Having a layoff? It is more than likely you will need to make sure that your layoff event is compliant with the WARN Act.
The WARN act actually stands for: “The Worker Adjustment and Retraining Notification Act”.
This law was first put into place in 1988 to assist families with the hardships that can result from a sudden loss of employment when an organization lays off a group of employees.
While there are several laws that an organization must take into account when preparing for a layoff (COBRA, EEOC, etc), many would argue that the WARN Act is the most important to consider before moving forward with your event.
Before we get started with our deep dive into if the WARN Act applies to your organization, make sure to download our self-assessment worksheet with the button below:
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WARN Act Regulations
The WARN act has several regulations that shape who the law should be applied to. It states:
- The WARN act applies to your organization if you have over 100 full-time employees
- The WARN act applies to all publicly and privately held companies
- The WARN act applies to all organizations that are for profit or not for profit
- A WARN notice must be given if there is a plant closing or a mass layoff
So, if you are an organization that has less than 100 FTEs, you do not have to comply with the WARN Act. If you have over 100 full time employees, the WARN Act will apply to you regardless of being public or private, for-profit or not-for-profit.
Those regulations are fairly simple to understand. The last one: “A WARN notice must be given if there is a plant closing or a mass layoff”, is a little bit more complicated because of the ambiguity of a “mass layoff” or “plant closing”.
According to LexisNexis, a plant closing is:
“If one or more facilities or operating units in a given location anticipate a shut down that will affect more than 50 workers AND last more than 30 days.”
And a mass layoff is:
“If a series of layoffs over a 30 day period will result in the loss of 500 or more employees, Warn Act Notice must be given. Also, if a series of layoffs of more than 50 or less than 500 employees over a 30 day period will result in a loss of 1/3rd of the workforce, WARN notice must be given.”
Let’s dig into some examples.
Let’s say that Jayhawk Manufacturing has 95 full time employees. If they were planning on laying off any employees, they wouldn’t have to give a WARN notice. Unless, according to the plant closing and/or mass layoff stipulation, Jayhawk Manufacturing was going to close a facility that would affect more than 50 workers and last for more than 30 days, or if they were going to layoff more than 50 workers over a 30 day period (since this is more than 1/3rd of their workforce).
Pittsburgh Hockey Co. has over 600 employees, and while they aren’t closing down their facilities, they are planning on laying off 100 workers. If they do this within 30 days time, they will have to provide a WARN notice to these employees. If they do this over an elongated time period, they will not have to give a notice, since a mass layoff only qualifies if all employees are let go within the 30 day time period.
There are other things to consider about the WARN Act besides the regulations above. First, the WARN Act only applies to organizations where employees will be impacted by a “loss of employment”. Thus, employees who are let go for performance issues or are retiring will not apply to the WARN act regulations.
Ogletree Deakins explains what qualifies as a loss of employment:
“According to the WARN Act, an “employment loss” means “(A) an employment termination, other than a discharge for cause, voluntary departure, or retirement; (B) a layoff exceeding 6 months; or (C) a reduction in hours of work of more than 50 percent during each month of any 6-month period.” 29 U.S.C. § 2101(a)(6). An “employment loss” does not occur as a result of (i) a sale of all or part of a business, (ii) a relocation, (iii) a consolidation, (iv) an employee receives an offer to transfer to a different work site within a reasonable commuting distance, or (v) an employee’s receipt receives and accepts a transfer to a different work site regardless of distance."
Based on this explanation, the WARN Act only applies to employment loss that is not caused by performance issues, the employee voluntarily leaving for a position at another organization, or retirement. It also means that if your organization provides a job to an employee let go at one location, for a position at another location that is a reasonable commuting distance, you do not need to provide the WARN notice.
According to the United States Department of Labor, a reasonable commuting distance is a “a flexible term that will vary with local conditions. The factors to be considered in determining what is a reasonable commuting distance include: the accessibility of the place of employment, the quality of the roads, customarily available transportation and usual or customary travel times. The commuting distance is measured from the worker's home.”
This means that a reasonable commuting distance might be different for an employee working at Jayhawk Manufacturing in Lawrence, Kansas, as opposed to an employee working at Pittsburgh Hockey Co. in Pittsburgh, Pennsylvania.
Complying With The WARN Act
If you fall into any of the categories listed above, you will need to comply with the WARN Act. Now, what does this mean for your organization?
To comply with the WARN Act, you will need to let your affected employees know 60 days in advance of their last day with the organization. This can be done through several different delivery methods, as long as it is given in writing. The United States Department of Labor states that any reasonable method of delivery is applicable. However, according to the United States Department of Labor:
“Use of preprinted notices that are regularly included in employees' paychecks or pay envelopes are not acceptable and do not meet the WARN Act requirements.”
This means that if your organization regularly gives out notices about the workplace with your paychecks, providing a WARN notice this way isn’t sufficient. This is because your employees might not notice the notice since they are regularly given notices through this delivery method.
