Worker Adjustment and Retraining Notification Act
Encyclopedia
The Worker Adjustment and Retraining Notification Act of 1988 (WARN Act) is a United States labor law
which protects employees, their families, and communities by requiring most employers with 100 or more employees to provide sixty- (60) calendar-day advance notification of plant closings and mass layoff
s of employees. In 2001, there were about 2,000 mass layoffs and plant closures which were subject to WARN advance notice requirements and which affected about 660,000 employees.
Employees entitled to notice under the WARN Act include managers and supervisors, hourly wage, and salaried workers. The WARN Act requires that notice also be given to employees' representatives (i.e. a labor union
), the local chief elected official (i.e. the mayor
), and the state dislocated worker unit.
The advance notice gives 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 retraining programs that will allow these workers to successfully compete in the job market.
The WARN Act also is not activated when the following coverage thresholds are unmet:
There are three (3) exceptions to the full 60-day notice requirement; however, the notice must be provided as soon as practicable, even when these exceptions apply, and the employer must provide a statement of the reason for shortening the notice requirement in addition to fulfilling other notice information requirements. These three exceptions are:
Exceptions are often claimed by employers in bankruptcy
cases, and bankruptcy courts must often determine how the WARN Act applies. Generally, the WARN Act's requirements and penalties apply when an employer continues to run the business in bankruptcy, rather than close the business, and also when an employer plans a closing or mass layoff before filing bankruptcy. The WARN Act does not apply to a trustee in bankruptcy
whose sole function is to close the business.
U.S. district courts
enforce WARN requirements. Workers, representatives of employees, and units of local government may bring individual or class action
suits. The Court may allow reasonable attorney's fees as part of any final judgment.
The U.S. Department of Labor
(DOL) is responsible to educate and inform employers and employees about WARN, and to provide assistance in understanding the regulations, but is not responsible for enforcing WARN.
The following states and localities have passed state or local WARN Acts.
A number of states have laws that create ancillary duties at the time of job layoffs, but which generally do not seek to mandate advance notice or severance payments to workers in a manner similar to the federal WARN Act, other states' statutes or the laws found in Canadian or European jurisdictions. Maryland, Missouri, Oklahoma, and Pennsylvania have statutes that require filing certain disclosure statements when businesses are the takeover targets of other corporations or when business are being dissolved. The statements generally require disclosure of plans to close facilities in the state. Connecticut requires employers to maintain health insurance for a certain period of time following the relocation of operations. Kansas requires the approval of state officials when businesses plan to close facilities or significantly cut production in select industries. Maryland, Michigan and Minnesota have statutes that ask employers to voluntary provide advance notice to workers in the event of mass layoffs; however these states to not require compliance with the state's statute. Montana and Nevada statutes require advance notice to certain public employees facing layoff. Oregon and Tennessee have laws that simply implement the federal WARN Act. South Carolina requires that employers provide the same notice to laid off workers that workers are contractually required to provide to the employer when leaving their employment. Ohio requires that state unemployment agency officials be notified several days in advance of mass layoffs.
(GAO) reviewed the WARN Act in 1993 and 2003. The GAO found that certain definitions and requirements of WARN are difficult to apply when employers and employees assess the applicability of WARN to their circumstances. The GAO recommended amending the WARN Act to simplify the calculation of thresholds, clarify the definition of employer and how damages are calculated, and establish a uniform statute of limitations.
United States labor law
United States labor law is a heterogeneous collection of state and federal laws. Federal law not only sets the standards that govern workers' rights to organize in the private sector, but also overrides most state and local laws that attempt to regulate this area. Federal law also provides more...
which protects employees, their families, and communities by requiring most employers with 100 or more employees to provide sixty- (60) calendar-day advance notification of plant closings and mass layoff
Layoff
Layoff , also called redundancy in the UK, is the temporary suspension or permanent termination of employment of an employee or a group of employees for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs...
s of employees. In 2001, there were about 2,000 mass layoffs and plant closures which were subject to WARN advance notice requirements and which affected about 660,000 employees.
Employees entitled to notice under the WARN Act include managers and supervisors, hourly wage, and salaried workers. The WARN Act requires that notice also be given to employees' representatives (i.e. a labor union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
), the local chief elected official (i.e. the mayor
Mayor
In many countries, a Mayor is the highest ranking officer in the municipal government of a town or a large urban city....
), and the state dislocated worker unit.
The advance notice gives 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 retraining programs that will allow these workers to successfully compete in the job market.
