Does the Federal WARN Act Apply to Me?

By Tiffanny Brosnan

Employers considering reducing their workforce, months-long furloughs or reducing employee work hours during this trying time should consider the federal WARN Act (Worker Adjustment and Retraining Notification Act) before going too far down that path. A number of states and cities have their own WARN Acts with their own – in some cases even stricter – requirements to consider (including California and Oregon to name two). The following are questions to ask to determine whether you will need to comply with the federal WARN Act’s notice requirements.

How Many Employees Do You Have?

For the federal WARN Act to apply, an employer must have at least:

• 100 full-time workers (excluded from that number are workers who have less than six months on the job and workers who work fewer than 20 hours per week); or
• 100 or more workers who work at least a combined 4,000 hours per week.

What Is It You Are Doing?

The federal WARN Act may be triggered in the following situations:

• When the employer has a “plant closing.” A plant closing is defined as the 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-day period for 50 or more employees (excluding part-time employees).
  • A plant closing also occurs when the employer closes an operating unit that has fewer than 50 workers, but that closing also involves the layoff of enough other workers to make the total number of layoffs 50 or more.
  • Additionally, an employment action that effectively ceases production and stops the work that a unit performs – even if a few employees remain – is a shutdown.
  • An “employment loss” includes an involuntary termination of employment, a furlough or temporary layoff exceeding six months, or a reduction in an employee’s work hours of more than 50 percent in each month of any six-month period.
• When the employer has a “mass layoff”
  • A mass layoff occurs when there is an “employment loss” (see above for definition) at a single site of employment during any 30-day period for:
    • 500 or more full-time workers; or
    • 50-499 full-time workers AND these layoffs constitute at least 33 percentage of the employer’s total active workforce.

Thus, the alarm bells should go off if you are considering an action that includes a reduction in force, furlough, or cutting hours by more than 50 percent for 50 or more employees. In these situations, dig deeper to see if the federal WARN applies. Additionally, although employment losses are presumptively measured in 30-day periods, be aware that the 30-day window can be opened to 90 days if multiple sets of employment losses stem from the same general causes or reasons.

If the Federal WARN Act Is Triggered, What Happens?

If a planned employment action is covered as described above, the employer is required to give 60 days’ written notice to employees, specific government entities, and unions if the affected workforce is represented by unions. This means that for permanent layoffs to occur today, notice should have been sent out 60 days prior to today. The problem is that 60 days ago employers in the United States barely had heard of the coronavirus or the concept of “shelter in place.” A federal WARN Act violation can lead to penalties equal to 60 days of back pay and benefits to each affected employee. Additionally, federal WARN Act cases are attractive to class action lawyers given that they can also recover their attorneys’ fees.

So What Happens If I Have to Do Layoffs Now and Can’t Wait 60 Days?

There are a few exceptions to the 60-day notice requirement and the one that is most likely to apply in these times is the “unforeseeable business circumstances” exception. This exception comes into play when the business circumstance is caused by some sudden, dramatic, and unexpected action or condition outside the employer's control. The federal WARN Act regulations provide that “an unanticipated and dramatic major economic downturn” “might . . . be considered a business circumstance that is not reasonably foreseeable.” The regulations further provide that “a government ordered closing of an employment site that occurs without prior notice also may be an unforeseeable business circumstance.” Unfortunately, it is likely that many employers will be forced to lay off employees and rely on this exception.

But even if the “unforeseen business circumstances” exception applies, this does not relieve the employer from providing the WARN notices. Instead, it only shortens the 60-day period, and employers must instead provide the WARN notices “as soon as practicable.” Also, in addition to the regular notice requirements described below, an employer relying on the “unforeseeable business circumstances” exception notice must also include in the notices a brief statement of the reason for reducing the notice period (e.g., due to the unforeseeable business circumstance of having to immediately close our store in response to a local order, we were forced to immediately lay off employees).

If no exception applies, employers may consider a strategy of “pay in lieu of notice.” The federal WARN Act itself does not expressly provide for 60 days of wages and benefits to cover the notice period, or for any combination of daily wages and notice totaling 60 days. However, it does allow for voluntary payments of wages and benefits to be offset against any damages that might be awarded. The U.S. Department of Labor has also recognized that providing employees with full pay and benefits that are not subject to any conditions (such as a release of claims) for the 60-day period effectively precludes any damages under the federal WARN Act. Consequently, employers might consider a strategy of paying for wages and benefits for any days short of 60 that the notice does not cover.

If the Federal WARN Act Is Triggered, Who Gets Notice?

• Affected full-time and part-time employees;
• Representatives of affected unionized employees;
• The state dislocated worker unit; and
• The chief elected official of the unit of local government.

What Must the Notice Contain?

Affected employees must receive notice containing:

• A statement as to whether the planned action is expected to be permanent or temporary and, if the entire plant is to be closed, a statement to that effect;
• The expected date for when the plant closing, or the mass layoff will commence, and the expected date when the individual employee will be separated;
• An indication of whether or not bumping rights exist (rights under a collective bargaining agreement or employer policy to displace another employee); and
• The name and telephone number of a company official to contact for further information.
• The notice may include additional information useful to the employees such as information on unemployment benefits.
• If the affected employees are represented by a union, the notice to the union is slightly different.

The notices to the State dislocated worker unit and to the chief elected official of the unit of local government must contain:

• The name and address of the employment site where the plant closing or mass layoff will occur;
• The name and telephone number of a company official to contact for further information;
• A statement as to whether the planned action is expected to be permanent or temporary and, if the entire plant is to be closed, a statement to that effect;
• The expected date of the first separation, and the anticipated schedule for making separations;
• The job titles of positions to be affected, and the number of affected employees in each job classification;
• An indication as to whether or not bumping rights exist;
• The name of each union representing affected employees, and the name and address of the chief elected officer of each union.

Thus, in a time when it is difficult to keep up, the technical requirements of the federal WARN Act can seem daunting, but the employment lawyers at Snell & Wilmer can help you walk through them. Additionally, for good general information regarding the WARN Act employers can read the Department of Labor’s “Employer’s Guide to Advance Notice of Closings and Layoffs” and more detailed information in the “Electronic Code of Federal Regulations.”