What is the WARN Act?
Employers be foreWARNed, the WARN Act might apply when they least expect it. The Federal Worker Adjustment and Retraining Notification Act is federal law that requires employers to provide notice to the employees and the state and local government when there is a plant closing or a mass lay off.
(NOTE: There are 17 states with specific laws relating to such notice. Employers in those states must ensure compliance with the federal law and the state law (sometimes called a “Mini Warn Act”). The following states have their own requirements in addition to the Federal Requirement: California, Hawaii, Illinois, Iowa, Maine, Maryland, Washington, D.C., Massachusetts, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oregon, Tennessee, Vermont and Wisconsin.)
This article addresses the Federal WARN Act. Employers should check with counsel regarding any potentially applicable Mini-WARN Acts.
WARN Act is Triggered by Mass Layoff or Plant Closing
Some Employers might think that the WARN Act does not apply to them, because they are not “closing down a Plant” or that the number of folks laid off does not even come close to a “mass layoff” in comparison to the entire size of the company. However, the WARN Act applies in more scenarios than just the mass shut down of the local plant that is the major employer.
Section 2101 of the Act defines a Plant Closing as either a:
(1) permanent or temporary shutdown of a single site of employment, or
(2) a permanent or temporary shutdown of 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 during a 30 day period for 50 or more employees (excluding part-time employees).
Section 2101 of the WARN Act, a mass layoff is a reduction in force that results in employment loss at a single site of employment during any 30 day period for (1) at least 33% of the employees, and at least 50 employees.
The WARN Act applies when a subcontract expires or is not renewed, thus resulting in a reduction in the work force. If the contract ending results in a mass layoff, then WARN Notices must be sent to the soon to be displaced individuals.
Single Site of Employment
Whether it is a mass layoff or plant closing, Employers must take into account what constitutes a “single site of employment.”
The Federal Regulations includes eight scenarios that could constitute a single site of employment. The Regulations provide that even though employees are not all working at the same physical location, multiple physical locations can be treated as a single site for the purposes of the Act. For instance, separate buildings or areas that are not directly connected or in immediate proximity may be considered a single site of employment if they (1) are in reasonable geographic proximity, (2) used for the same purpose, and (3) share the same staff and equipment.
The Regulations further explain that “contiguous buildings owned by the same employer which have separate management, produce different products, and have separate workforces are considered separate single sites of employment.” Employer should consult the advice of counsel, as the regulations further instruct that the term, “may also apply to truly unusual organizational situations where the above criteria do not reasonably apply.”
Policy of the WARN Act
The purpose of the WARN Act is to protect workers, their families and the community. Thus, the statute suggests that employers who are not required to comply with the Act should, “to the extent possible, provide notice” to the employees. Once the employer decides to provide the Notice, the Act specifies that the Notice must be sent to the state and the local government entity 60 days prior to the layoff or closing. (NOTE: The Act includes exceptions to this 60 day rule.)
The WARN Act affords employees to pursue civil remedies against employers who violate its terms. The Act further allows for penalties against the employer. In light of the potential exposure, it makes sense for Employers to issue the Notice even when it is questionable whether the Act applies. Providing the Notice is a low cost step that could save time and resources in the future. Issuing the Notice even when the Act does not apply will not result in penalties or potential civil remedies. There is little downside, if any to issuing the Notice.
The Act and Regulations provide further insight as to who the Act covers and when it applies. Employers should seek the advice of counsel when there is a potential for the Act to apply, such as the expiration of a contract, a reduction in force or a closing of a site.