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 layoffs 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.[1]
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.[2]
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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,
The WARN Act is not activated when a covered employer:
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.[3]
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 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.
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.[4]
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.
The WARN Act was passed by a veto-proof Democratic majority in Congress and became law without President Reagan's signature.[5][6] The WARN Act became law in August 1988 and took effect in 1989.
The U.S. Government Accountability Office (GAO) reviewed the WARN Act in 1993[7][8] and 2003.[1] 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.