A WARNing for Employers: When Conducting Layoffs, Know This Law

| Zuckerman Spaeder Team

The coronavirus pandemic has already had a massive impact on businesses. Many companies have announced layoffs, furloughs, or unpaid leaves of absence. 

Employers aren’t prohibited from firing employees. Employment relationships are usually at-will, meaning that employees can be fired for any reason or no reason at all. Of course, there are still boundaries that apply, such as laws prohibiting discrimination and retaliation.

The Worker Adjustment and Retraining Notification (WARN) Act is another one of those rules. The WARN Act was passed to give workers sufficient time to prepare for a transition between their current jobs and their new jobs.

Under the WARN Act, when a business engages in a “plant closing” or “mass layoff,” it must give written notice at least 60 calendar days in advance.  The WARN Act applies to employers with 100 or more full-time workers, or with 100 or more workers who work at least a combined 4,000 hours per week.

A “plant closing” is a shutdown of a single employment site, or of operating units in that site, that results in 50 or more full-time employees losing their jobs over a 30-day period. A “mass layoff” is a reduction in force for longer than 6 months that is not the result of a plant closing and results in a job loss for at least 500 employees, or at least 50 full-time employees at a single site if they are 33% of the workforce at the site. Because WARN looks at employment losses that occur over a 30- and 90-day period, an employer cannot avoid it by laying off some workers to start with and others later.

Importantly, WARN provides three exceptions to the full 60-day notice requirement. These exceptions include natural disasters, unforeseeable business circumstances, or faltering companies that need new capital. Even in those circumstances, however, employers must give notice as soon as is practicable. Further, as the pandemic continues to spread, it will get harder and harder for businesses to argue that they did not have to give 60 days’ notice of forthcoming layoffs because of the unforeseeable impact of coronavirus. 

Employers that violate WARN are liable to affected employees for back pay and benefits, as well as civil penalties. 

Some states, such as California, also have their own WARN Acts. Although California does not typically recognize the same exceptions provided under federal law, in light of the coronavirus pandemic, it has temporarily suspended its 60-day notice requirement for employers who are forced to lay off employees because of unforeseeable business circumstances resulting from COVID-19.

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