WARN Act Requires 60 Days Notice for Plant Closings and Mass Layoffs

posted by Neil Klingshirn  |  Aug 12, 2009 11:19 AM [EST]  |  applies to Ohio

The Worker Adjustment Retraining and Notification Act ("WARN") requires employers to provide 60 days advance written notice of a "plant closing" and "mass layoffs."  This article defines a mass layoff and plant closing and touches on the penalties for failing to provide notice. In general, plant closings and mass layoffs will only affect larger employers who lay off significant portions of their workforce at one time.

Mass Layoffs

A mass layoff is defined as an "employment loss" of at least 1/3 of an employer's full-time employees.  An employment loss means, among other things, a layoff exceeding six months.  

If the layoff does not exceed 1/3 of the current roster, a mass layoff could still occur if the current layoff, together with all other layoffs made during the 90 day period preceding the current layoff, total 1/3 of the number of employees employed on "the date the first notice is required to be given."  Since notice is "required to be given" 60 days prior to the first layoff that contributes to the mass layoff, you must go back to 60 days before the first layoff to find the number of employees to divide by 3.  

To illustrate, assume that an employer intends to layoff 200 people on day 1.  Further assume that the employer had also laid off 48 other employees during the preceding 90 days, with the first layoff occurring a full 90 days beforehand.  Under these circumstances, the company will have a total of 248 layoffs during the relevant 90 day period.  In order to accomplish these layoffs without triggering WARN, the company would need to have had at least 745 people [(248 x 3) + 1] employed 150 days before the day 1 layoff (i.e., "the date on which the first notice would have been required to be given").  

As such, determining if a mass layoff will occur requires a calculation involving three variables:

1. the number of employees employed 60 days before the first layoff during the 90 day period preceding the last layoff (call this "A");
2. the number of employees laid off during the 90 day period preceding the last layoff (call this "B"); and
3. the number of employees to be laid off in the last layoff ("C").  

If B + C is greater than 1/3 x  A, then a mass layoff has occurred.

Plant Closing.

The definition of a "plant closing" is considerably less complicated:

The term "plant closing" means the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees.  29 U.S.C. § 2101(a)(2).

The most significant issues involved in a plant closing are whether a phased down workforce will involve the shutdown of an "operating unit," and whether the employer will employ less than 50 employees at the time of final closure.

Operating Unit.

The WARN regulations shed little light on the term "operating unit":

                            * *

29 CFR § 639.3(b) and (j).  A decision to shut down a distinct group, department or unit affecting more than 50 people thus may require 60 days advance notice.

Notice Requirements.

If an employer implements a plant closing or a mass layoff, it must then provide 60 calendar days advance written notice of the decision to:

1. the union representing the affected employees (whether part-time or full-time); or
2. to each individually affected employees (where there is no union involved) and
   
3. to the state dislocated worker unit and the chief elected official of the unit of local government within which the closing or layoff will occur.
   

29 U.S.C. § 2102(a)(2). 

The notices must specify the date and nature of the layoff, whether it will be temporary or permanent, whether or not bumping rights exist, the name and telephone number of a company official to contact for further information, the job titles affected, the number of employees in each job classification and the name of each union representing affected employees.

Penalties.

    
If an employer fails to give notice, or fails to make that notice complete, the employer could be liable for back pay and benefits (60 days maximum) for each affected employee who has suffered an employment loss, including the actual cost of medical expenses which would have been covered by medical insurance if the loss of employment had not occurred.  Payment of reasonable attorneys' fees to the prevailing plaintiffs is also provided in the Act.  Finally, a $500/day fine (up to 60 days) could be imposed and paid to the local government. 

External Links

• WARN Act, 29 USC Chapter 23 (29 USC Section 2101 et seq.)
  
• U.S. Department of Labor Employment and Training Administration Fact Sheet
• U.S. DOL WARN Regulations
• U.S. DOL WARN Workers Guide
  

posted by Neil Klingshirn  |  Aug 12, 2009 11:19 AM [EST]  |  applies to Ohio