When creating your WARN notice to be given to employees, make sure to include the following items:
- Notify notice receivers of the upcoming reduction in force
- Explain whether this layoff will be permanent or if the workers can expect to be called to work again
- A time-frame of when layoffs will occur and when their position will be affected
- Your organization’s policy on bumping rights
- Severance benefits that your organization will provide
- Who the employees should contact for further information at your organization (usually an HR representative)
To comply with the WARN Act, your organization must also provide a notice to your government about your reduction event. Similar to the notice given to employees, this notice must be given 60 days in advance.
According to the US Department of Labor, “The employer must also provide notice to the State dislocated worker unit and to the chief elected official of the unit of local government in which the employment site is located.”
WARN Act State Laws
Many individual states have specific laws that pertain to the WARN act. Your corporate counsel should evaluate all of the states where your employees will be affected to make sure that your organization is abiding by regulations in every location.
According to the Employment Law Handbook, the following states have WARN act regulations specific to their locations:
- New Jersey
- New York
If you are closing a location in one of these areas, read the descriptions of the laws below taken from the Employment Law Handbook. If not, feel free to skip to the next section.
California: “Applies to employers with 75 or more full or part-time employees where 50 or more employees are to be laid off due to a plant closing, mass layoff, or relocation of the employer's business. Unlike the federal law, there is no requirement that the number of employees to be laid off constitute a certain percentage of the employer's workforce. Relocation is defined as a move to a different location more than 100 miles from the prior location.”
Illinois: “Applies to employers with 75 or more full-time employees when:
- 25 or more full-time employees are laid off if they constitute one-third or more of the full-time employees at the site, or
- 250 or more full-time employees are laid off”
Maryland: “Maryland's version of WARN, the Maryland Economic Stabilization Act, is voluntary and applies to employers in the industrial, commercial, and business industries with 50 or more employees. Otherwise, an employer must comply with the federal requirements.”
New Jersey: “Applies to employers who have been in business at least three years and have at least 100 employees. It applies in situations where a covered employer:
- transfers or terminates its operations during any continuous period of 30 days which results in the termination of employment of 50 or more full-time employees, or
- conducts a mass layoff that results in an employment loss during any 30 day period of:
500 or more full-time employees, or
50 or more full-time employees representing one third or more of the full-time employees at the establishment”
New York: “Applies to private employers with 50 or more workers who layoff at least 25 employees.”
Tennessee: “Applies to employers with 50 or more employees, instead of the 100 required by the federal law. All other federal requirements apply.”
Wisconsin: “Applies to employers with 50 or more employees.”
For more information about WARN laws specific to your state location, make sure to speak with your corporate counsel or law firm.
Common Questions About The WARN Act
Below are some of the most commonly asked questions about the WARN Act:
Does the WARN Act apply to territories outside of the United States?
Yes. Territories like Puerto Rico and Guam are subject to United States law, and thus are also subject to the WARN act. Please consult with corporate counsel or a law firm to ensure that if you are having an event in a territory that you are abiding by the WARN act, as well as any local laws and regulations specific to that territory.
Are hospitals covered by the WARN Act?
This depends. If your hospital is owned by a local government, then no. If not, your hospital will have to be compliant with the WARN act.
Are universities covered by the WARN Act?
More than likely yes. Private colleges will definitely have to comply with the WARN act, and most public colleges will as well. Please review your public institution with a corporate counsel to review if your school board functions as a governmental institution, which could complicate WARN notice compliance.
Do I have to provide a notice to workers on leave?
Yes. Any workers that expect to come back to work at your organization after their leave has finished will need to be given a WARN notice. This could be for maternity or paternity leave, a sabbatical, etc.
WARN Act Enforcement
The WARN Act has a reputation of being a “toothless tiger” because of the lack of punishment for if an organization violates the law.
Here is LexisNexis’ explanation of this:
“The WARN Act is a paper lion because it limits employees' damages to their loss of wages and benefits over the last 60 days of their employment. Thus, an employer who fails to give notice under the Act is essentially immune from any liability as long as they pay all compensation due their employees through their last day of work.“
The WARN act only allows employees to file suit for damages if they are not paid their last 60 days of wages. So while an organization is in violation of the law if they don’t provide notice, they are not at risk for being sued as long as they paid their employees up until their last day of employment. Many organizations choose to do this to avoid mass amounts of employees quitting at the same time and huge losses in productivity associated with giving WARN notices.
Even though you might not be in financial risk by not giving a WARN notice, it could put your brand at serious risk if you don’t give proper notice. If your organization plans to keep running after the reduction event, the damage done to your employer brand by not providing notice could be detrimental to your talent retention and recruitment efforts.
Always consult with your corporate counsel or outside law firm when preparing for layoffs to ensure compliance with all legal regulations.