mass layoff is extended beyond the date or the ending date of any 14-day period announced in the original notice if:
The mass layoff or plant closing is postponed for less than 60 days, in which case additional notice should be given as soon as possible and should include reference to the earlier notice, the new action date, and the reason for the postponement. The notice does not need to be formal but should be given in a manner that will provide the information to employees;
The postponement is for 60 days or more, in which case the employees must receive a new WARN notice. Routine periodic notice, given whether or not a plant closing or mass layoff is impending, and with the intent to evade specific notice as required by WARN, is not acceptable.
A verbal announcement at an all-employees’ meeting or smaller employees/supervisor staff meeting does not meet the WARN Act requirements. In addition, preprinted notices regularly included in each employee’s paycheck or pay envelope or press releases to the media do not meet the requirements.
The employer is required to provide notice not only to the employee or the union but also to the local government’s chief elected official where the employment site is located and to the State Rapid Response Dislocated Worker Unit so that planning can begin for early intervention services prior to the layoff to help employees become reemployed as quickly as possible.
WARN applies when all or part of a business is sold. If a covered plant closing or mass layoff occurs, which employer—the seller or buyer—is responsible for giving notice depends on when the event occurs. The seller must give employees notice for a covered plant closing or mass layoff that occurs before the sale becomes effective. The buyer must give employees notice for a covered plant closing or mass layoff that occurs after the sale becomes effective.
Employees of the seller automatically become employees of the buyer for purposes of WARN. That means that even though there is a technical termination of the employees employment when they stop working for the seller and start working for the buyer, the technical termination does not trigger WARN.
There are three exceptions to the full 60-day notice requirement. However, in all cases, notice must be provided as soon as it is practicable. When notice is given in less than the 60-day timeframe, the employer must include a statement of the reason for providing less than 60 days’ notice in addition to fulfilling the other information notice requirements.
The exceptions to providing the full 60-day notice are as follows:
A "faltering company" is not required to give notice of a layoff or plant closing when, before the plant closing, it is actively seeking capital or business, which if obtained would avoid or postpone the layoff or closure, and if it reasonably believes that advance notice would hurt its ability to find the capital or business it needs to continue operating;
A business is not required to give a full 60-day’s notice if it could not reasonably foresee business circumstances that led to a layoff or closing at the time that the 60-day notice would have been required, (e.g., a business circumstance that is caused by some sudden, dramatic, and unexpected action or conditions outside the employer’s control like the unexpected cancellation of a major order); or
A business is not required to give notice if a layoff or plant closing is the direct result of a natural disaster (i.e., hurricane, flood, earthquake, tornado, storm, drought, or similar effect of nature).
If employees think that they may have a claim under WARN, they should consult an attorney. Generally, where workers are successful in their suits, the employer pays legal fees incurred. However, if the employee's suit is unsuccessful, they may be liable for legal expenses. Under some circumstances, the employee may qualify for legal services assistance based upon their income. Further information about accessing such legal services can be found through the local Bar Association. If the employees are union members, speak to the local representative or the union’s legal department for specific information about possible legal claims.
Although the DOL and your state have no enforcement role in seeking damages for workers who did not receive adequate notice or received no notice at all, they can assist the employee in finding a new job or learning about training opportunities that are available to them whether or not they have received a WARN notice.
WARN is enforced through the U.S. District Courts. Workers, their representatives, and units of local government may bring individual or class action suits against employers who they believe to be in violation of the Act. The DOL has no authority or legal standing in any enforcement action and cannot provide specific binding or authoritative advice or guidance with respect to individual situations. The DOL does, however, provide assistance in understanding the law and regulations to individuals, firms, and communities.
Here are some frequently asked questions to assist employers and employees in determining whether or not the employer has given the proper written notice of a layoff or plant closing and in understanding their rights under the WARN Act.
Q: Does WARN replace other notice laws or contracts?
A: The provisions of WARN do not supersede any laws or collective bargaining agreements that provide for additional notice or additional rights and remedies. If another law or agreement provides for a longer notice period, WARN notice runs at the same time as that additional notice period. Collective bargaining agreements may be used to clarify or amplify the terms and conditions of WARN but may not reduce WARN rights. For example, if the collective bargaining agreement provides for an employer to issue written notice to the union 75 days in advance of anticipated layoffs, the provision will satisfy the WARN requirement for 60-day advance notice. On the other hand, if a collective bargaining agreement provides a 45-day notice period, the WARN requirement for 60 days notice supersedes that provision.
