Federal WARN Act

The Worker Adjustment and Retraining Notification Act (WARN Act)

The federal law, called the WARN Act, requires an employer to notify its employees in writing at least 60 days before a plant closing or mass layoff takes effect. If the employer fails to provide the required notice, it is legally required to pay the laid off employees their wages for the period during which they should have been on notice.

Outten & Golden attorneys represent employees who have lost their jobs in WARN Act violations and helped them recover their back-pay wages. But what is a plant closing and mass layoff?

In a Plant Closing, the Doors Shut and Work Stops

A "plant closing" describes any site of employment in which the work stops and the employees go home. Operations cease. Usually, there is no promise of return. The site can be a building, or group of buildings next to or near each other. It can be one floor of the company's building, or even a few offices on the floor if they constituted a separate unit of the business. The number of employees at the building, site or unit let go in the shutdown has to be 50 or more full time employees to qualify as a "plant closing." By full time, the WARN Act means they must have worked an average of 20 or more hours a week and have worked for at least 6 months in the year leading up to the shutdown.

It is important to note that remote employees who report to the site or location are included in the 50 or more headcount. If two people headed a business unit such as "customer support" and worked in a tiny office, the office's closure would be a plant closing if there were 50 work-at-home employees who reported to it remotely or got their directions from the office.

It does not matter if the rest of the company is doing fine. If 60 days' notice is not given to the employees of the location in advance of its closing, there is a WARN Act violation. Two defenses, however, may be raised by the employer. One, that it was arranging for new capital to avoid the shutdown 60 days' prior, which would have been threatened had a WARN notice been delivered, what is known as the "faltering company" exception. Or, two, that the cause of the shutdown was an outside event that 60 days earlier was not foreseeable (the "unforeseeable business circumstances" exception).

In a Mass Layoff some, but not all, are laid off and the company is still operating.

The WARN Act includes a detailed definition of what constitutes a mass layoff:

  • The employer must have 100 or more full-time employees who each worked more than six of the prior 12 months and averaged over 20 hours a week of work each.
  • 50 or more employees are laid off at a site, and they represent over one-third of the workforce at that site (but if 500 or more employees are laid off at a site, they do not need to meet the one-third requirement).
  • 50 or more employees are let go when a worksite is shut down.
  • Multiple workforce reductions within a 30-day window are combined into one layoff.
  • The 90-day rule combines two or more layoffs that may not meet the threshold individually.

As in a plant closing, the headcount of 50 or more employees affected at a particular site is essential for a mass layoff. But, remote employees who work in the field, such as at home, or on the move in their cars, are also counted to that site, if they report to it or receive instructions from it.

As in a plant closing, there are exceptions. In a mass layoff, however, there is no "faltering company" defense, regardless of whether the employer was seeking new capital or business 60 days before the layoff to avoid it. The "unforeseeable business circumstances" however, may be raised as a defense.

Pay Close Attention to Numbers and the Notice

It is essential, as you can see, to have a trained eye look at the numbers and notices to determine if a WARN mass layoff or site shutdown has occurred.

Often employees may not squarely fall into the category of a worker who is permanently terminated in a mass layoff or shutdown. For example, some employees may be notified that they are being furloughed for a period of time. Some workers may be rehired after a period of time following a mass layoff. Some employees are told that they can apply for other jobs within the company. Finally, some employees may receive an offer of employment by a company that purchases their former employer. In these instances, the employees may still be entitled to WARN notice, or compensated for lack of notice.

Experienced legal assistance is often required to pin down the numbers of affected employees and the terms on which they have been let go, to determine whether their WARN rights have been violated, and to seek redress when violations occur.

The same is true even when "notice" is given. Employees have been told they were "notified" by meetings, word-of-mouth, newspapers, even billboards! Even written messages have been called "WARN" notices although they are filled with extraneous happy talk and opaque omens, or come late, after the employees were shown the door. Experienced eyes are needed to cut through the confusion and show that employees deserved notice and did not get it under the WARN Act.

Outten & Golden's WARN Act practice group provides that experienced legal assistance. Assistance that cuts through the numbers and the wordplay, to get employees the outcome they deserve.

If you believe your employment rights may have been violated under the WARN Act, or want to have your questions answered, please contact the firm through the "Contact Us" form or by calling us in our New York, Chicago, Washington, D.C., or San Francisco offices (see bottom of page for phone numbers) to begin the Outten & Golden intake process.

Penalties for Violating the WARN Act

Employers who fail to comply with the WARN Act, either by giving notice too late, or who issue vague notices, may be liable to employees for back pay and benefits for each day of the violation up to a maximum of 60 days, plus civil penalties of up to $500 per day and reasonable attorney's fees. The amount of back pay owed to each employee may be offset by any wages or benefits paid to employees during the period of violation, and by any "voluntary and unconditional payment" by the employer to the employee that is not required by any legal obligation, such as a severance agreement. Many employers who violate the WARN Act ask their employees to sign "waiver agreements" in exchange for receiving severance pay. It is very important that you consult an attorney before signing such agreement, as it may prevent you from filing other claims against the employer.

Contact Nationwide WARN Act Lawyers

Workers who have lost their jobs in a RIF should consult an Outten & Golden lawyer. Please contact the firm through the Contact Us form or by calling us in the New York, Chicago, or San Francisco office (see bottom of page for phone numbers) to begin the Outten & Golden intake process.