Your Guide to the WARN Act

Layoffs and sudden company closings are scary. They result in many people being left without a job or way to support themselves, not because of anything wrong the employees did, but because the company simply can’t afford to have them anymore.

Mass layoffs can have community-wide impact, too. Workers suddenly left without employment will no longer be able to actively engage in the local economy. Mass layoffs and closings help no one and are ultimately more harmful than they appear at first glance.

That’s why the WARN Act is in place—to require that workers be given advanced notice of company layoffs and closings. It is the goal of this act to lessen the harmful impact of layoffs by allowing the affected employees and their families a chance to plan and adjust accordingly.

As with any law, however, there are limitations and loopholes. We’ll get into everything you need to know about the WARN Act below, the good and the bad.

What is the WARN Act?

The Worker Adjustment and Retraining Notification Act was enacted in 1989. It works to protect workers and their families from the ramifications of sudden company layoffs and closings.

Main Purpose of the WARN Act

The main way that the WARN Act protects workers is by requiring that companies give a minimum of 60 days’ notice before closing or laying off large amounts of people.

This notice is intended to give workers and their families the necessary notice they need to successfully transition. This 60 day period allows families time to get their finances in order as well as search for alternative forms of employment, rather than having the rug pulled out from under them. It’s also much easier to find a new job when you are already employed, so the notice is helpful in this way as well.

This not only benefits the individual workers and their families, but the community as a whole, allowing them to more quickly reenter the economic cycle rather than being counted out for longer.

Other Provisions

When giving notice, the employer is required to communicate either with the employees directly, or with the labor union that represents the employees. Notice must also be given to the state dislocated worker unit, the elected official that works with the local government employment department, and any bargain collecting units.

The WARN Act applies when either a plant is closing or in case of what is defined as a mass-layoff. Only employees who have worked with the company for more than six months and who work over 20 hours a week contribute to the overall count that determines whether or not the WARN Act is in provision.

When is the WARN Act in Effect?

Types of Companies/Employees the Act Applies To

Generally, the WARN Act only applies to large and mid-sized companies. Companies that have at least 100 employees fall under jurisdiction of the WARN Act. Employees only count within this number if they have been employed by the company for 6 or more months and are considered full-time, working more than 20 hours a week.

Thus, the layoff of many new and part-time employees does not fall under the protection of the WARN Act.

When a plant is closing, companies are required to give 60 days’ notice when 50 or more people are being laid off within 30 days.

Apart from a plant closing, the Act is in effect during a mass layoff. Mass layoffs are defined as 500 or more employees lost over a 30 day period. If 50-499 employees make up at least 33% of the company, however, then the Act also applies.

Grounds for Notice

In addition to the plant-closing and mass-layoff grounds listed above, the employer must also provide notice to department layoffs that may fall below the threshold individually but that pass it when combined within a 90-day period. The company is only exempt from this if it can prove that they layoffs are a result of different causes and therefore unrelated.

All employees to be terminated must receive the 60-day notice under the WARN ACT. This includes part-time workers and those who’ve been working there for less than six months, even though they aren’t included in the count when adding up layoffs.

If the number of employees that will be let go is known but the specific employees have not yet been determined, the company must provide notice to the entire affected departments and areas.

When the WARN Act Does Not Apply

There are a few instances when the WARN Act does not apply to what can be considered large losses in employment. They are as follows:

• The Closing of a Temporary Facility: If a facility is set up to be temporary from the outset, no notice of termination is required. An example of a temporary facility is a holiday shop or other business that is only in business for a limited time. Employees should have an understanding that this is a temporary position to begin with.
• The Completion of a Project: The same goes for temporary projects or undertakings, such as a contracted construction job. The employer is only exempt from the WARN Act, however, so long as the workers were employed with the understanding that the nature of the work was temporary.
• In the Case of Strikers/Worker Part of a Bargaining Unit: Strikers and workers part of a bargaining unit in labor negotiations that have led to strikes/shutdowns that then require a loss of employment are not protected under the WARN Act. Non-striking employees are still protected under these circumstances.
• In the Case of “Economic Strikers”: Economic strikers are also not protected under the WARN Act.

What Happens if a Company Violates the WARN Act?

So now that we’ve gone over when the WARN Act is in effect and what happens under it, what actually makes companies follow it?

Fines, of course. For each day that passes that the company is in violation of the WARN Act, they are liable to pay up to $500. The company is also liable to pay each severed employee for the lost work and benefits up to 60 days.

The employer’s liability will be reduced by the amount that it pays back to these employees. If the company satisfies its liability to each employee within a three week period, it may avoid the penalties that it has so far incurred. This leads to an unfortunate abuse of the protection that the WARN Act offers.

Limitations of the WARN Act

The Hollow Reinforcement of the WARN Act

The very way that the WARN Act is reinforced is one of its largest limitations. If they pay out all that is owed to their former employees within three weeks, they aren’t subject to any fees at all. This leads to a natural abuse of the system.

It can be appealing for companies to violate the WARN Act. Given the advanced notice, some employees may choose to leave earlier than their predetermined last day or express discontent in other ways. In order to keep as peaceful productivity as possible, then, some companies violate the Act, choosing to payout the same amount later and canceling the fines they were incurring.

Though some may think of this as somewhat of a positive, the cut-loose workers being paid for time that they are no longer working. As mentioned earlier, however, it is easier to find employment while already employed. So, neglecting to give real notice can have a discernable impact.

The threat/reinforcement that the WARN Act offers, then, is rather hollow. Companies can openly violate the Act then take care of it without incurring any real consequence.

Other Limitations

The WARN Act also does not take part-time and new employees into consideration. If a mass cut is being made solely to workers who work less than 20 hours a week or who have been at the company for less than six months, then, no notice period is required.

This Act also does not have any effect over companies with fewer than 100 full-time/long-term employees. If you work for a small company, then, you are offered no such assurances or protections under the WARN Act. This is largely practical, as smaller businesses who close down tend to have fewer funds on hand to pay out and need to act quicker.

A Call for Reform

The nature of the WARN Act’s reinforcement procedures make it susceptible to loopholes and abuse. Because of this, many are calling to reform the WARN Act.

The intents and purposes behind the Act are noble—to protect workers’ rights from abuse by large corporations and give them a chance to stay afloat in the face of difficult circumstances that they did not bring about. Its execution, however, can unfortunately leave something to be desired.

It is important, therefore, to make our voices heard. If you or someone you know has been a victim of an employer circumventing the system with no penalty, you know the severity of this issue. It is necessary to call for reform and keep large companies accountable.