Q: Where would the "single site" of the employee's office be located if they travel widely within a large geographic area for work?
A: For workers whose primary duties require travel from point to point, who are out stationed, or whose primary duties involve work outside any of the employer's regular work sites (including railroad workers, bus drivers, and salespersons), the single site of employment for WARN purposes is one of the following:
The location to which workers are assigned as their home base;
The location from which workers are assigned duties; or
The location to which they report.
Q: How do employees determine whether they are considered a full- or part-time worker for the purposes of receiving a WARN notice?
A: If an employees works a regular schedule of 20 hours or more each week and have worked for the employer for more than 6 of the last 12 months, the employee is a fulltime worker. If the employee works a varying schedule, the examples below may help to understand the calculations needed to determine if the employee should receive a WARN notice. If the employee has a varying work schedule, to determine whether they work an average of fewer than 20 hours by looking at:
The period since the employee became employed, if their total period of employment is less than 90 days; or
The most recent 90 days. Overtime is not included in this determination.
The calculation to determine whether an employee may be eligible for WARN notice is:
TOTAL HOURS WORKED / 13 WEEKS (number of weeks worked in 90 days) = AVERAGE HOURS WORKED PER WEEK
Example 1: 223 TOTAL HOURS WORKED / 13 WEEKS = 17.2 HOURS AVERAGE HOURS WORKED PER WEEK
Example 2: 265 TOTAL HOURS WORKED / 13 WEEKS = 20.4 HOURS AVERAGE HOURS WORKED PER WEEK
The worker in Example 1 is a part-time worker because the average hours worked per week was less than 20 hours. The worker in Example 2 is a full-time worker because the average hours worked per week was over 20 hours.
Q: If an employee was on leave—workers’ compensation, medical, maternity, or other leave—when notice was given to other workers, should they have received a notice as well?
A: Yes. Workers on leave who reasonably expect that they will continue employment with their employer are due notice despite being on leave at the time notice was provided to other workers.
Q: What if the employer pays employees for the 60 days instead of sending them a WARN notice?
A: WARN requires 60 calendar days’ written notice. The law makes no provision for any alternative such as pay in place of a notice. While an employer who pays workers for 60 calendar days instead of giving them proper notice is in violation of WARN, the provision of pay and benefits in place of a notice is a possible option. Because WARN provides for back pay and benefits for the period of the violation for up to 60 days, generally this approach by an employer—pay in place of notice—means that the employer has already met the penalty specified in the Act. This approach may make it difficult for workers to receive Rapid Response assistance that is usually carried out at the work site.
Q: What if while receiving 60 days’ pay, instead of a WARN notice, the employee gets a new job. Is the employer required to continue paying the employee until the end of the 60-day period?
A: The former employer can consider the acceptance of a new job as a voluntary termination from the old job. Since the employee now has a new job, the former employer may end the payments the employee was receiving instead of a notice—just as the remaining days of the 60-day WARN notice would no longer be in effect if the employee found new employment before the date of the layoff.
Q: Can the employer provide a severance package instead of notice? A: There are certain circumstances under which WARN allows "voluntary and unconditional" payments that are not required by a legal obligation or bargaining agreement to be offset against an employer's back pay obligation. However, payments that are required by a contract, such as an employer's personnel policies (or much less likely, state law), would not offset WARN damages and, thus, would not serve to reduce the employer's liability.
Q: Can my employer decide not to give me my paid vacation in a layoff or closing situation?
A: Vacation pay may be considered wages or a fringe benefit in some situations. If the employees have "earned" the vacation pay, that is, if they have a legal right to it by contract or otherwise, then the employer must pay it as a part of WARN damages. These obligations are generally governed by contract and sometimes by the Employee Retirement and Income Security Act.
Q: What obligations does the employer have to give notice when there is an established bumping rights system?
A: When there is no union contract but the employer has an established system of bumping rights, the employer must attempt to identify the individuals who will ultimately lose their jobs as a result of the bumping system and provide the WARN notice to them. If the employer cannot reasonably identify those workers, it must give notice to the incumbent workers in the jobs being eliminated.
Q: Will the employer give notice to everyone even when all affected workers cannot be identified?
