WARN Act in the News: Why Employers Need to Know the Law

The Worker Adjustment and Retraining Notification (WARN) Act is a federal law that requires employers with 100 or more employees to provide at least 60 days’ notice to employees before a plant closing or mass layoff. With the many large reductions in force that have occurred recently, the Act has been highlighted in the news. Some employers have been called out by former employees for cutting corners and not abiding by the law. What’s at stake?

This article explains the WARN Act at a high level while also providing some considerations to take into account if the WARN Act is on your radar.

The Purpose of the WARN Act

The purpose of the WARN Act is to give employees and their families some transition time to adjust to the prospective loss of employment, to seek and obtain other employment, and, if necessary, to enter skill training or retraining programs that will allow these employees to successfully compete in the job market.

Who does the WARN Act apply to?

The WARN Act applies to employers who employ 100 or more employees, including both full-time and part-time employees. Employers are also required to give notice to the state dislocated worker unit and the chief elected official of the unit of local government in which the employment site is located.

The WARN Act applies to both private and public sector employers, and it applies to all types of businesses, including for-profit and non-profit organizations.

Are there any exceptions to the WARN Act?

There are some exceptions to the WARN Act, such as if the closing or layoff is the result of a natural disaster or a strike or lockout not caused by the employer. Additionally, if an employer can demonstrate that the closing or layoff is caused by a faltering company, and that giving notice would have prevented the employer from obtaining necessary capital or business, the employer may be excused from providing notice.

What are the risks of violating the WARN Act?

Violations of the WARN Act can result in penalties, including back pay and benefits for each day of violation, as well as civil penalties of up to $500 per day per employee. Additional costs in the form of expenses of time and resources are ones that many organizations can’t afford—especially during a time of layoffs and/or restructuring.

WARN Act in the News

Lawsuits have been filed in a number of industries by former employees seeking damages from companies who failed to comply with the WARN Act, demonstrating that any organization with 100+ employees is at risk of legal action if it doesn’t honor the law.

Tech

Former employees of Twitter filed a class action lawsuit against the company for failing to provide 60 days advance notice before the mass layoffs, as required by the state of California. 

Manufacturing  

Not long before that, former workers from United Furniture, one of the country’s largest furniture manufacturers, filed lawsuits against the company for failing to comply with the WARN Act.

Hospitality 

Orlando resorts company Rosen Hotels and Resorts settled for $2.3 million in a lawsuit brought against them by over 3,600 employees for failing to give notice of their employment status, paying them, or providing benefits during a 6-month furlough period.

How Employers Can Protect Themselves

Layoffs affect workers in multiple ways, with financial, emotional, and mental consequences. Mitigating lawsuits and reducing the negative impacts of these unfortunate events for both employees and the organization is possible when you have information and processes in place before you actually need them.

Consider the following:

• Layoff anxiety affects not only those who are let go, but also remaining employees. This can impact engagement and productivity, not to mention retention at a time when an organization most needs its employees to come together and make up for the resources who have left. Managing layoffs respectfully, in an organized fashion, can reduce panic and speculation.
• Having a complete severance package in place to offer employees can protect your organization from legal action. Make sure that you follow best practices. 
• Work with a trusted partner to put benefits in place for when you need them. Offering outplacement to exiting employees will help them move on from the layoff more quickly, minimizing negative backlash. Providing this benefit will also help your remaining employees to understand that you’re assisting their former colleagues as they leave the company.    
• Keep current on the laws and regulations that affect your business, as they are constantly changing. 

Sources:

• United States Department of Labor, “Worker Adjustment and Retraining Notification (WARN)” https://www.dol.gov/agencies/whd/warn
• United States Department of Labor, “Employee Rights Under the WARN Act” https://www.dol.gov/agencies/whd/warn/employee-rights-under-the-warn-act
• National Law Review, “Employers Must Provide 60 Days’ Notice of Plant Closings and Mass Layoffs under the Worker Adjustment and Retraining Notification (WARN) Act” https://www.natlawreview.com/article/employers-must-provide-60-days-notice-plant-closings-and-mass-layoffs-under-worker

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