Layoffs, Reductions In Force, and Plant Closings: Employers must comply with the federal WARN Act

With the recent downturn in our economy, more and more businesses are facing the necessity of mass layoffs and the closing of some of their locations to maximize profitability, or even to keep their businesses afloat. Conducting these mass layoffs and plant closures can be very tricky and can have potentially catastrophic results if the employer does not comply with the requirements of the applicable federal laws, when implicated. One of those federal laws is the Worker Adjustment and Retraining Notification Act (the “WARN Act”).

In general, employers are covered by the WARN Act if they have 100 or more employees, not counting employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than twenty hours per week (part-time employees). Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government.

Under the WARN Act:

A “mass layoff” is a reduction in force which:

• is not the result of a plant closing; and,
• results in an employment loss (as defined below) at the single site of employment during any 30 day (or in some cases 90 day) period for:
  • at least 33 % of the employer’s active workforce, excluding part-time employees; and,
  • at least 50 employees, excluding part-time employees; or,
  • 500 or more employees, excluding part-time employees.

A “plant closing” occurs when a facility or operating unit at a single site of employment will be temporarily or permanently shut down, and the shutdown will result in an employment loss (as defined below) for 50 or more employees, excluding part-time employees, during any 30-day period.

An “employment loss” means:

• an employment termination, other than a discharge for cause, voluntary departure or retirement; and,
• a layoff exceeding 6 months; or,
• a reduction in hours of work of individual employees of more than 50% during each month of any 6 month period.
• there are exceptions for employees who either refuse a reasonable offer to transfer or accept a transfer, within limitations.

An employer who orders a covered mass layoff or plant closing has certain obligations (with limited exemptions):

1. To provide a 60 day notice to its workforce prior to the plant closing or mass layoff;
2. This notice must be provided to either affected workers or their representatives (e.g., a labor union); to the State dislocated worker unit; and to the appropriate unit of local government (there additional requirements for the notice depending upon the entity to receive the notice).

The Notice:

• must be in writing;
• provide a reasonable method of delivery to ensure receipt 60 days before a plant closing or mass layoff;
• must be specific;
• must provide information be based on the best information available to the employer at the time the notice is served.

The notice may be conditioned upon the occurrence or non-occurrence of an event only when the event is definite and its occurrence or non-occurrence will result in a covered employment action less than 60 days after the event. If separations are planned according to a schedule, the schedule should indicate the specific dates or the beginning date of each 14-day period during which any separations are expected to occur. Additional notice is required when a mass layoff or plant closure is extended.

Advance notice gives workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain other jobs, and, if necessary, to enter skill training or retraining that will allow these workers to compete successfully in the job market. The WARN Act also provides for notice to state dislocated worker units so that they can promptly offer dislocated worker assistance.

The WARN Act also provides for less than 60 days notice when the layoffs resulted from closure of a faltering company, unforeseeable business circumstances, or a natural disaster. If an employer relies on any of these exceptions, it has the burden of proof that the conditions for the exception have been met.

If a violation of the WARN Act is found, an employer is liable to each aggrieved employee who suffers an employment loss as a result of such plant closing or mass layoff for an amount including back pay and benefits for the period of violation, up to 60 days. In recent cases, employers have been held liable for non-compliance with the notice provisions.

The Schwarzberg & Associates Employment Law and Compliance Team has extensive experience in developing effective policies, procedures and proactive responsive measures to deal with a myriad of workplace issues. Please do not hesitate to contact one of our members; Steve Schwarzberg or Lisa Kohring at (561) 659-3300 to obtain more information about our firm and its various employment law compliance and defense services.