Closing down a plant or laying off employees is a big decision for an organization, and it directly impacts the lives of all of the employees involved. Giving employees ample notice of such a transition is the idea behind the Worker Adjustment and Retraining Notification (WARN) Act.
According to the U.S. Department of Labor (DOL) website, the WARN Act is meant to protect employees and their families—and even the community—by requiring 60 days’ advance notice of an impending mass layoff or plant closure. This is intended to give employees enough time to prepare for the change, time to secure new employment, or time to get the necessary training to qualify for other employment after the closure or layoff occurs.
For the purposes of the WARN Act:
- A plant closure means the plant (any facility or operating unit) will be shut down for at least 6 months.
- A mass layoff means either:
- Fifty to 499 employees will be losing their jobs for more than 6 months within a 30-day time frame at a single site. As long as that’s at least 33% of the workforce at that location, it qualifies as a mass layoff. If there are multiple related layoffs that occur within 90 days and otherwise meet these criteria, that also qualifies, or
- Five hundred or more employees are losing their jobs at a single site. Regardless of what percentage of the workforce that is, this also qualifies as a mass layoff if it meets the other requirements.
When either of these situations occur, the WARN Act will apply to any organization with 100 or more employees. When such an organization faces a mass layoff or plant closure, it must provide the required advance notice to the following groups and individuals:
- Managers and supervisors;
- All hourly and salaried employees;
- Employee representatives;
- Local chief elected officials; and
- State dislocated worker units[i].
If the organization fails to do so, there are penalties for violations. Both damages and civil penalties may apply. For example, if in violation, the employer may be liable to pay employees back pay for the missed notice period up to the full required 60 days if no notice was given.
If this payment to employees is not made within 3 weeks of the mass layoff or closure, then the employer is also subject to civil penalties of up to $500 per day for each day of advance notice missed.
Exceptions to the WARN Act
Not all plant closure circumstances are subject to the WARN Act. Here are the primary exceptions:
- Employers with fewer than 100 employees are not subject to this regulation.
- No notice is required if all of the employees at the site have worked less than 6 months in the last year or work an average of less than 20 hours per week. However, if the WARN Act is otherwise triggered, then these employees would still be subject to receiving notice. In other words, this exception only applies if this is the entire workforce at the location.
- Government entities providing public services are not subject to this Act.
- Closing temporary facilities does not apply to the Act.
- Smaller layoffs (those not meeting the minimum thresholds described above) are not subject to these rules.
- The WARN Act does not apply to situations where the employees were only hired for the duration of a specific project that has now come to completion.
- Additionally, shorter or no notice is required when:
- The company is faltering, in some cases. According to the DOL’s Employment and Training Administration Fact Sheet[ii], “This exception, to be narrowly construed, covers situations where a company has sought new capital or business in order to stay open and where giving notice would ruin the opportunity to get the new capital or business, and applies only to plant closings.”
- The circumstances are unforeseen.
- There is a natural disaster.
Obviously, the WARN Act is not the only consideration for employers contemplating a mass layoff or plant closure, but it’s an important one. Some states have their own laws regarding these situations, so be sure to check state and local regulations and consult legal counsel with questions.
*This article does not constitute legal advice. Always consult legal counsel with specific questions.
About Bridget Miller:
Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.