Stay compliant with federal, state, and local WARN laws
Worker Adjustment and Retraining Notification (WARN) requirements are complex enough, but employers must also follow and adhere to state and even city “mini-WARN” laws. This article, the latest in a three-part series on layoffs, provides an overview of the requirements under the WARN Act and mini-WARN statutes.
“WARN’s details are infuriating,” said Gerald Hathaway, attorney at Faegre Drinker in New York. “Sometimes companies evaluating WARN requirements give up and follow WARN notification requirements in situations where further analysis reveals that WARN is not triggered.”
For example, employers may count individuals as full-time employees who do not meet this definition under the WARN Act.
So what are the WARN Act notification requirements and who is covered?
“In a nutshell, the WARN Act requires a covered employer to provide 60 days’ notice of covered plant closures and covered mass layoffs to affected employees or the employees’ union representative, if applicable; the unit workers dislocated by the state; and the official elected leader of local government,” said Ben Ho, an attorney at Baker McKenzie in San Francisco.
The notice provided to each of these groups must include specific information detailed in applicable regulations, said Ted Hollis, an attorney at Quarles & Brady in Indianapolis.
Covered employers are those with at least 100 full-time employees.
There are exceptions to the 60-day notice requirement, such as the exception for unforeseeable business circumstances, but this exception is narrowly defined, Ho warned.
“In our experience, attempting to rely on the unforeseeable business circumstances exception is not common,” he said. “Instead, it is far more common for employers to provide WARN notice or make payment in lieu of notice.” Not all states recognize the exception, he added.
While employers can pay severance pay to employees, that includes all forms of compensation, including benefits, said Robin Samuel, an attorney at Baker McKenzie in Los Angeles. Such compensation “is difficult to calculate correctly given that the law does not expressly contemplate this approach”, he noted.
A “plant closure” is the permanent or temporary closure of a single job site, or one or more facilities or operating units within a single job site, if the closure results in loss of employment at the job site alone for 30 hours. -day shift for 50 or more employees, excluding part-timers, Hollis explained.
A “mass layoff” occurs when there is a reduction in the workforce that is not the result of a plant closure and results in job loss at a single job site over the course of a year. a period of 30 days for: 1) at least 33% of employees, excluding part-time employees, and at least 50 employees or 2) at least 500 employees, excluding part-time employees.
Note that the job loss that counts for these thresholds can be any of the following, Hollis said:
- A termination of employment, other than a dismissal for cause, a voluntary departure or a retirement.
- A layoff of more than six months.
- A reduction in working hours of more than 50% in each month of any six-month period.
Hollis added that even if an employer does not meet any of these thresholds within 30 days, multiple small events can be aggregated to create a covered WARN event if they:
- Are all below the usual threshold.
- Occur within a rolling 90 day period.
- Are not the result of separate and distinct causes or actions.
“Thus, without careful planning, an initial layoff that does not reach a WARN threshold could nonetheless result in a WARN event if additional follow-up layoffs within 90 days—which may or may not have been originally planned—result a drop in the applicable thresholds exceeded,” he said.
State mini-WARN laws add another layer of complexity.
California’s WARN law (Cal WARN) takes an approach to counting employees and layoffs that differs from the federal WARN law, Hathaway noted. Cal WARN applies to “facilities” that have employed 75 or more people in the last 12 months. If 50 employees, employed for at least six months, are terminated within 30 days, Cal WARN is triggered. Additionally, any closure of a covered facility triggers Cal WARN, even if fewer than 50 employees are laid off, he explained.
Iowa, New Hampshire, New York and Wisconsin’s WARN laws apply to layoffs involving as few as 25 employees, Hathaway said.
“New York requires 90 days’ notice, and New Jersey has a revision to its WARN law that hasn’t yet gone into effect that also requires 90 days’ notice, plus severance pay equal to one week’s pay. per year of service,” he said. Noted.
The Illinois mini-WARN law applies to employers with 75 or more full-time employees when: 1) 25 or more full-time employees are terminated if they constitute one-third or more of the full-time employees on the site or 2) 250 or more full-time employees are laid off, Hollis said.
Wisconsin’s mini-WARN Act applies to employers with at least 50 employees, he added.
“States continue to adhere to WARN-like requirements,” Hathaway warned. “Make sure you know which states have done it.”
A city may also have a mini-WARN law. “As an example, Philadelphia has such a law, which may surprise employers,” said Trina Ricketts, an attorney at Ogletree Deakins in Kansas City, Mo.
“It’s no secret that the economy is facing significant headwinds, and circumstances can get significantly worse before they get better,” Hollis said. “Unfortunately, many employers will likely need to implement layoffs to meet business challenges. By starting to plan sooner rather than later, employers can maximize their flexibility, have time to think carefully and implement the planning for layoffs, comply with all applicable notice requirements and avoid legal liability.”