Covered workers
Often, WARN Act problems arise when employers are acquired by other companies. Generally, The WARN Act covers employers with 100 or more employees, not counting those who have worked fewer than six (6) months in the last twelve- (12) month work period, and those who work an average of less than twenty (20) hours a week. Employees entitled to advance notice under the WARN Act include managers, supervisors, hourly-wage, and salaried workers. Employees unprotected by the WARN Act include,- Workers participating in strike actions, or workers who have been locked out in a labor dispute;
- Workers employed on temporary projects or the work facilities of the business who clearly understand the temporary nature of the work when hired;
- Business partners, consultants, and contract employees assigned to the closing business, but who have a separate employment relationship with another, second employer and who are paid by that other, second employer, and those business partners, consultants, and contract employees who are self-employed.
- Regular federal, state, and local government employees.
Exceptions to the WARN Act
The WARN Act is not activated when a covered employer:- Closes a temporary facility or completes a temporary project, and the employees working in the facility or temporary project were hired with the clear understanding that their employment would end with the closing of the work facility or the completion of the project; or
- Closes a facility or operating unit because of a strike or a worker lock-out, and the closing is not intended to evade the purposes of the WARN Act.
The WARN Act also is not activated when the following coverage thresholds are unmet:
- If a plant closing or a mass layoff results in fewer than 50 workers losing their jobs at a single employment site;
- If 50 to 499 workers lose their jobs and that number is less than 33 percent of the employer’s total, active workforce at a single employment site;
- If a layoff is for 6 months or less; or
- If work hours are not reduced 50 percent in each month of any 6-month period.
There are three (3) exceptions to the full 60-day notice requirement; however, the notice must be provided as soon as practicable, even when these exceptions apply, and the employer must provide a statement of the reason for shortening the notice requirement in addition to fulfilling other notice information requirements. These three exceptions are:
- Faltering company: When, before a plant closing, a company is actively seeking capitalFinancial capitalFinancial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc....
or business and reasonably, in good faith, believes that advance notice would preclude its ability to obtain such capital or business, and this new capital or business would allow the employer to avoid or postpone the shutdown for a reasonable period;
- Unforeseeable business circumstances: When the 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 (i.e. a business circumstance caused by some sudden, dramatic, and unexpected action(s) or condition(s) beyond the employer's control, such as a major order's unexpected cancellation); or
- Natural disasterNatural disasterA natural disaster is the effect of a natural hazard . It leads to financial, environmental or human losses...
: When a plant closing or mass layoff is the direct result of a natural disaster such as a floodFloodA flood is an overflow of an expanse of water that submerges land. The EU Floods directive defines a flood as a temporary covering by water of land not normally covered by water...
, an earthquakeEarthquakeAn earthquake is the result of a sudden release of energy in the Earth's crust that creates seismic waves. The seismicity, seismism or seismic activity of an area refers to the frequency, type and size of earthquakes experienced over a period of time...
, a droughtDroughtA drought is an extended period of months or years when a region notes a deficiency in its water supply. Generally, this occurs when a region receives consistently below average precipitation. It can have a substantial impact on the ecosystem and agriculture of the affected region...
, a storm, a tidal wave, or the similar effects of nature. In such cases, notice may be given after the event.
Exceptions are often claimed by employers in bankruptcy
Bankruptcy in the United States
Bankruptcy in the United States is governed under the United States Constitution which authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States." Congress has exercised this authority several times since 1801, most recently by adopting the Bankruptcy...
cases, and bankruptcy courts must often determine how the WARN Act applies. Generally, the WARN Act's requirements and penalties apply when an employer continues to run the business in bankruptcy, rather than close the business, and also when an employer plans a closing or mass layoff before filing bankruptcy. The WARN Act does not apply to a trustee in bankruptcy
Trustee in bankruptcy
A trustee in bankruptcy is an entity, often an individual, in charge of administering a bankruptcy estate.- United States :In the United States, a Trustee in Bankruptcy is a person who is appointed by the United States Department of Justice or by the creditors involved in a bankruptcy case.In a...
whose sole function is to close the business.
Penalty for violating the WARN Act
An employer who violates the WARN provisions is liable to each employee for an amount equal to back pay and benefits for the period of the violation, up to 60 days. This may be reduced by the period of any notice that was given and any voluntary payments that the employer made to the employee, sometimes referred to as "pay in lieu of notice."U.S. district courts
United States district court
The United States district courts are the general trial courts of the United States federal court system. Both civil and criminal cases are filed in the district court, which is a court of law, equity, and admiralty. There is a United States bankruptcy court associated with each United States...
enforce WARN requirements. Workers, representatives of employees, and units of local government may bring individual or class action
Class action
In law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
suits. The Court may allow reasonable attorney's fees as part of any final judgment.
