Stay in Line with Federal, State and Local WARN Laws

​Worker Adjustment and Retraining Notification (WARN) Act requirements are complex enough, but employers also must keep track of and comply with state and even city "mini-WARN" laws. This article, the last in a three-part series on layoffs, provides an overview of the requirements under the WARN Act and mini-WARN statutes.

"The minutiae of WARN is maddening," said Gerald Hathaway, an attorney with Faegre Drinker in New York City. "Sometimes, companies assessing the WARN requirements throw up their hands and follow the WARN notice requirements in situations where a close analysis reveals that WARN is not triggered."

For example, employers may count individuals as full-time employees who do not meet that definition under the WARN Act.

WARN Requirements

So what are the WARN Act's notice requirements, and who is covered?

"In a nutshell, the WARN Act requires a covered employer to provide 60 days' advance notice of covered plant closings and covered mass layoffs to affected employees or the employees' union representative, if any; the state dislocated worker unit; and the chief elected official of the local government," said Ben Ho, an attorney with Baker McKenzie in San Francisco.

The notice provided to each of these groups must include specific information detailed in applicable regulations, said Ted Hollis, an attorney with Quarles & Brady in Indianapolis.

Covered employers are those with at least 100 full-time employees.

There are exceptions to the full 60-day notice requirement, such as the unforeseeable business circumstances exception, but this exception is narrowly defined, Ho cautioned.

"In our experience, attempting to rely on the unforeseeable business circumstances exception is not common," he said. "Instead, it is far more common for employers to provide WARN notice or make a payment in lieu of notice." Not all states recognize the exception, he added.

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While employers can provide pay in lieu of notice to employees, that includes all forms of compensation, including benefits, said Robin Samuel, an attorney with Baker McKenzie in Los Angeles. Such pay "is difficult to calculate correctly given the statute does not expressly contemplate this approach," he noted.

A "plant closing" is the permanent to 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 part-time employees, Hollis explained.

A "mass layoff" occurs when there is a reduction in force that is not the result of a plant closing and that results in an employment loss at a single site of employment during any 30-day period for either: 1) at least 33 percent of the employees, excluding part-time workers, and at least 50 employees or 2) at least 500 employees, excluding part-time employees. 

Note that employment loss that counts toward these thresholds can be any of the following, Hollis said: 

• An employment termination, other than a discharge for cause, voluntary departure or retirement.
• A layoff exceeding six months in duration.
• A reduction in hours of work of more than 50 percent during each month of any six-month period.

Hollis added that even if an employer does not reach any of these thresholds within a 30-day period, multiple small events may be aggregated to create a covered WARN event if they:

• Are all below the usual threshold.
• Occur within a rolling 90-day period.
• Are not the result of separate and distinct causes or actions. 

"Thus, without careful planning, an initial layoff that did not hit a WARN threshold could nevertheless result in a WARN event if follow-up additional layoffs within 90 days—which may or may not have initially been planned—cause the applicable thresholds to be exceeded," he said.

Mini-WARN Laws

States' mini-WARN laws add another layer of complexity.

California's WARN Act (Cal WARN) takes an approach to counting employees and layoffs that differs from the federal WARN Act, Hathaway noted. Cal WARN applies to "facilities" that have employed 75 or more people within the past 12 months. If 50 employees—employed for at least six months—are let go within a 30-day period, Cal WARN is triggered. Also, any closing of a covered facility triggers Cal WARN, even if fewer than 50 employees are let go, he explained.

The Iowa, New Hampshire, New York and Wisconsin WARN laws apply to layoffs involving as few as 25 employees, Hathaway said.

"New York requires 90 days' notice, and New Jersey has a revision to its WARN law that has not yet gone into effect that also requires 90 days' notice, plus separation pay equal to one week of pay per year of service," he noted.

The mini-WARN Act in Illinois applies to employers with 75 or more full-time employees when: 1) 25 or more full-time employees are laid off if they constitute one-third or more of the full-time employees at the site or 2) 250 or more full-time employees are laid off, Hollis said.

Wisconsin's mini-WARN Act applies to employers with at least 50 employees, he added.

"States continue to pass WARN-like requirements," Hathaway said. "Be sure to know which states have done so."

A city also can have a mini-WARN law. "As an example, Philadelphia has such a law, which can be surprising to employers," said Trina Ricketts, an attorney with Ogletree Deakins in Kansas City, Mo.

"It's no secret that the economy is facing significant headwinds, and circumstances may get substantially worse before they get better," Hollis said. "Unfortunately, many employers will likely need to implement layoffs to meet business challenges. By beginning to plan sooner, rather than later, employers can maximize their flexibility, have time to carefully think through and implement layoff planning, meet any applicable notice requirements, and avoid legal liabilities."