A: If, at the time notice is required, it is not possible for the employer to identify who may reasonably be expected to be laid off, then the employer must give notice to those workers whose jobs will be eliminated as a result of the plant closing or mass layoff. The employer may choose to give broader notice to workers likely to be affected by the seniority system, but it is not appropriate for an employer to provide a blanket notice to all of its employees.
Q: In the case of a union contract, if the employer meets the requirements of the regulations and provides notification to the union representative as to the job classifications and the names of employees who are in those job classifications, is that notice sufficient to cover whatever bumping takes place later?
A: It is not necessary for the employer to identify those who could be bumped when providing a WARN notice to a union representative. The employer is only required to address bumping rights in notices to employees who are not represented by a union. This notice requires an indication of whether bumping rights exist but not an indication of the specific individuals who may be subject to bumping rights in the future.
As previously mentioned, when an employer gives individual notice, that employer is required to make a good faith effort to identify and provide notice to those workers who will actually lose their jobs as the result of the seniority system.
Q: Does the employer have to tell employees the system it has used to determine who receives layoff notices, and does job tenure or seniority make a difference?
A: No. Unless there is an established system for reducing the workforce either in a company policy or as part of a collective bargaining agreement, the employer may select employees to be terminated according to its business needs.
Q: If the employer offers to transfer an employee to another location, how does the employee know if the transfer is within a reasonable commuting distance?
A: The meaning of the term "reasonable commuting distance" will vary with local and industry conditions. Determining what is a "reasonable commuting distance" involves consideration of the following factors:
geographic accessibility of the place of work
the quality of the roads
customarily available transportation, and
the usual travel time.
The starting point for determining whether a commuting distance is reasonable is the employee's home, not where they work.
Q: If the employee is terminated without notice at the instant the sale of the business becomes effective, which party is liable—the seller who employed the employee or the new buyer of the business?
A: The seller. In the case of the sale of part or all of a business, the seller is responsible for providing notice of any plant closing or mass layoff that takes place up to and including the effective date (time) of the sale. The buyer is responsible for providing notice of any plant closing or mass layoff that takes place after the sale is complete. Employees of the seller automatically become employees of the buyer for purposes of the WARN notice requirement.
Q: If an employee is offered a job with the buyer of the business and they refuse it, is this considered a voluntary departure?
A: The refusal of the offer is considered a voluntary departure unless the job offered represents a "constructive discharge," which includes situations where very significant changes are made in employee’s wage, benefits, working conditions, or job description.
Q: If the buyer of the business continues to employ the employees but decreases their wages and benefits, has the buyer "constructively discharged" the employees?
A: If a drastic change in wages or working conditions causes a person to believe that they are being fired or would be unable to continue working for the buyer, this may constitute a "constructive discharge." This determination is often a matter of state laws and can be a strict one.
Q: Is the employer required to give notice if it declares bankruptcy?
A: WARN remains applicable to an employer that declares bankruptcy in some circumstances. If the employer declares bankruptcy and then orders a plant closing or mass layoff, it may still be liable under WARN. There are two situations under which WARN still applies though the employer declares bankruptcy.
The first situation occurs when the employer knows about the closing or mass layoff before filing for bankruptcy and should have given the employees notice but seeks to use bankruptcy to avoid giving notice. The second situation occurs when the employer continues to run the business in bankruptcy, usually as a "debtor in possession."
WARN generally does not apply where a bankruptcy trustee is simply liquidating a business. The exceptions to the notice requirement, a faltering company and unforeseeable business circumstances, often come up in bankruptcy cases. The bankruptcy proceeding does change the court in which the WARN claim must be filed from the U.S. District Court to the Bankruptcy Court. The bankruptcy filing may affect how soon any damages are actually paid to an affected employee.
Q: If the employer gave the employees a WARN notice and then postponed the layoff because an order was received for more work, does the employer have to give the employees a new 60-day notice?
A: Additional notice is required when the date of a planned plant closing or mass layoff is extended beyond the date or end of a 14-day period announced in the original notice. If the postponement is for less than 60 days, the additional notice should be given as soon as possible and should include a reference to the earlier notice, the new date, and the reason for postponement. The employer must provide a new WARN notice if the postponement is for 60 days or more.
Q: Can an employee waive their right to notice under WARN?