The U.S. Department of Labor
United States Department of Labor
The United States Department of Labor is a Cabinet department of the United States government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, re-employment services, and some economic statistics. Many U.S. states also have such departments. The...
(DOL) is responsible to educate and inform employers and employees about WARN, and to provide assistance in understanding the regulations, but is not responsible for enforcing WARN.
State & Local Laws
In addition to the WARN Act, which is a federal law, several states have enacted similar acts that require advance notice or severance payments to employees facing job loss from a mass layoff or plant closing. For example, California requires advance notice for plant closings, layoffs, and relocations of 50 or more employees regardless of percentage of workforce, that is, without the federal "one-third" rule for mass layoffs of fewer than 500 employees. Also, the California law applies to employers with 75 or more employees, counting both full-time and part-time employees.The following states and localities have passed state or local WARN Acts.
- California
- City of Philadelphia
- Hawaii
- Illinois
- Iowa
- Maine
- Massachusetts
- Minnesota (voluntary)
- New Hampshire
- New Jersey
- New York
- Wisconsin
A number of states have laws that create ancillary duties at the time of job layoffs, but which generally do not seek to mandate advance notice or severance payments to workers in a manner similar to the federal WARN Act, other states' statutes or the laws found in Canadian or European jurisdictions. Maryland, Missouri, Oklahoma, and Pennsylvania have statutes that require filing certain disclosure statements when businesses are the takeover targets of other corporations or when business are being dissolved. The statements generally require disclosure of plans to close facilities in the state. Connecticut requires employers to maintain health insurance for a certain period of time following the relocation of operations. Kansas requires the approval of state officials when businesses plan to close facilities or significantly cut production in select industries. Maryland, Michigan and Minnesota have statutes that ask employers to voluntary provide advance notice to workers in the event of mass layoffs; however these states to not require compliance with the state's statute. Montana and Nevada statutes require advance notice to certain public employees facing layoff. Oregon and Tennessee have laws that simply implement the federal WARN Act. South Carolina requires that employers provide the same notice to laid off workers that workers are contractually required to provide to the employer when leaving their employment. Ohio requires that state unemployment agency officials be notified several days in advance of mass layoffs.
History
The WARN Act was passed by a veto-proof Democratic majority in Congress and became law without President Reagan's signature. The WARN Act became law in August 1988 and took effect in 1989.Review
The U.S. Government Accountability OfficeGovernment Accountability Office
The Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.-History:...
(GAO) reviewed the WARN Act in 1993 and 2003. The GAO found that certain definitions and requirements of WARN are difficult to apply when employers and employees assess the applicability of WARN to their circumstances. The GAO recommended amending the WARN Act to simplify the calculation of thresholds, clarify the definition of employer and how damages are calculated, and establish a uniform statute of limitations.
See also
- US labor law
- Transfer of Undertakings (Protection of Employment) Regulations 2006 and TULRCA 1992 section 188 from UK labour law
External links
- WARN Act 29 U.S.C. §§ 2101 to 2109
- WARN Act Regulations 20 C.F.R. §§ 639.1 to 639.10
- U.S. Department of Labor - WARN Act Guide
- U.S. Department of Labor - Compliance Assistance
- State Dislocated Worker Unit Contacts
- Maurice & Jane Sugar Law Center for Economic & Social Justice (WARN Act experts)
- WARN Act News, Blog of the Sugar Law Center
- Workplace Fairness (Plant Closings/Mass Layoffs)
- Special Report on WARN Act, Toledo Blade, four-part series, July 15-18, 2007
- "U.S. Senate Committee to Focus on WARN Act's Reform", Toledo Blade, May 20, 2008
- "WARN Act Falls Short as Jobs Vanish", Toledo Blade, December 22, 2008
- Meeting WARN Act Obligations Amid Mass Layoffs and Closures, Pamela L. Wolf, J.D., CCH White Paper, April 24, 2009
- "Companies, Workers Tangle Over Law to Curb Layoffs", Wall Street Journal, July 6, 2009
- The Worker Adjustment and Retraining Notification Act (WARN), Linda Levine, Congressional Research Service, Report for Congress, RL31250, July 9, 2009