What is the WARN Act? What Employers Need to Know

The Worker Adjustment and Retraining Notification (WARN) Act requires employers to provide a 60-day notice before planned closings or mass layoffs. This law demands careful planning and communication to meet legal obligations and avoid liability. Non-compliance with the WARN Act can lead to significant penalties, including back pay, benefits to affected employees, and fines for each day of noncompliance. Compliance with the WARN Act helps employers avoid these penalties and supports a positive reputation among employees, stakeholders, and the public.

Purpose of the WARN Act

The WARN Act is intended to mitigate the impact of sudden job losses by giving workers time to seek new employment and training opportunities. The WARN Act also aims to support affected employees and communities by providing adequate time for adjustments, lessening the economic disruption caused by major workforce reductions

Scope of the WARN Act

The WARN Act applies to public, quasi-public, and private businesses, including both for-profit and not-for-profit organizations. It covers all employers with more than 100 employees. Under the WARN Act, an “employee” includes:

1. Regular Employees: Full-time employees who have worked at least 6 of the 12 months prior to the notice date.
2. Temporary Employees: Employees whose positions are not intended to be permanent but who have a reasonable expectation of recall. The reasonableness of this expectation depends on employer communication, the employer’s history of handling recalls, and industry practices regarding recalls. For detailed information on what constitutes a reasonable expectation of recall, see 20 C.F.R. § 639.3.
3. Employees on Leave: Employees on medical or personal leave are considered employees if they have a reasonable expectation of returning to work.
4. Employees in Multiple Locations: For employers operating multiple locations, employees at each site must be considered individually. However, if layoffs at separate locations are part of a single event, they may be aggregated to determine WARN Act applicability.

Part-time employees generally do not count toward the 100-employee threshold.

What Triggers the WARN Act?

The WARN Act specifies events that require employers to provide a 60-day notice to employees. Knowing these events is essential for compliance. The events that trigger the WARN Act include:

1. Employment Loss: This includes layoffs exceeding six months or a 50% reduction in work hours over a six month period.
2. Planned Closings: Involves the shutdown of a single site, resulting in job losses for 50 or more employees in a 30-day period.
3. Mass Layoffs: Occur when there is a reduction of 500 or more employees, or 50-499 employees if they constitute at least 33% of the employer’s workforce.
4. Sale of Business: In the event of a business sale, the selling employer must notify employees of the transaction. The buyer then assumes responsibility for any ongoing notifications.

What are the Notice Requirements?

Employers must adhere to specific notice requirements under the WARN Act to ensure compliance and avoid penalties.

Recipients of Notice

When a triggering event occurs, employers are required by the WARN Act to provide written notice to affected employees, their representatives (if any), the state dislocated worker unit, and the local government where the employment site is located

Notification Period

Employers are required to notify all mandated recipients of notice 60-days prior to the commencement of a triggering event.

Form and Content of Notice

Employers must provide written notice to mandated recipients. Verbal notifications and informal communications do not satisfy the legal requirement. The notice must include the reason for the layoff, the expected date, and the job titles of the affected positions. It should also detail any available reemployment opportunities and provide contact information for further inquiries.

Consequences of WARN Act Noncompliance

Employers who fail to comply with the WARN Act risk significant financial penalties and operational disruptions.

1. Back Pay and Benefits: Employers may be required to compensate each affected employee for up to 60 days of lost wages and benefits, including health insurance and retirement contributions.
2. Daily Fines: Employers may incur fines of up to $500 per day for each day they fail to provide the required notice, potentially resulting in significant financial burdens.
3. Legal Costs: Non-compliance can result in additional legal fees and costs associated with defending an employer against WARN Act claims.

Employer Defenses to WARN Act Claims

Employers can avoid liability under the WARN Act if they are able to prove specific defenses. Understanding these defenses helps employers mitigate fines and potential litigation

Unforeseeable Business Circumstances

Employers can claim this defense if layoffs or closures result from sudden, dramatic, and unexpected business conditions beyond their control. This defense requires evidence showing that the business change was unforeseen.

Natural Disasters

Layoffs and closures caused directly by natural disasters such as floods, earthquakes, or severe storms can serve as valid defenses to WARN Act claims. Employers must show a direct link between the disaster and the employment action.

