Plant Closings / Mass Layoffs
This page provides answers to the following questions:
Yes. The Worker Adjustment and Retraining Notification (WARN) Act offers some protection to workers, their families and communities against plant closings and/or mass layoffs, by requiring employers to give their workers sixty days notice before a plant closing or mass layoff. This notice must be provided to either affected workers or their representatives (such as a labor union); to the State dislocated worker unit; and to the appropriate unit of local government.
Advance notice gives you and your family some transition time to adjust to the prospective loss of employment, to seek and obtain other jobs and, if necessary, to enter skill training or retraining that will allow you to successfully compete in the job market. WARN also provides for notice to state dislocated worker units so that they can promptly offer dislocated worker assistance.
If employers have 100 or more full-time employees they are generally covered by WARN. However, employees who have worked less than 6 months in the last 12 months or who work an average of less than 20 hours a week are not counted as part of the 100 employees required to be covered.
Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Regular Federal, State, and local government entities which provide public services are not covered.
Employees entitled to notice under WARN include hourly and salaried workers, as well as managerial and supervisory employees. Business partners are not entitled to notice.
Employees who have worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week are entitled to receive notice, even though, as discussed in the previous question, they are not counted when determining whether the WARN Act applies to your employer.
There are three different events that may trigger the need for your employer to give you notice under the WARN Act:
- plant closings,
- mass layoffs, or
- if the number of employment losses which occur during a 30-day period fails to meet the threshold requirements of a plant closing or mass layoff, but the number of employment losses for 2 or more groups of workers, each of which is less than the minimum number needed to trigger notice, reaches the threshold level, during any 90-day period, of either a plant closing or mass layoff. Job losses within any 90-day period will count together toward WARN Act threshold levels, unless the employer demonstrates that the employment losses during the 90-day period are the result of separate and distinct actions and causes.
For the purposes of the WARN Act a plant closing happens when an employment site (or one or more facilities or operating units within an employment site) will be shut down, and the shutdown will result in an “employment loss” (see below) for 50 or more employees during any 30-day period. This does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. These latter groups, however, are entitled to notice.
For the purposes of the WARN Act a mass layoff is defined as an employment loss at the employment site during any 30-day period for 500 or more employees, or for 50-499 employees if they make up at least 33% of the employer’s active workforce. Again, this does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. These latter groups, however, are entitled to notice.
The term “employment loss” means:
- An employment termination, other than a discharge for cause, voluntary departure, or retirement;
- a layoff exceeding 6 months; or
- a reduction in an employee’s hours of work of more than 50% in each month of any 6-month period.
Notice must be timed to reach the required parties at least 60 days before a closing or layoff. When the individual employment separations for a closing or layoff occur on more than one day, the notices are due to the representative(s), State dislocated worker unit and local government at least 60 days before each separation. If the workers are not represented, each worker’s notice is due at least 60 days before that worker’s separation.
8. What if my employer didn’t know 60 days before that his business was closing? Is he in violation of the WARN Act?
Not necessarily: there are three exceptions to the sixty-day notice requirement. An employer is not required to give a full 60 days notice if he could not reasonably foresee the circumstances that led to a layoff or closing at the time that the 60-day notice would have been required.
The exceptions to 60-day notice are:
Faltering company: The faltering company 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. It applies only to plant closings; Unforeseeable business circumstances: This exception applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required; and Natural disaster: This applies where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought or storm.
If an employer provides less than 60 days advance notice of a closing or layoff and relies on one of these three exceptions, the employer must prove that the conditions for the exception have been met.
However, in all cases, notice must be provided as soon as it is practicable. When notice is given in less than the 60-day timeframe, the employer must include a statement of the reason for providing less than 60 days’ notice in addition to fulfilling the other information notice requirements.
It depends on whether you are represented by a union or not.
If a union represents you, your employer must give 60 days’ written notice to the union. It is your union’s decision how and when to give you notice. If you are an unrepresented individual worker who may reasonably be expected to experience an employment loss, you are still entitled to notice, and it must be given to you directly.
Another situation in which you may not receive an individual 60-day written notice from your employer even though WARN applies is when there is a complex system of bumping rights. This situation will not arise often since most complex seniority systems are created under collective bargaining agreements and the union is the party required to be notified. If there is a complex seniority/bumping system and no union is involved, your employer must make a good faith effort to determine who will actually lose their job as the result of the seniority system. However, your employer is not required to predict exactly who will lose a job as a result of a complex bumping system. If your employer cannot exactly predict who will lose their job as a result of a complex bumping system, your employer must give notice to the person whose job is being eliminated even though that person may later bump another worker.
Employees who have worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week are due notice, even though they are not counted when determining the trigger levels.
The employer must also provide notice to the State dislocated worker unit and to the chief elected official of the unit of local government in which the employment site is located.
