CONSIDERING A LAYOFF? THE WARN ACT MAY APPLY TO YOUR BUSINESS

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By: Kathleen D. Weron


As unemployment claims reach an unprecedented number again this week, reports have also surfaced that giant retailers like Macy’s, the Gap, Kohls, and many local businesses, have begun announcing they intend to furlough tens of thousands of employees as the Coronavirus pandemic continues to slam the U.S. economy. If your business is considering a furlough or layoff, the federal Worker Adjustment and Retraining Notification Act, also known as the WARN Act, may apply. If you are a Utah business, the WARN Act may apply to you, but there is no state equivalent or other notice requirement for group layoffs.

 Even in the midst of the  COVID-19 pandemic, the WARN Act is still in effect. It remains to be seen, in the aftermath of an outbreak, the extent to which the U.S. Department of Labor will focus upon enforcement. The WARN Act provides stiff penalties for non-compliance as well as a private cause of action in federal court so that an employer may still be subject to lawsuits arising under the WARN Act regardless of the DOL’s official position. Therefore, if your company experiences a WARN Act qualifying event, compliance with the Act is required.

 WARN is meant to furnish advance warning and requires employers to provide at least 60 days’ notice to employees prior to the temporary or permanent shutdown of a worksite or prior to a mass layoff. The purpose of WARN is to help alleviate the negative impact of a mass layoff on affected employees and the community. Here are the steps to follow:

Determine Whether WARN Applies to Your Organization

WARN applies to all employers who employ at least 100 full-time employees or at least 100 employees, including part-time employees, who work at least 4,000 hours per week in the aggregate, exclusive of overtime. WARN also applies to all publicly and privately held companies and organizations that are non-profit or for-profit.

Determine Whether There Will Be a Plant Closing or Mass Layoff

A WARN notice must be given if there is a plant closing or a mass layoff. Under the statute, a “Plant Closing” is the permanent or temporary shutdown of a single employment site, one or more facilities or operating units with a single site, which results in job loss for 50 or more employees (not including those who work fewer than 20 hours per week) during a 30-day period.

A “Mass Layoff” is a reduction in force that results in job loss at a single employment site, during a 30-day period, for: (1) 500 or more full-time employees; or (2) 50 to 499 full-time employees, if the laid-off employees make up at least one-third of the employer’s active workforce.

WARN also covers staged plant closings or layoffs, which are defined the same as above but occur in stages over a 90-day period. This rule is intended to prevent employers from circumventing WARN by conducting a series of smaller layoffs.

Determine Whether There is an Exception That Applies to Your Organization

There are some exceptions to the notice requirement. For example, an employer may effectuate a plant closing or mass layoff before conclusion of the 60-day notice period where the employer was seeking capital and, if obtained, would have avoided or delayed the shutdown and the employer in good faith believed that giving the notice would have precluded the employer from obtaining the needed capital. Another exception exists where a shutdown or mass layoff is caused by business circumstances not reasonably foreseeable at the time notice would have been required or is due to a natural disaster. In addition, WARN does not apply in situations where the employer closes a temporary facility or completes a temporary project, and the employees were hired with the clear understanding that their employment would end with the closing of the facility or the completion of the project. Finally, WARN does not apply where an employer closes a facility or operating unit due to a strike or lockout.

Provide the Required Notice to Employees and State Dislocated Worker Unit

If it applies to your organization, WARN requires employers to provide 60-days’ written notice to employees prior to the temporary or permanent shutdown of a worksite or prior to a mass layoff to the following: (i) each affected employee or the affected employees’ representatives; and (ii) the state dislocated worker unit and the chief elected officer of the local government in the area affected by the closing or layoff.

The content of the notice to employees must be written in clear and specific language and must contain at least the following requirements:

  • 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 when the plant closing or mass layoff will commence and the expected date when the individual employee will be separated;
  • An indication as to whether bumping rights exists; 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 available dislocated worker assistance, and, if the planned action is expected to be temporary, the estimated duration, if known.

 Advance notice should also be given to the State Rapid Response Dislocated Worker Unit (which, in Utah, is a part of Utah’s Department of Workforce Services) as well as the chief elected official of the local government where the closing or mass layoff is to occur.

The Notice to the State Rapid Response Dislocated Worker Unit and the local chief elected official must contain at a minimum:

  • The name and address where the mass layoff or plant closing is to occur;
  • An explanation of whether the employment loss will be temporary or permanent, and whether the entire plant is being closed;
  • The expected date of the first job losses, along with a schedule of any further employment reductions;
  • The job titles of positions that will be affected and the number of affected employees in each job category;
  • A statement of bumping rights, if any exist; and
  • The name of each union/employee representative and the name and address of the chief elected officer of each union.

Importantly, the provisions of WARN do not supersede any laws or collective bargaining agreements that provide for additional notice or additional rights and remedies. Utah law does not require a longer notice period; however, an employer may have collective bargaining agreements or employment agreements that provide for a longer notice period.

Failure to comply with WARN may result in both private and local government enforcement. An employee who is entitled to WARN notice, but does not timely receive it, may recover for violations of WARN back pay and benefits lost as a result of the violation up to a 60-day period as well as costs and fees if the employee prevails. Employees may also bring class action suits to recover for themselves and others similarly situated. An Employer may also be fined up to $500.00 per day civil penalties for failing to warn the local government of the locale affected by the layoff or worksite closure.

WARN requires employers to think about timing prior to a plant closing or mass layoff even in these uncertain times due to the COVID-19 virus. For now, no new changes have been made to the Act. If WARN applies to your organization, beginning thinking now about future furloughs or layoffs so that you have the lead time to do what is necessary to give timely notice and comply with the Act. 

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About the Author

Kathleen D. Weron

Kathleen D. Weron is a litigation partner at Manning Curtis Bradshaw & Bednar, PLLC. With over 20-years employment law experience and counseling, Kathleen is closely monitoring the rapidly evolving legislation affecting employers during the COVID-19 pandemic.

For more information on the WARN ACT or other employment law-related issues, contact Kathleen via email or at 801.363.5678.

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