To Notice or Not to NoticeTHE WARN ACT
Sean F. Darke is an attorney specializing in employment and labor law with Wessels Sherman in Chicago. He can be contacted at firstname.lastname@example.org
As a result of the current economic downturn, some companies are facing the difficult decision of whether to implement mass layoffs or close divisions or departments. As a result, businesses are looking to legal counsel to instruct them about what legal issues may arise when taking such actions.
Most employees are “at-will,” which means employers are not required to provide employees with notice of layoffs or closings. But Congress determined that certain layoffs should require notice to the employees, community, and local government—enter the WARN Act. The federal Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq ., which was enacted in 1988, requires qualified businesses to provide employees written notice at least 60 calendar days prior to a mass layoff or plant closing.
The purpose of WARN is to establish a bridge from one job to another. Although unemployment benefits support this bridge, Congress was concerned that if a major company in a community started to have financial problems and lay off a majority of its workforce without warning, the community and its families would be devastated.
Under WARN, not all businesses must provide notice; there are qualifications and certain exceptions that may trigger the need for notice. For example, a private business must have more than 100 full-time employees or employ 100 or more employees who work at least a combined 4,000 hours per week and plan to lay off at least 50 employees at a “single site of employment.” This is a key provision that triggers WARN notice, but attorneys must review their state law
and perhaps a collective bargaining agreement, where different notice requirements may be in place. For example, Illinois enacted its own WARN Act that requires businesses with only 75 employees to provide written notice of layoffs or closings.
If businesses meet the initial employee threshold requirement for WARN notice, they must provide notice to all employees who are protected under WARN. The following employees are protected under WARN:
- employees who are terminated or laid off for more than six months or who have their hours reduced 50 percent or more in any six-month period as a result of the mass layoff or plant closing; >
- employees who may reasonably be expected to experience an employment loss as a result of a proposed mass layoff or plant closing;
- employees who are on temporary layoff but have a reasonable expectation of recall (this includes employees on medical, maternity, or other leave); and
- part-time employees (as stated earlier, only full-time employees are counted to determine whether notice needs to be sent, but if notice is required part-time employees also receive notice).
Employees who are not protected under WARN are
- strikers or employees who have been locked out in a labor dispute;
- employees on a temporary project, business partners, consultants, or contract employees; and
- regular federal, state, and local government employees.
For plant closures, a company needs to provide notice to employees when it:
- permanently or temporarily closes a business operation that involves at least 50 employees at a single site;
- lays off 500 or more employees at a single site for a 30-day period or lays off 50 to 499 employees when such layoffs constitute 33 percent of the workforce at that site;
- believes the layoff will be less than 6 months, but it extends beyond the 6 months; or
- reduces the hours of 50 or more employees by 50 percent for each month in a 6-month period.