No particular form of notice is required. However, the notice must contain the following information:
- An explanation of whether the layoff or closing is permanent or temporary – of 6 months or less;
- The date of layoff or closing and the date of your separation (Your employer has some leeway in predicting the dates on which workers will be separated. Your employer may give you notice that you will be separated within a two-week, or 14-day, period after a certain date. If your employer chooses to use a 14-day period, he/she must give you notice 60 days before the first day of the 14-day period.);
- An explanation of bumping rights, if they exist; and
- Name and contact information for a person in the company who can provide additional information.
All notices must be in writing. Any reasonable method of delivery designed to ensure receipt 60 days before a closing or layoff is acceptable.
Not generally. There are certain circumstances in which employers are exempt from WARN requirements. An employer does not need to give notice if a plant closing is the closing of a temporary facility, or if the closing or mass layoff is the result of the completion of a particular project or undertaking. This exemption applies only if the workers were hired with the understanding that their employment was limited to the duration of the facility, project or undertaking. An employer cannot label an ongoing project “temporary” in order to evade its obligations under WARN.
The WARN Act only covers you if you are a non-striking employee who experiences an employment loss as a direct or indirect result of a strike, or if you are a worker who is not part of the bargaining unit(s) which was involved in the labor negotiations that led to a lockout.
An employer does not need to provide notice to strikers or to workers who are part of the bargaining unit(s) which are involved in the labor negotiations that led to a lockout when the strike or lockout is equivalent to a plant closing or mass layoff.
An employer does not need to give notice when permanently replacing a person who is an “economic striker” as defined under the National Labor Relations Act.
If your employer sells all or part of its business, there are certain protections for all affected employees:
- In each situation, there is always an employer responsible for giving notice.
- If the sale by a covered employer results in a covered plant closing or mass layoff, the required parties (discussed later) must receive at least 60 days notice.
- The seller is responsible for providing notice of any covered plant closing or mass layoff which occurs up to and including the date/time of the sale.
- The buyer is responsible for providing notice of any covered plant closing or mass layoff which occurs after the date/time of the sale.
- No notice is required if the sale does not result in a covered plant closing or mass layoff.
- Employees of the seller (other than employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week) on the date/time of the sale become, for purposes of WARN, employees of the buyer immediately following the sale. This provision preserves the notice rights of the employees of a business that has been sold.
Yes. Included in the legal definition of “employment loss” in the Warn Act is a reduction in an employee’s hours of work of more than 50% in each month of any 6-month period.
If the closing or layoff results from the relocation or consolidation of part or all of the employer’s business, it depends. An employee who refuses a transfer to a different employment site within reasonable commuting distance does not experience an employment loss.
Also, if you accept the transfer outside of a reasonable distance within 30 days after it is offered, or within 30 days after the plant closing or mass layoff, whichever is later, your transfer will not be considered “employment loss.”
In both cases, the transfer offer must be made before the closing or layoff, there must be no more than a 6 month break in employment, and the new job must not be deemed a constructive discharge.
It depends. The definition of “employment loss” in the WARN Act requires that an employee be laid off for a period exceeding 6 months. If you have been laid off for 6 months or less you will not be covered by WARN.
No. If you were hired with the understanding that your employment would be limited to the duration of the facility, project or undertaking, an employer does not need to give you notice.
18. My employer verbally announced at an all-employees’ meeting that the plant was closing. Does this count as notice?
No. All notices must be in writing. A verbal announcement at an all-employees’ meeting or smaller employees/supervisor staff meeting does not meet the WARN Act requirements. In addition, preprinted notices regularly included in each employee’s paycheck or pay envelope or press releases to the media do not meet the requirements.
19. How do I determine whether I am considered a full- or part-time worker for the purposes of receiving a WARN notice?
If you work a regular schedule of 20 hours or more each week and have worked for your employer for more than 6 of the last 12 months, you are a full-time worker. If you work a varying schedule, you determine whether you work an average of fewer than 20 hours by looking at:
- The period since you became employed, if your total period of employment is less than 90 days; or
- The most recent 90 days.
Overtime is not included in this determination. See The Worker Adjustment and Retraining Notification (WARN) Act Guide to Advance Notice of Closings and Layoffs for examples.
Enforcement of WARN requirements is through the United States district courts. Workers, representatives of employees and units of local government may bring individual or class action suits. In any suit, the court, in its discretion, may allow the prevailing party a reasonable attorney’s fee as part of the costs.
An employer who violates the WARN provisions by ordering a plant closing or mass layoff without providing appropriate notice is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days. The employer’s liability may be reduced by such items as wages paid by the employer to the employee during the period of the violation and voluntary and unconditional payments made by the employer to the employee.
An employer who fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. This penalty may be avoided if the employer pays each affected employee within 3 weeks after the closing or layoff is ordered by the employer.
If you think that you have a claim under the WARN Act, you should not delay in contacting an attorney to discuss filing a claim. There are strict time limits in which claims under the WARN Act must be filed. Although the WARN Act itself does not have a filing deadline (also called a “statute of limitations”), claims are subject to filing deadlines under state law, which can vary from a few months to a few years. As you might have other legal claims with shorter deadlines, do not wait to file your claim until your time limit is close to expiring.