With the dramatically changing business environment, employers must be careful to comply with numerous state and federal laws when instituting Reductions-In-Force. Most notably, the Worker Adjustment Retraining Notification Act (WARN) must be taken seriously by all employers reducing staff. Any company may be hit with a WARN suit. For example, recently a state attorney general filed suit in federal court under WARN for back pay, lost benefits and interest for laid-off workers of an Internet company. The action alleged that the Internet-related company violated WARN's notice requirements. The attorney general claimed that the employer improperly relied upon an exception to the law for companies actively pursuing financing to avoid layoffs. The spokesperson said that the claim was "nonsensical" because the employer failed to provide facts to support its defense.
Now is a good time to review WARN obligations. Key provisions of the legislation require certain employers to provide their employees with 60 days' advance written notice of a plant closing or mass layoff. Companies subject to this Act are those with 100 or more employees, excluding part-time employees, or employers with 100 or more employees who in the aggregate work at least 4,000 hours per week, exclusive of overtime.
Under provisions of the Act, the employer must give 60 days' notice of a plant closing, either permanent or temporary, where the shutdown results in job loss for 50 or more full-time employees at a single site.
Notice of a mass layoff is required either when 500 or more full-time employees at a site will lose their jobs, or if more than 33% of the work force at a site and a minimum of 50 full-time employees are laid off.
Notice of a plant closing or mass layoff is effective if mailed to each affected employee's last known address or if included with the employee's paycheck. Employers should avoid using fine print forms or any preprinted notices in this matter. The notice should be written in a language which is understandable to the employee. As a result, an employer with workers who speak English as a second language or who have little facility with English may want to consider supplying notice in whichever foreign language is appropriate.
Furthermore, the notice should be clear with regard to the anticipated date of the layoff or closing and should indicate if the action is of a permanent or temporary nature. Where employees are unionized, notice is effective if served in writing to union representatives.
Employers are also required to notify certain government officials.
The 60-day notice requirement prior to a plant closing may be reduced to "as much notice as is practicable" if, at the time notice would have been required, the employer was actively seeking capital or business which, if obtained, would have enabled the employer to avoid or postpone the shutdown and the employer reasonably and in good faith believed giving notice would have precluded the acquisition of the needed capital or business. The notice requirement may also be reduced if the plant closing or mass layoff is caused by business circumstances which are not reasonably foreseeable at the time notice would have been required.
Notice also is not required if the plant closing or mass layoff is due directly to a natural disaster or to a strike or lockout. The notice requirement also does not apply in those situations where the closing is of a temporary facility or is the direct result of the completion of a particular project and the affected employees were hired with the understanding that their employment was limited to the duration of the facility or the project. Since it is likely that the burden of proving such an understanding may fall on the employer, it is generally best for the employer to clarify temporary work understandings in writing when employees are hired.
If a plant closing or mass layoff results from the relocation or consolidation of part or all of the employer's business, the employer may avoid the notice requirement if prior to the closing or layoff, the employer offers to transfer the employees and meets certain other requirements of the Act.
An employer who orders a plant closing or mass layoff in violation of the Act is liable to each employee who suffers an employment loss for back pay and benefits for each day of the violation, up to a maximum of 60 days, but in no event for more than one-half the number of days the employee was employed by the employer.
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