Companies that are planning mass layoffs or reductions in force (RIF) must comply with the often-complex requirements of the Worker Adjustment and Retraining Notification (WARN) Act. Many states and even municipalities have enacted their own “mini-WARN Acts” that may impose different or additional requirements on employers who intend to conduct layoffs.
The Federal WARN Act
The WARN Act requires covered employers, which are employers with 100 or more full-time employees, to provide 60 days advance notice of covered “plant closings” and “mass layoffs” to various parties. A “plant closing” is a permanent or temporary shutdown of a single site of employment or one or more facilities or operating units within a single site of employment if the shutdown results in an employment loss at the single site of employment during any 30 days for 50 or more employees. A “mass layoff” is a reduction in force that does not result from an “employment loss” at a single site of employment during any 30 days for either:
- At least 33% of the employees, excluding part-time workers; and
- At least 50 employees; or
- At least 500 employees, excluding part-time employees.
An employment loss may be an employment termination, other than a discharge for just cause, voluntary departure, or retirement, a layoff exceeding six months in duration, or a reduction in hours of work of more than 50% during each month in any six months. A covered WARN event may still occur even if the employer does not reach these individual thresholds within 30 days. If multiple small events, when taken together, occur within a rolling 90-day period and are not the result of separate and distinct causes or events, the employer still may be subject to the requirements of the WARN Act.
State and Municipal Mini-WARN Laws
State laws that operate as mini-WARN Acts can add further complexity to employer obligations during mass layoffs and plant closings. For instance, California’s state WARN Act counts employees and layoffs differently than the federal WARN Act. As a result, employers in some situations may trigger state WARN Act requirements but not federal WARN Act requirements. Similarly, state WARN laws in Iowa, New Hampshire, New York, and Wisconsin affect employers who lay off as few as 25 employees.
Some state WARN laws also require more than 60 days advance notice. For example, New York law requires 90 days advance notice, plus some separation pay based on years of service.
The parties that must receive notice under the WARN Act include:
- Affected employees; or
- Employees’ union representative, if any;
- The state dislocated worker unit; and
- The chief elected official of the local government unit.
Regulations also detail the information that the required notices must contain.
The WARN Act provides some narrow exceptions to the 60-day notice requirement, but using those exceptions is rare. For instance, the WARN Act contains an unforeseeable business circumstances exception, but not all states recognize it, and few employers rely on it.
Although employers can provide pay to workers instead of the required 60-day notice, pay includes all forms of compensation that employees receive, including benefits. As a result, correctly calculating appropriate pay to comply with the WARN Act can be complicated, as the Act does not anticipate employers utilizing this approach.
Some cities, such as Philadelphia, also may have their own mini-WARN laws, which can require additional or different notice requirements. These laws may affect employers even where the federal WARN Act may not apply.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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