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Lawyers WARN of More Scrutiny for Employers

The National Law Journal – Tresa Baldas

Published: July 02, 2009

As Congress considers a tougher, layoff notification law, employment lawyers are warning employers to brace for more scrutiny and potential litigation involving how they execute mass layoffs.

On Capitol Hill, members of both the House and Senate are considering amending the Worker Adjustment and Retraining Notification (WARN) Act — the federal law that mandates layoff notices — by requiring more and smaller employers to notify workers of mass layoffs or plant closings, and doubling penalties for failure to do so.

Under the proposed law — known as the Federal Oversight, Reform, and Enforcement of the WARN Act (FOREWARN) — employers with at least 75 employees would be required to provide a 90-day written notice to employees about plant closings or massive layoffs. Current law applies only to companies with at least 100 employees, and imposes a lower, 60-day notice.

The FOREWARN Act also would reduce the number of laid off employees needed to constitute a plant closing from 50 to 25, and lower the mass layoff trigger.

In addition, written notifications must include the reason for the plant closing or layoff, whether the employer has jobs elsewhere, and a statement of each employee’s right to wages and benefits. The bill would also increase employer penalties for violations to double back pay. Under current law, an employer is only liable for back pay.

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The FOREWARN Act was first introduced in 2007, then re-introduced on Thursday in the House by Rep. George Miller, D-Calif., and in the Senate by Sen. Sherrod Brown, D-Ohio. Given the wobbly economy and rising unemployment rates, attorneys expect it to pass this time around.

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But plenty of employers are already tripping into the WARN Act, but nothing is being done about it, countered employee-rights attorney Jack Raisner, of New York’s Raisner Roupinian LLP, who has seen WARN Act violations rise dramatically over the last year. “The present state of the law is too weak to compel wide-scale compliance. In fact, it inspires widespread avoidance,” Raisner said. “What’s particularly pernicious is these shutdowns are often accompanied by bankruptcy.”

Raisner said that most WARN Act violators are companies that initiate layoffs while at the same time file bankruptcy. “The employee finds themselves not only without their job, but without their insurance,” he said, who believes losing health benefits is equally detrimental.

Where the WARN Act should help people prepare for problems, like an operation or future health costs, he said employers are ignoring the law and leaving employees “flat out with nothing.” “It’s supposed to allow you to arrange your affairs to prepare for a landing,” Raisner said of the WARN Act. “The safety net is not very well developed … There are just innumerable tragedies, which are nightmarish, due to the lack of notice.”