Faltering Company

A company actively seeking capital or business to prevent layoffs or closing can use this defense. Employers must demonstrate that giving notice would have jeopardized the potential for obtaining the necessary capital or business.

Best Practices for Employers

Adhering to the WARN Act requires careful planning and strategic management. Implementing best practices ensures compliance and minimizes legal risks. Some steps that employers should take include:

1. Conduct Regular Workforce Reviews: Periodically review workforce levels and business conditions to anticipate potential layoffs or closures.
2. Develop a Notification Process: Establish a clear process for delivering WARN notices. This includes identifying key personnel responsible for drafting and distributing notices.
3. Maintain Open Communication: Communicate openly with employees about business conditions and potential changes. Transparency builds trust and eases transitions.
4. Consult Legal Advisors: Regularly consult with legal advisors to ensure compliance with WARN Act requirements and to stay updated on any legal changes.
5. Document Decision-Making: Keep detailed records of the decision-making process related to layoffs or closures. Proper documentation supports potential defenses to WARN Act claims and demonstrates employer effort to remain compliant.
6. Train Management: Provide training for management on WARN Act requirements and compliance procedures. Well-informed management can effectively implement compliance strategies. These practices help employers comply with the WARN Act and maintain a stable work environment for employees.

How to Respond to WARN Act Claims

When faced with a WARN Act claim, employers should take immediate and strategic action to avoid severe liabilities. If accused of violating the WARN Act, consider the following steps:

1. Examine Claim and Notice Details: Take a look at the claim filed against you to gain a clear understanding of what the accusations are, as well as the evidence used to corroborate them. Look back at the notice provided to the employee and any other mandated recipients to ensure that it met all WARN Act requirements.
2. Consult Legal Counsel: Consult with attorneys who specialize in employment law and have special experience dealing with WARN Act claims.
3. Collect Relevant Documents: Gather all relevant employment records, correspondences, layoff notices, and internal communications.
4. Evaluate Defenses: Critically examine whether the layoffs were due to unforeseen business circumstances, natural disasters, or a faltering company.
5. Respond to the Claim: Work with legal counsel to prepare and file a response to the WARN Act claim, addressing all allegations and presenting applicable defenses.
6. Consider Settlement Options: Consider settling the claim out of court as a costeffective and quicker resolution than prolonged litigation.
7. Litigation Preparation: If the case proceeds to court, work closely with your legal team to gather evidence, identify witnesses, and develop a strong defense strategy.
8. Conduct Audits: Perform a thorough audit of WARN Act compliance to identify improvement areas and implement changes to prevent future claims.

Contact Conn Maciel Carey, LLP

Compliance with the WARN Act can be complex. Conn Maciel Carey, LLP specializes in guiding employers through these requirements to avoid costly penalties. Our experienced attorneys can assist with:

1. Create Customized Notification Processes: Tailor notification procedures that meet legal requirements and fit your business operations.
2. Implement Workforce Planning Strategies: Develop strategies to anticipate and manage potential layoffs and closures.
3. Provide Training and Education: Equip management with the knowledge to recognize and fulfill WARN Act obligations.
4. Conduct Regular Compliance Audits: Ensure ongoing adherence to the WARN Act through periodic reviews and updates. If your company faces a WARN Act claim and potential litigation, Conn Maciel Carey, LLP offers expert legal defense. Our attorneys provide:

1. Comprehensive Legal Representation: Defend against claims of non-compliance with strategic and knowledgeable approaches.
2. Assert Valid Defenses: Prove defenses such as unforeseeable business circumstances, natural disasters, or faltering company conditions.
3. Manage Litigation Processes: Handle all aspects of litigation, from discovery to trial.
4. Mitigate Financial Liabilities: Aim to minimize potential liabilities and penalties through effective legal strategies and negotiation.

Whether you need to safeguard your business against WARN Act noncompliance or defend against ongoing litigation, The Labor and Employment group at Conn Maciel Carey, LLP stands ready to assist in nearly any kind of workplace case, whether an employment matter, OSHA proceeding, or commercial dispute. Contact us today at (202) 715-6244.

This article originally appeared on HospitalityLawyer.com.