A: Employees cannot be required by the employer to waive their right to advance notice under WARN. However, when an employer closes a facility or has a layoff, the employer may ask its employees to sign a document waiving their right to make claims against the employer. (Waiving the right to make claims against the employer means the employee agrees not to sue the employer for additional financial compensation or any other benefit because of the employee’s job loss, or, in some cases, from anything else that may have occurred during the worker’s employment.)
This request for the employee's signature may involve offering some additional severance pay or extended health benefits. If the employee received something of value (such as additional pay or benefits) for signing the waiver and signed the waiver voluntarily and knowingly, the employee may have waived any claims they have under WARN or other employment-related laws.
Q: Are there penalties to the employer for violating the WARN advance notice requirement?
A: Yes. An employer who violates the WARN Act notice requirement is liable to each affected employee for an amount equal to back pay and benefits for the period of violation up to 60 days. An employer who fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. The penalty may be avoided if the employer satisfies the liability to each affected employee within three weeks after the closing. In any suit, the court, in its discretion, may allow the prevailing party a reasonable attorney’s fee as part of the costs. These are the only remedies that WARN provides.
Q: If an employer has temporarily closed due to COVID-19, is it supposed to sent notice under the WARN Act?
A: Employee protections under the WARN Act apply to those who suffer “an employment loss”; a layoff (or furlough) that is “temporary” may not be an employment loss for WARN Act purposes. Under the Act, an employee who is laid off does not suffer an employment loss unless the layoff extends beyond 6 months. Therefore, a temporary layoff of 6 months or less does not trigger the need for the employer to issue a WARN Act notice.
However, if the layoff lasts for more than 6 months, employees would be considered to have experienced an employment loss and would have been entitled to notice before the layoff unless it was not reasonably foreseeable at the time of the initial layoff that the layoff would extend beyond 6 months. If a layoff is extended beyond 6 months due to business circumstances, notice is required when it becomes reasonably foreseeable that the extension is required.
The WARN Act is enforced by private legal action in any U.S. District Court for any district in which the violation is alleged to have occurred or in which the employer transacts business. In such an action an employer may have to prove that it could not foresee the circumstances necessitating an extension of the layoff.
Q: If an employer has permanently closed due to COVID-19 but did not provide a 60-day notice stating that the loss of business from the virus was an unforeseen business circumstance. Does this violate the employees' rights under the WARN Act?
A: Under the WARN Act, employers can claim an exception to the 60-day notice requirement for unforeseeable business circumstances. The exception to the advance notice requirement applies to worksite closings and mass layoffs caused by business circumstances that are not reasonably foreseeable at the time that 60-day notice would have been required. An important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by a sudden, dramatic, and unexpected action or condition outside the employer’s control. This can include an unanticipated and dramatic major economic downturn.
A government ordered closing of an employment site that occurs without prior notice also may be an unforeseeable business circumstance. Similarly sudden, dramatic, and unexpected action outside the employer’s control, announced and implemented swiftly, such that the employer is unable to provide 60 days’ notice may also fall within this exception to the 60-day notice requirement.
When invoking an exception to the WARN Act’s 60-day notice requirement, a covered employer is still required to:
Give as much notice to employees (or the employees’ representative(s)) and State and local government officials as is practicable (which may, in some circumstances, be notice after the fact); and
Include a brief statement of the reason for giving less than 60-days’ notice along with the other required elements of a WARN notice.
The WARN Act is enforced by private legal action in any U.S. District Court for any district in which the violation is alleged to have occurred or in which the employer transacts business. Thus an employer may need to prove that it could not foresee the circumstances necessitating the worksite closing or mass layoff if such enforcement action is brought.
Any dispute regarding the interpretation of the WARN Act will be determined on a case-by-case basis in such a court proceeding. The role of the U.S. Department of Labor is limited to providing guidance and information about the WARN Act; such guidance is not binding on courts and does not replace the advice of an attorney.
Q: Can the employer send WARN Notices by email because the business is currently closed?
A: The regulations implementing the WARN Act state that: “Any reasonable method of delivery… which is designed to ensure receipt of notice” is an acceptable form of notice. A WARN notice sent via email must still be specific to the individual employee, and comply with all requirements of the WARN Act statute and regulations regarding written notifications.
If you have any further questions or need additional information about the WARN Act, please contact me for a FREE confidential consultation at (916) 333-4653 or Stephen_Fiegel_Esq@comcast.net.
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