The Worker Adjustment and Retraining Notification Act (WARN Act) is a federal act that requires certain employers to give advance notice of significant layoffs to their employees. Layoff notice requirements are intended to give workers and their families transition time to adjust to the prospective loss of employment, to seek and obtain other employment, and, if necessary, to enter skill training or re-training programs to successfully compete in the job market.
The WARN Act protects workers, their families, and communities by requiring most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs to affected employees, unions, and local and state governments. In order to determine how many employees an employer “has” under the WARN Act, it must count all employees at every location, not just the location where employees are being laid off. Employees entitled to notice under WARN Act include managers and supervisors, as well as hourly and salaried workers. The WARN Act requires that notice should be given to employees’ representatives, the local chief elected official, and the state dislocated worker unit. An employer who violates WARN provisions by ordering plant closings or mass layoffs without providing appropriate notice is liable to pay each aggrieved employee back pay and benefits for the period of violation, up to 60 days.
The Exceptions:
The law does provide exceptions to the requirement as stated below, based on factors beyond the control or reasonable knowledge of the employer. There are three exceptions to the notice requirements:
- Faltering company: When a company which is seeking capital reasonably and in good faith believes that notice would prevent the company from obtaining that capital and the capital if obtained, would allow the company to avoid or postpone the shutdown for a reasonable period.
- Unforeseeable business circumstances: When the plant closing or mass layoff is caused by business circumstances that were not reasonably foreseeable at the time that the 60-day notice would have been required.
- Natural disaster: When the plant closing or mass lay off is due to any form of natural disaster.
The Statutory Wording:
The Warn Act can be found in29 USCS § 2102 and it reads as follows:
Ҥ 2102 Notice is required before plant closings and mass layoffs
(a) Notice to employees, state dislocated worker units, and local governments. An employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order–
(1) to each representative of the affected employees as of the time of the notice or, if there is no such representative at that time, to each affected employee; and
(2) to the State or entity designated by the State to carry out rapid response activities under section 134(a)(2)(A) of the Workforce Investment Act of 1998 [29 USCS § 2864(a)(2)(A)], and the chief elected official of the unit of local government within which such closing or layoff is to occur.
If there is more than one such unit, the unit of local government which the employer shall notify is the unit of local government to which the employer pays the highest taxes for the year preceding the year for which the determination is made.
(b) Reduction of notification period.
(1) An employer may order the shutdown of a single site of employment before the conclusion of the 60-day period if as of the time that notice would have been required the employer was actively seeking capital or business which, if obtained, would have enabled the employer to avoid or postpone the shutdown and the employer reasonably and in good faith believed that giving the notice required would have precluded the employer from obtaining the needed capital or business.
(2) (A) An employer may order a plant closing or mass layoff before the conclusion of the 60-day period if the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.
(B) No notice under this Act [29 USCS §§ 2101 et seq.] shall be required if the plant closing or mass layoff is due to any form of natural disaster, such as a flood, earthquake, or the drought currently ravaging the farmlands of the United States.
(3) An employer relying on this subsection shall give as much notice as is practicable and at that time shall give a brief statement of the basis for reducing the notification period.
(c) Extension of layoff period. A layoff of more than 6 months which, at its outset, was announced to be a layoff of 6 months or less, shall be treated as an employment loss under this Act [29 USCS §§ 2101 et seq.] unless–
(1) the extension beyond 6 months is caused by business circumstances (including unforeseeable changes in price or cost) not reasonably foreseeable at the time of the initial layoff; and
(2) notice is given at the time it becomes reasonably foreseeable that the extension beyond 6 months will be required.
(d) Determinations with respect to employment loss. For purposes of this section, in determining whether a plant closing or mass layoff has occurred or will occur, employment losses for 2 or more groups at a single site of employment, each of which is less than the minimum number of employees specified in section 2(a)(2) or (3) [29 USCS § 2101(a)(2) or (3)] but which in the aggregate exceed that minimum number, and which occur within any 90-day period shall be considered to be a plant closing or mass layoff unless the employer demonstrates that the employment losses are the result of separate and distinct actions and causes and are not an attempt by the employer to evade the requirements of this Act [29 USCS §§ 2101 et seq.].
If there is more than one such unit, the unit of local government which the employer shall notify is the unit of local government to which the employer pays the highest taxes for the year preceding the year for which the determination is made.
California Law:
Almost every state has enacted legislation which prescribes the measures and procedures that must be followed when an employee is laid off from his or her job. This legislation can fall under the umbrella of statutes governing state or public employees and the states’ labor statutes. Usually, an employer has a duty to provide notice of any proposed layoff, priority of reemployment, and, sometimes, the right to continued benefits.
California has modified the federal WARN Act and incorporated it into the California Labor Code section 1400 et seq. (California WARN Act). In California, employers must comply with both the federal WARN Act as well as the California Labor Code. Id. While the federal legislation applies to business establishments that employ 100 or more employees, the state legislation applies to “covered establishments” which are industrial or commercial facilities that have employed 75 or more employees over the preceding 12 months. Cal. Lab. Code § 1400 (a). The California WARN Act discusses notice requirement for mass layoff, relocation, or termination mandating a 60 days’ notice. Cal. Lab. Code § 1401 (a). The Act is silent about notice requirements for ordinary (non-mass) layoffs. While in the case of a lay off, an employer need not give any notice to its employees, in the case of a mass lay off a 60 days’ notice requirement is mandatory. MacIsaac v. Waste Management Collection & Recycling, Inc., 134 Cal. App. 4th 1076, 1085 (Cal. Ct. App. 2005). The California law offers less exceptions than the Federal law, it should be noted.
The California law is as follows:
Cal. Lab. Code § 1401. Notice requirements for mass layoff, relocation, or termination
(a) An employer may not order a mass layoff, relocation, or termination at a covered establishment unless, 60 days before the order takes effect, the employer gives written notice of the order to the following:
(1) The employees of the covered establishment affected by the order.
(2) The Employment Development Department, the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs.
(b) An employer required to give notice of any mass layoff, relocation, or termination under this chapter shall include in its notice the elements required by the federal Worker Adjustment and Retraining Notification Act (29 U.S.C. Sec. 2101 et seq.).
(c) Notwithstanding the requirements of subdivision (a), an employer is not required to provide notice if a mass layoff, relocation, or termination is necessitated by a physical calamity or act of war.
Conclusion:
The concept behind the law is simply beneficial and to provide to workers sufficient advance notice so that they can seek other employment and make personal financial plans. This makes good sense but it should be noted that the Federal statute recognizes certain realities of business, such as the fact that the notice could not be possible due to massive changes in business that are unforeseen and could interfere with last efforts to sell or seek financing. The California Act is not nearly so flexible at to business realities and must be carefully considered by any company with seventy five or more employees. Note that the risk is severance pay for the entire sixty days.
Before the United States business bemoans the law too greatly, note that in most of Europe such mass layoffs are not even allowed without consent of local authorities and almost always result in significant additional costs to the Company. The United States and even California remain much more friendly locales for business than most developed nations.